File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Amending 2012 Tax Return

E File Tax ReturnsH & R Block Online TaxesH&r Block State TaxesFree Efile State TaxIrs Amended FormFile State Tax Return FreeFile Taxes Online For FreeTurbo Tax 1040ezIrs Gov Vita1040ez Tax Form 2012Ez Tax Form1040x Form For 2013Irs 1040E File Tax Return 20112012 Tax Form 88632010 State Tax FormsFree Online State TaxesAmend Tax Return For FreePrintable 1040ez Tax FormFederal Tax Form 2010H&rblock2012 Ez Tax FormsDo I Amend Tax ReturnFree Tax HelpAmend 2011 Federal Tax ReturnCan A Tax Return Be Amended2010 Tax FilingFree Tax Filing For Low IncomeHow Can I Amend My 2012 Tax ReturnFile Free State TaxesMypay Dfas Mil MypayFederal Amended Tax Return InstructionsHttps Www Freefilefillableforms Com2011 Tax Filing DeadlineH&r Block Taxes OnlineFile Amended Tax Return 2011 OnlineQuicktaxAmended Tax Return FormEfile 2010 TaxesFree Efile Tax Return

Amending 2012 Tax Return

Amending 2012 tax return 13. Amending 2012 tax return   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Amending 2012 tax return It is divided into the following sections. Amending 2012 tax return Cost basis. Amending 2012 tax return Adjusted basis. Amending 2012 tax return Basis other than cost. Amending 2012 tax return Your basis is the amount of your investment in property for tax purposes. Amending 2012 tax return Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Amending 2012 tax return Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Amending 2012 tax return If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Amending 2012 tax return Only the basis allocated to the business or investment use of the property can be depreciated. Amending 2012 tax return Your original basis in property is adjusted (increased or decreased) by certain events. Amending 2012 tax return For example, if you make improvements to the property, increase your basis. Amending 2012 tax return If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Amending 2012 tax return Keep accurate records of all items that affect the basis of your property. Amending 2012 tax return For more information on keeping records, see chapter 1. Amending 2012 tax return Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Amending 2012 tax return The cost is the amount you pay in cash, debt obligations, other property, or services. Amending 2012 tax return Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Amending 2012 tax return In addition, the basis of real estate and business assets may include other items. Amending 2012 tax return Loans with low or no interest. Amending 2012 tax return    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Amending 2012 tax return You generally have unstated interest if your interest rate is less than the applicable federal rate. Amending 2012 tax return   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Amending 2012 tax return Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Amending 2012 tax return If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Amending 2012 tax return Lump sum purchase. Amending 2012 tax return   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Amending 2012 tax return Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Amending 2012 tax return Figure the basis of each asset by multiplying the lump sum by a fraction. Amending 2012 tax return The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Amending 2012 tax return    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Amending 2012 tax return Fair market value (FMV). Amending 2012 tax return   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Amending 2012 tax return Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Amending 2012 tax return Assumption of mortgage. Amending 2012 tax return   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Amending 2012 tax return Settlement costs. Amending 2012 tax return   Your basis includes the settlement fees and closing costs you paid for buying the property. Amending 2012 tax return (A fee for buying property is a cost that must be paid even if you buy the property for cash. Amending 2012 tax return ) Do not include fees and costs for getting a loan on the property in your basis. Amending 2012 tax return   The following are some of the settlement fees or closing costs you can include in the basis of your property. Amending 2012 tax return Abstract fees (abstract of title fees). Amending 2012 tax return Charges for installing utility services. Amending 2012 tax return Legal fees (including fees for the title search and preparation of the sales contract and deed). Amending 2012 tax return Recording fees. Amending 2012 tax return Survey fees. Amending 2012 tax return Transfer taxes. Amending 2012 tax return Owner's title insurance. Amending 2012 tax return Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Amending 2012 tax return   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Amending 2012 tax return   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Amending 2012 tax return Casualty insurance premiums. Amending 2012 tax return Rent for occupancy of the property before closing. Amending 2012 tax return Charges for utilities or other services related to occupancy of the property before closing. Amending 2012 tax return Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Amending 2012 tax return Fees for refinancing a mortgage. Amending 2012 tax return Real estate taxes. Amending 2012 tax return   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Amending 2012 tax return You cannot deduct them as an expense. Amending 2012 tax return    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Amending 2012 tax return Do not include that amount in the basis of your property. Amending 2012 tax return If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Amending 2012 tax return Points. Amending 2012 tax return   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Amending 2012 tax return Generally, you deduct the points over the term of the loan. Amending 2012 tax return For more information on how to deduct points, see chapter 23. Amending 2012 tax return Points on home mortgage. Amending 2012 tax return   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Amending 2012 tax return If certain requirements are met, you can deduct the points in full for the year in which they are paid. Amending 2012 tax return Reduce the basis of your home by any seller-paid points. Amending 2012 tax return Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Amending 2012 tax return The result is the adjusted basis. Amending 2012 tax return Increases to Basis Increase the basis of any property by all items properly added to a capital account. Amending 2012 tax return Examples of items that increase basis are shown in Table 13-1. Amending 2012 tax return These include the items discussed below. Amending 2012 tax return Improvements. Amending 2012 tax return   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Amending 2012 tax return For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Amending 2012 tax return Assessments for local improvements. Amending 2012 tax return   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Amending 2012 tax return Do not deduct them as taxes. Amending 2012 tax return However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Amending 2012 tax return Example. Amending 2012 tax return Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Amending 2012 tax return Add the assessment to your property's basis. Amending 2012 tax return In this example, the assessment is a depreciable asset. Amending 2012 tax return Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Amending 2012 tax return Examples of items that decrease basis are shown in Table 13-1. Amending 2012 tax return These include the items discussed below. Amending 2012 tax return Table 13-1. Amending 2012 tax return Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Amending 2012 tax return   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Amending 2012 tax return    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Amending 2012 tax return   For more information on casualty and theft losses, see chapter 25. Amending 2012 tax return Depreciation and section 179 deduction. Amending 2012 tax return   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Amending 2012 tax return   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Amending 2012 tax return Example. Amending 2012 tax return You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Amending 2012 tax return You added an improvement to the duplex that cost $10,000. Amending 2012 tax return In February last year, the duplex was damaged by fire. Amending 2012 tax return Up to that time, you had been allowed depreciation of $23,000. Amending 2012 tax return You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Amending 2012 tax return You deducted a casualty loss of $1,000 on your income tax return for last year. Amending 2012 tax return You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Amending 2012 tax return You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Amending 2012 tax return Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Amending 2012 tax return Your basis in the land is its original cost of $5,000. Amending 2012 tax return Easements. Amending 2012 tax return   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Amending 2012 tax return It reduces the basis of the affected part of the property. Amending 2012 tax return If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Amending 2012 tax return   If the gain is on a capital asset, see chapter 16 for information about how to report it. Amending 2012 tax return If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Amending 2012 tax return Exclusion of subsidies for energy conservation measures. Amending 2012 tax return   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Amending 2012 tax return Reduce the basis of the property for which you received the subsidy by the excluded amount. Amending 2012 tax return For more information about this subsidy, see chapter 12. Amending 2012 tax return Postponed gain from sale of home. Amending 2012 tax return    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Amending 2012 tax return For more information on the rules for the sale of a home, see chapter 15. Amending 2012 tax return Basis Other Than Cost There are many times when you cannot use cost as basis. Amending 2012 tax return In these cases, the fair market value or the adjusted basis of the property can be used. Amending 2012 tax return Fair market value (FMV) and adjusted basis were discussed earlier. Amending 2012 tax return Property Received for Services If you receive property for your services, include the FMV of the property in income. Amending 2012 tax return The amount you include in income becomes your basis. Amending 2012 tax return If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Amending 2012 tax return Restricted property. Amending 2012 tax return   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Amending 2012 tax return However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Amending 2012 tax return Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Amending 2012 tax return For more information, see Restricted Property in Publication 525. Amending 2012 tax return Bargain purchases. Amending 2012 tax return   A bargain purchase is a purchase of an item for less than its FMV. Amending 2012 tax return If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Amending 2012 tax return Your basis in the property is its FMV (your purchase price plus the amount you include in income). Amending 2012 tax return   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Amending 2012 tax return However, your basis in the property is still its FMV. Amending 2012 tax return See Employee Discounts in Publication 15-B. Amending 2012 tax return Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Amending 2012 tax return A taxable gain or deductible loss also is known as a recognized gain or loss. Amending 2012 tax return If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Amending 2012 tax return Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Amending 2012 tax return Similar or related property. Amending 2012 tax return   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Amending 2012 tax return Decrease the basis by the following. Amending 2012 tax return Any loss you recognize on the involuntary conversion. Amending 2012 tax return Any money you receive that you do not spend on similar property. Amending 2012 tax return Increase the basis by the following. Amending 2012 tax return Any gain you recognize on the involuntary conversion. Amending 2012 tax return Any cost of acquiring the replacement property. Amending 2012 tax return Money or property not similar or related. Amending 2012 tax return    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Amending 2012 tax return Example. Amending 2012 tax return The state condemned your property. Amending 2012 tax return The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Amending 2012 tax return You realized a gain of $5,000 ($31,000 − $26,000). Amending 2012 tax return You bought replacement property similar in use to the converted property for $29,000. Amending 2012 tax return You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Amending 2012 tax return Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Amending 2012 tax return The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Amending 2012 tax return   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Amending 2012 tax return Basis for depreciation. Amending 2012 tax return   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Amending 2012 tax return For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amending 2012 tax return Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Amending 2012 tax return If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Amending 2012 tax return See Nontaxable Trades in chapter 14. Amending 2012 tax return Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Amending 2012 tax return To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Amending 2012 tax return Qualifying property. Amending 2012 tax return Like-kind property. Amending 2012 tax return The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Amending 2012 tax return If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Amending 2012 tax return Qualifying property. Amending 2012 tax return   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Amending 2012 tax return Like-kind property. Amending 2012 tax return   There must be an exchange of like-kind property. Amending 2012 tax return Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Amending 2012 tax return The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Amending 2012 tax return Example. Amending 2012 tax return You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Amending 2012 tax return The dealer allows you $2,000 on the old truck, and you pay $4,800. Amending 2012 tax return This is a like-kind exchange. Amending 2012 tax return The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Amending 2012 tax return If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Amending 2012 tax return The basis of the new truck is the price you pay the dealer. Amending 2012 tax return Partially nontaxable exchanges. Amending 2012 tax return   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Amending 2012 tax return The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Amending 2012 tax return Decrease the basis by the following amounts. Amending 2012 tax return Any money you receive. Amending 2012 tax return Any loss you recognize on the exchange. Amending 2012 tax return Increase the basis by the following amounts. Amending 2012 tax return Any additional costs you incur. Amending 2012 tax return Any gain you recognize on the exchange. Amending 2012 tax return If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Amending 2012 tax return Allocation of basis. Amending 2012 tax return   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Amending 2012 tax return The rest is the basis of the like-kind property. Amending 2012 tax return More information. Amending 2012 tax return   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Amending 2012 tax return Basis for depreciation. Amending 2012 tax return   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Amending 2012 tax return For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amending 2012 tax return Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Amending 2012 tax return The same rule applies to a transfer by your former spouse that is incident to divorce. Amending 2012 tax return However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Amending 2012 tax return If the property transferred to you is a series E, series EE, or series I U. Amending 2012 tax return S. Amending 2012 tax return savings bond, the transferor must include in income the interest accrued to the date of transfer. Amending 2012 tax return Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Amending 2012 tax return For more information on these bonds, see chapter 7. Amending 2012 tax return At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Amending 2012 tax return For more information about the transfer of property from a spouse, see chapter 14. Amending 2012 tax return Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Amending 2012 tax return FMV less than donor's adjusted basis. Amending 2012 tax return   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Amending 2012 tax return Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Amending 2012 tax return Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Amending 2012 tax return See Adjusted Basis , earlier. Amending 2012 tax return Example. Amending 2012 tax return You received an acre of land as a gift. Amending 2012 tax return At the time of the gift, the land had an FMV of $8,000. Amending 2012 tax return The donor's adjusted basis was $10,000. Amending 2012 tax return After you received the property, no events occurred to increase or decrease your basis. Amending 2012 tax return If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Amending 2012 tax return If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Amending 2012 tax return If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Amending 2012 tax return Business property. Amending 2012 tax return   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Amending 2012 tax return FMV equal to or greater than donor's adjusted basis. Amending 2012 tax return   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Amending 2012 tax return Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Amending 2012 tax return   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Amending 2012 tax return See Adjusted Basis , earlier. Amending 2012 tax return   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Amending 2012 tax return Figure the increase by multiplying the gift tax paid by a fraction. Amending 2012 tax return The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Amending 2012 tax return   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Amending 2012 tax return The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Amending 2012 tax return Example. Amending 2012 tax return In 2013, you received a gift of property from your mother that had an FMV of $50,000. Amending 2012 tax return Her adjusted basis was $20,000. Amending 2012 tax return The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Amending 2012 tax return She paid a gift tax of $7,320 on the property. Amending 2012 tax return Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Amending 2012 tax return 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Amending 2012 tax return If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Amending 2012 tax return However, your basis cannot exceed the FMV of the gift at the time it was given to you. Amending 2012 tax return Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Amending 2012 tax return The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Amending 2012 tax return The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Amending 2012 tax return The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Amending 2012 tax return If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Amending 2012 tax return For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Amending 2012 tax return Property inherited from a decedent who died in 2010. Amending 2012 tax return   If you inherited property from a decedent who died in 2010, special rules may apply. Amending 2012 tax return For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Amending 2012 tax return Community property. Amending 2012 tax return   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Amending 2012 tax return When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Amending 2012 tax return For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Amending 2012 tax return Example. Amending 2012 tax return You and your spouse owned community property that had a basis of $80,000. Amending 2012 tax return When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Amending 2012 tax return The FMV of the community interest was $100,000. Amending 2012 tax return The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Amending 2012 tax return The basis of the other half to your spouse's heirs is also $50,000. Amending 2012 tax return For more information about community property, see Publication 555, Community Property. Amending 2012 tax return Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Amending 2012 tax return To do so, you must figure its basis for depreciation at the time of the change. Amending 2012 tax return An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Amending 2012 tax return Basis for depreciation. Amending 2012 tax return   The basis for depreciation is the lesser of the following amounts. Amending 2012 tax return The FMV of the property on the date of the change. Amending 2012 tax return Your adjusted basis on the date of the change. Amending 2012 tax return Example. Amending 2012 tax return Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Amending 2012 tax return You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Amending 2012 tax return Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Amending 2012 tax return Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Amending 2012 tax return On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Amending 2012 tax return The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Amending 2012 tax return Sale of property. Amending 2012 tax return   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Amending 2012 tax return Gain. Amending 2012 tax return   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Amending 2012 tax return Example. Amending 2012 tax return Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Amending 2012 tax return Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Amending 2012 tax return Loss. Amending 2012 tax return   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Amending 2012 tax return Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Amending 2012 tax return Example. Amending 2012 tax return Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Amending 2012 tax return In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Amending 2012 tax return Reduce that amount ($180,000) by the depreciation deductions ($37,500). Amending 2012 tax return The basis for loss is $142,500 ($180,000 − $37,500). Amending 2012 tax return Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Amending 2012 tax return If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Amending 2012 tax return You must adjust the basis of stocks for certain events that occur after purchase. Amending 2012 tax return For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Amending 2012 tax return This rule applies only when the additional stock received is identical to the stock held. Amending 2012 tax return Also reduce your basis when you receive nontaxable distributions. Amending 2012 tax return They are a return of capital. Amending 2012 tax return Example. Amending 2012 tax return In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Amending 2012 tax return In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Amending 2012 tax return In 2013 XYZ declared a 2-for-1 stock split. Amending 2012 tax return You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Amending 2012 tax return Other basis. Amending 2012 tax return   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Amending 2012 tax return For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amending 2012 tax return Identifying stocks or bonds sold. Amending 2012 tax return   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Amending 2012 tax return If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Amending 2012 tax return For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amending 2012 tax return Mutual fund shares. Amending 2012 tax return   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Amending 2012 tax return For more information, see Publication 550. Amending 2012 tax return Bond premium. Amending 2012 tax return   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Amending 2012 tax return See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Amending 2012 tax return Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Amending 2012 tax return Original issue discount (OID) on debt instruments. Amending 2012 tax return   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Amending 2012 tax return See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Amending 2012 tax return Tax-exempt obligations. Amending 2012 tax return    OID on tax-exempt obligations is generally not taxable. Amending 2012 tax return However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Amending 2012 tax return The accrued OID is added to the basis of the obligation to determine your gain or loss. Amending 2012 tax return See chapter 4 of Publication 550. Amending 2012 tax return Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Understanding your CP21B Notice

We made the change(s) you requested to your tax return for the tax year specified on the notice. You should receive your refund within 2-3 weeks of your notice.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it shows the area(s) of your tax return that changed, e.g., Schedule A.
  • If you agree with the notice, you don't need to do anything.
  • Contact us if you disagree with the change(s) we made.
  • Correct the copy of your tax return that you kept for your records.
  • Be sure to report any interest we paid you on your tax return for this year.

You may want to...


Answers to Common Questions

What if I don't receive my refund in 2-3 weeks?
If you don't owe other taxes or debts we're required to collect, such as child support, and 3 weeks have lapsed, call us at the toll-free number listed on the top right corner of your notice.

Will I receive information about the interest that I need to report on my next tax return?
If you were paid $10 or more in interest, you'll receive a Form 1099-INT from IRS by January 31st of next year. Please note, even if the interest amount paid to you is less than $10, you must report this amount on your tax return.

The notice says "We made the changes you requested to your 2006 Form 1040 to adjust your..." but I don't remember sending any change to IRS. How can I find out what IRS received to initiate this change?
Please contact us at the number listed on the top right corner of your notice for specific information about your tax return.

What if I need to make another correction to my account?
You'll need to file Form 1040X, Amended U.S. Individual Income Tax Return.

What if I have tried to get answers and after contacting IRS several times have not been successful?
Call Taxpayer Advocate at 1-877-777-4778 or for TTY/TDD 1-800-829-4059.

What if I think I’m a victim of identity theft?
Please contact us at the number listed on the top right corner of your notice. Refer to the IRS Identity Theft resource page for more information.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 26-Feb-2014

The Amending 2012 Tax Return

Amending 2012 tax return 26. Amending 2012 tax return   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Amending 2012 tax return Parking fees. Amending 2012 tax return Advertising display on car. Amending 2012 tax return Car pools. Amending 2012 tax return Hauling tools or instruments. Amending 2012 tax return Union members' trips from a union hall. Amending 2012 tax return Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Amending 2012 tax return Statutory employees. Amending 2012 tax return Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. Amending 2012 tax return  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Amending 2012 tax return Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. Amending 2012 tax return Depreciation limits on cars, trucks, and vans. Amending 2012 tax return  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Amending 2012 tax return For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Amending 2012 tax return For more information, see Depreciation limits in Publication 463. Amending 2012 tax return Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Amending 2012 tax return An ordinary expense is one that is common and accepted in your trade or business. Amending 2012 tax return A necessary expense is one that is helpful and appropriate for your business. Amending 2012 tax return An expense does not have to be required to be considered necessary. Amending 2012 tax return This chapter explains the following. Amending 2012 tax return What expenses are deductible. Amending 2012 tax return How to report your expenses on your return. Amending 2012 tax return What records you need to prove your expenses. Amending 2012 tax return How to treat any expense reimbursements you may receive. Amending 2012 tax return Who does not need to use this chapter. Amending 2012 tax return   If you are an employee, you will not need to read this chapter if all of the following are true. Amending 2012 tax return You fully accounted to your employer for your work-related expenses. Amending 2012 tax return You received full reimbursement for your expenses. Amending 2012 tax return Your employer required you to return any excess reimbursement and you did so. Amending 2012 tax return There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Amending 2012 tax return If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Amending 2012 tax return See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. Amending 2012 tax return    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Amending 2012 tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. Amending 2012 tax return This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. Amending 2012 tax return It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. Amending 2012 tax return Travel expenses defined. Amending 2012 tax return   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. Amending 2012 tax return   You will find examples of deductible travel expenses in Table 26-1 . Amending 2012 tax return 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. Amending 2012 tax return This rest requirement is not satisfied by merely napping in your car. Amending 2012 tax return 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. Amending 2012 tax return Example 1. Amending 2012 tax return You are a railroad conductor. Amending 2012 tax return You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Amending 2012 tax return 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. Amending 2012 tax return You are considered to be away from home. Amending 2012 tax return Example 2. Amending 2012 tax return You are a truck driver. Amending 2012 tax return You leave your terminal and return to it later the same day. Amending 2012 tax return You get an hour off at your turnaround point to eat. Amending 2012 tax return 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. Amending 2012 tax return Members of the Armed Forces. Amending 2012 tax return   If you are a member of the U. Amending 2012 tax return S. Amending 2012 tax return Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Amending 2012 tax return You cannot deduct your expenses for meals and lodging. Amending 2012 tax return 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. Amending 2012 tax return 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. Amending 2012 tax return    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. Amending 2012 tax return Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Amending 2012 tax return Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Amending 2012 tax return It includes the entire city or general area in which your business or work is located. Amending 2012 tax return If you have more than one regular place of business, your tax home is your main place of business. Amending 2012 tax return See Main place of business or work , later. Amending 2012 tax return 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. Amending 2012 tax return See No main place of business or work , later. Amending 2012 tax return If you do not have a regular or a 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. Amending 2012 tax return As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Amending 2012 tax return Main place of business or work. Amending 2012 tax return   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. Amending 2012 tax return The total time you ordinarily spend in each place. Amending 2012 tax return The level of your business activity in each place. Amending 2012 tax return Whether your income from each place is significant or insignificant. Amending 2012 tax return Example. Amending 2012 tax return You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Amending 2012 tax return You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Amending 2012 tax return Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Amending 2012 tax return No main place of business or work. Amending 2012 tax return   You may have a tax home even if you do not have a regular or main place of business or work. Amending 2012 tax return Your tax home may be the home where you regularly live. Amending 2012 tax return Factors used to determine tax home. Amending 2012 tax return   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. Amending 2012 tax return 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. Amending 2012 tax return You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Amending 2012 tax return 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. Amending 2012 tax return   If you satisfy all three factors, your tax home is the home where you regularly live. Amending 2012 tax return If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Amending 2012 tax return If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Amending 2012 tax return Example. Amending 2012 tax return You are single and live in Boston in an apartment you rent. Amending 2012 tax return You have worked for your employer in Boston for a number of years. Amending 2012 tax return Your employer enrolls you in a 12-month executive training program. Amending 2012 tax return You do not expect to return to work in Boston after you complete your training. Amending 2012 tax return During your training, you do not do any work in Boston. Amending 2012 tax return Instead, you receive classroom and on-the-job training throughout the United States. Amending 2012 tax return You keep your apartment in Boston and return to it frequently. Amending 2012 tax return You use your apartment to conduct your personal business. Amending 2012 tax return You also keep up your community contacts in Boston. Amending 2012 tax return When you complete your training, you are transferred to Los Angeles. Amending 2012 tax return You do not satisfy factor (1) because you did not work in Boston. Amending 2012 tax return You satisfy factor (2) because you had duplicate living expenses. Amending 2012 tax return 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. Amending 2012 tax return Therefore, you have a tax home in Boston. Amending 2012 tax return Tax home different from family home. Amending 2012 tax return   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. Amending 2012 tax return You also cannot deduct the cost of meals and lodging while at your tax home. Amending 2012 tax return See Example 1 . Amending 2012 tax return   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Amending 2012 tax return See Example 2 . Amending 2012 tax return Example 1. Amending 2012 tax return You are a truck driver and you and your family live in Tucson. Amending 2012 tax return You are employed by a trucking firm that has its terminal in Phoenix. Amending 2012 tax return At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Amending 2012 tax return You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Amending 2012 tax return This is because Phoenix is your tax home. Amending 2012 tax return Example 2. Amending 2012 tax return Your family home is in Pittsburgh, where you work 12 weeks a year. Amending 2012 tax return The rest of the year you work for the same employer in Baltimore. Amending 2012 tax return In Baltimore, you eat in restaurants and sleep in a rooming house. Amending 2012 tax return Your salary is the same whether you are in Pittsburgh or Baltimore. Amending 2012 tax return Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Amending 2012 tax return You cannot deduct any expenses you have for meals and lodging there. Amending 2012 tax return However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Amending 2012 tax return You can deduct the cost of your round trip between Baltimore and Pittsburgh. Amending 2012 tax return You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Amending 2012 tax return Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Amending 2012 tax return It may not be practical to return to your tax home from this other location at the end of each work day. Amending 2012 tax return Temporary assignment vs. Amending 2012 tax return indefinite assignment. Amending 2012 tax return   If your assignment or job away from your main place of work is temporary, your tax home does not change. Amending 2012 tax return You are considered to be away from home for the whole period you are away from your main place of work. Amending 2012 tax return You can deduct your travel expenses if they otherwise qualify for deduction. Amending 2012 tax return 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. Amending 2012 tax return   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. Amending 2012 tax return 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. Amending 2012 tax return   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. Amending 2012 tax return You may be able to deduct the cost of relocating to your new tax home as a moving expense. Amending 2012 tax return See Publication 521 for more information. Amending 2012 tax return Exception for federal crime investigations or prosecutions. Amending 2012 tax return   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Amending 2012 tax return 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. Amending 2012 tax return   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 or prosecute, or provide support services for the investigation or prosecution of a federal crime. Amending 2012 tax return Determining temporary or indefinite. Amending 2012 tax return   You must determine whether your assignment is temporary or indefinite when you start work. Amending 2012 tax return 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. Amending 2012 tax return An assignment or job that is initially temporary may become indefinite due to changed circumstances. Amending 2012 tax return 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. Amending 2012 tax return Going home on days off. Amending 2012 tax return   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. Amending 2012 tax return You cannot deduct the cost of your meals and lodging there. Amending 2012 tax return However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Amending 2012 tax return You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Amending 2012 tax return   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Amending 2012 tax return 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. Amending 2012 tax return Probationary work period. Amending 2012 tax return   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. Amending 2012 tax return You cannot deduct any of your expenses for meals and lodging during the probationary period. Amending 2012 tax return 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. Amending 2012 tax return You can deduct ordinary and necessary expenses you have when you travel away from home on business. Amending 2012 tax return The type of expense you can deduct depends on the facts and your circumstances. Amending 2012 tax return Table 26-1 summarizes travel expenses you may be able to deduct. Amending 2012 tax return You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Amending 2012 tax return 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. Amending 2012 tax return You can use a log, diary, notebook, or any other written record to keep track of your expenses. Amending 2012 tax return The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. Amending 2012 tax return Separating costs. Amending 2012 tax return   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. Amending 2012 tax return You must have a reasonable basis for making this allocation. Amending 2012 tax return For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Amending 2012 tax return Travel expenses for another individual. Amending 2012 tax return   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. Amending 2012 tax return Employee. Amending 2012 tax return   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. Amending 2012 tax return Business associate. Amending 2012 tax return   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. Amending 2012 tax return A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. Amending 2012 tax return A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Amending 2012 tax return Bona fide business purpose. Amending 2012 tax return   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Amending 2012 tax return Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Amending 2012 tax return Example. Amending 2012 tax return Jerry drives to Chicago on business and takes his wife, Linda, with him. Amending 2012 tax return Linda is not Jerry's employee. Amending 2012 tax return Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Amending 2012 tax return The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Amending 2012 tax return Her expenses are not deductible. Amending 2012 tax return Jerry pays $199 a day for a double room. Amending 2012 tax return A single room costs $149 a day. Amending 2012 tax return He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Amending 2012 tax return If he uses public transportation, he can deduct only his fare. Amending 2012 tax return Table 26-1. Amending 2012 tax return Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. Amending 2012 tax return IF you have expenses for. Amending 2012 tax return . Amending 2012 tax return . Amending 2012 tax return THEN you can deduct the cost of. Amending 2012 tax return . Amending 2012 tax return . Amending 2012 tax return transportation travel by airplane, train, bus, or car between your home and your business destination. Amending 2012 tax return If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Amending 2012 tax return If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. Amending 2012 tax return 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. Amending 2012 tax return baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Amending 2012 tax return car operating and maintaining your car when traveling away from home on business. Amending 2012 tax return You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. Amending 2012 tax return If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Amending 2012 tax return 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. Amending 2012 tax return Meals include amounts spent for food, beverages, taxes, and related tips. Amending 2012 tax return See Meals and Incidental Expenses for additional rules and limits. Amending 2012 tax return cleaning dry cleaning and laundry. Amending 2012 tax return telephone business calls while on your business trip. Amending 2012 tax return This includes business communication by fax machine or other communication devices. Amending 2012 tax return tips tips you pay for any expenses in this chart. Amending 2012 tax return other other similar ordinary and necessary expenses related to your business travel. Amending 2012 tax return 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. Amending 2012 tax return Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. Amending 2012 tax return It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Amending 2012 tax return The meal is business-related entertainment. Amending 2012 tax return Business-related entertainment is discussed under Entertainment Expenses , later. Amending 2012 tax return The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. Amending 2012 tax return Lavish or extravagant. Amending 2012 tax return   You cannot deduct expenses for meals that are lavish or extravagant. Amending 2012 tax return An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Amending 2012 tax return 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. Amending 2012 tax return 50% limit on meals. Amending 2012 tax return   You can figure your meal expenses using either of the following methods. Amending 2012 tax return Actual cost. Amending 2012 tax return The standard meal allowance. Amending 2012 tax return Both of these methods are explained below. Amending 2012 tax return But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Amending 2012 tax return   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. Amending 2012 tax return If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Amending 2012 tax return The 50% limit is explained later under Entertainment Expenses . Amending 2012 tax return Accountable and nonaccountable plans are discussed later under Reimbursements . Amending 2012 tax return Actual cost. Amending 2012 tax return   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. Amending 2012 tax return If you use this method, you must keep records of your actual cost. Amending 2012 tax return Standard meal allowance. Amending 2012 tax return   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Amending 2012 tax return 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. Amending 2012 tax return The set amount varies depending on where and when you travel. Amending 2012 tax return In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Amending 2012 tax return If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Amending 2012 tax return See Recordkeeping , later. Amending 2012 tax return Incidental expenses. Amending 2012 tax return   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Amending 2012 tax return 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. Amending 2012 tax return Incidental expenses only method. Amending 2012 tax return   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Amending 2012 tax return The amount of the deduction is $5 a day. Amending 2012 tax return You can use this method only if you did not pay or incur any meal expenses. Amending 2012 tax return You cannot use this method on any day that you use the standard meal allowance. Amending 2012 tax return    Federal employees should refer to the Federal Travel Regulations at  www. Amending 2012 tax return gsa. Amending 2012 tax return gov. Amending 2012 tax return Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Amending 2012 tax return 50% limit may apply. Amending 2012 tax return   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. Amending 2012 tax return 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. Amending 2012 tax return The 50% limit is explained later under Entertainment Expenses . Amending 2012 tax return Accountable and nonaccountable plans are discussed later under Reimbursements . Amending 2012 tax return There is no optional standard lodging amount similar to the standard meal allowance. Amending 2012 tax return Your allowable lodging expense deduction is your actual cost. Amending 2012 tax return Who can use the standard meal allowance. Amending 2012 tax return   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. Amending 2012 tax return   Use of the standard meal allowance for other travel. Amending 2012 tax return    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Amending 2012 tax return You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Amending 2012 tax return You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Amending 2012 tax return Amount of standard meal allowance. Amending 2012 tax return   The standard meal allowance is the federal M&IE rate. Amending 2012 tax return For travel in 2013, the daily rate for most small localities in the United States is $46. Amending 2012 tax return   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Amending 2012 tax return You can find this information (organized by state) on the Internet at www. Amending 2012 tax return gsa. Amending 2012 tax return gov. Amending 2012 tax return Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. Amending 2012 tax return However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. Amending 2012 tax return You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. Amending 2012 tax return   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. Amending 2012 tax return If you work in the transportation industry, however, see Special rate for transportation workers , later. Amending 2012 tax return Standard meal allowance for areas outside the continental United States. Amending 2012 tax return    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Amending 2012 tax return The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Amending 2012 tax return S. Amending 2012 tax return Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Amending 2012 tax return The Department of State establishes per diem rates for all other foreign areas. Amending 2012 tax return    You can access per diem rates for non-foreign areas outside the continental United States at: www. Amending 2012 tax return defensetravel. Amending 2012 tax return dod. Amending 2012 tax return mil/site/perdiemCalc. Amending 2012 tax return cfm. Amending 2012 tax return You can access all other foreign per diem rates at www. Amending 2012 tax return state. Amending 2012 tax return gov/travel/. Amending 2012 tax return Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. Amending 2012 tax return Special rate for transportation workers. Amending 2012 tax return   You can use a special standard meal allowance if you work in the transportation industry. Amending 2012 tax return 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. Amending 2012 tax return If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). Amending 2012 tax return   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. Amending 2012 tax return 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. Amending 2012 tax return Travel for days you depart and return. Amending 2012 tax return   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). Amending 2012 tax return You can do so by one of two methods. Amending 2012 tax return Method 1: You can claim 3/4 of the standard meal allowance. Amending 2012 tax return Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Amending 2012 tax return Example. Amending 2012 tax return Jen is employed in New Orleans as a convention planner. Amending 2012 tax return In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Amending 2012 tax return She left her home in New Orleans at 10 a. Amending 2012 tax return m. Amending 2012 tax return on Wednesday and arrived in Washington, DC, at 5:30 p. Amending 2012 tax return m. Amending 2012 tax return After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Amending 2012 tax return m. Amending 2012 tax return Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Amending 2012 tax return 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. Amending 2012 tax return Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Amending 2012 tax return 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. Amending 2012 tax return Travel in the United States The following discussion applies to travel in the United States. Amending 2012 tax return For this purpose, the United States includes only the 50 states and the District of Columbia. Amending 2012 tax return 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. Amending 2012 tax return See Part of Trip Outside the United States , later. Amending 2012 tax return Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. Amending 2012 tax return 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 your business-related travel expenses. Amending 2012 tax return These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Amending 2012 tax return Example. Amending 2012 tax return You work in Atlanta and take a business trip to New Orleans in May. Amending 2012 tax return On your way home, you stop in Mobile to visit your parents. Amending 2012 tax return You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Amending 2012 tax return If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. Amending 2012 tax return You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. Amending 2012 tax return The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Amending 2012 tax return 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. Amending 2012 tax return However, you can deduct any expenses you have while at your destination that are directly related to your business. Amending 2012 tax return 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. Amending 2012 tax return 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. Amending 2012 tax return Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. Amending 2012 tax return For the part of your trip that is inside the United States, use the rules for travel in the United States. Amending 2012 tax return Travel outside the United States does not include travel from one point in the United States to another point in the United States. Amending 2012 tax return The following discussion can help you determine whether your trip was entirely within the United States. Amending 2012 tax return Public transportation. Amending 2012 tax return   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. Amending 2012 tax return 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 . Amending 2012 tax return Example. Amending 2012 tax return You fly from New York to Puerto Rico with a scheduled stop in Miami. Amending 2012 tax return You return to New York nonstop. Amending 2012 tax return 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. Amending 2012 tax return Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Amending 2012 tax return Private car. Amending 2012 tax return   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. Amending 2012 tax return Example. Amending 2012 tax return You travel by car from Denver to Mexico City and return. Amending 2012 tax return 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. Amending 2012 tax return The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Amending 2012 tax return 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. Amending 2012 tax return For this purpose, the United States includes only the 50 states and the District of Columbia. Amending 2012 tax return 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. Amending 2012 tax return See chapter 1 of Publication 463 for information on luxury water travel. Amending 2012 tax return 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. Amending 2012 tax return Travel entirely for business. Amending 2012 tax return   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Amending 2012 tax return Travel considered entirely for business. Amending 2012 tax return   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. Amending 2012 tax return Exception 1 - No substantial control. Amending 2012 tax return   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Amending 2012 tax return The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Amending 2012 tax return   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. Amending 2012 tax return    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . Amending 2012 tax return   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. Amending 2012 tax return    A self-employed person generally has substantial control over arranging business trips. Amending 2012 tax return Exception 2 - Outside United States no more than a week. Amending 2012 tax return   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Amending 2012 tax return One week means 7 consecutive days. Amending 2012 tax return 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. Amending 2012 tax return Exception 3 - Less than 25% of time on personal activities. Amending 2012 tax return   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. Amending 2012 tax return For this purpose, count both the day your trip began and the day it ended. Amending 2012 tax return Exception 4 - Vacation not a major consideration. Amending 2012 tax return   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. Amending 2012 tax return Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. Amending 2012 tax return You can only deduct the business portion of your cost of getting to and from your destination. Amending 2012 tax return You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. Amending 2012 tax return These travel allocation rules are discussed in chapter 1 of Publication 463. Amending 2012 tax return You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. Amending 2012 tax return In those cases, you can deduct the total cost of getting to and from your destination. Amending 2012 tax return 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. Amending 2012 tax return 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. Amending 2012 tax return Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Amending 2012 tax return You cannot deduct the travel expenses for your family. Amending 2012 tax return If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Amending 2012 tax return Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Amending 2012 tax return You can deduct your travel expenses only if your attendance is connected to your own trade or business. Amending 2012 tax return Convention agenda. Amending 2012 tax return   The convention agenda or program generally shows the purpose of the convention. Amending 2012 tax return 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. Amending 2012 tax return 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. Amending 2012 tax return Conventions held outside the North American area. Amending 2012 tax return    See chapter 1 of Publication 463 for information on conventions held outside the North American area. Amending 2012 tax return Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Amending 2012 tax return You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. Amending 2012 tax return Directly-related test. Amending 2012 tax return Associated test. Amending 2012 tax return Both of these tests are explained in chapter 2 of Publication 463. Amending 2012 tax return The amount you can deduct for entertainment expenses may be limited. Amending 2012 tax return Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Amending 2012 tax return This limit is discussed next. Amending 2012 tax return 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Amending 2012 tax return (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Amending 2012 tax return See Individuals subject to “hours of service” limits , later. Amending 2012 tax return ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Amending 2012 tax return Figure 26-A summarizes the general rules explained in this section. Amending 2012 tax return The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Amending 2012 tax return Included expenses. Amending 2012 tax return   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Amending 2012 tax return However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Amending 2012 tax return Application of 50% limit. Amending 2012 tax return   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. Amending 2012 tax return   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Amending 2012 tax return It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. Amending 2012 tax return It also applies to the cost of meals included in deductible educational expenses. Amending 2012 tax return When to apply the 50% limit. Amending 2012 tax return   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Amending 2012 tax return You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. Amending 2012 tax return Example 1. Amending 2012 tax return You spend $200 for a business-related meal. Amending 2012 tax return If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Amending 2012 tax return Your deduction cannot be more than $45 (. Amending 2012 tax return 50 × $90). Amending 2012 tax return Example 2. Amending 2012 tax return You purchase two tickets to a concert and give them to a client. Amending 2012 tax return You purchased the tickets through a ticket agent. Amending 2012 tax return You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Amending 2012 tax return Your deduction cannot be more than $80 (. Amending 2012 tax return 50 × $160). Amending 2012 tax return Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Amending 2012 tax return Figure 26-A can help you determine if the 50% limit applies to you. Amending 2012 tax return Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Amending 2012 tax return Employee's reimbursed expenses. Amending 2012 tax return   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Amending 2012 tax return Accountable plans are discussed later under Reimbursements . Amending 2012 tax return Individuals subject to “hours of service” limits. Amending 2012 tax return   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Amending 2012 tax return The percentage is 80%. Amending 2012 tax return   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Amending 2012 tax return Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Amending 2012 tax return Interstate truck operators and bus drivers who are under Department of Transportation regulations. Amending 2012 tax return Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Amending 2012 tax return Certain merchant mariners who are under Coast Guard regulations. Amending 2012 tax return Other exceptions. Amending 2012 tax return   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. Amending 2012 tax return These are discussed in Publication 463. Amending 2012 tax return Figure 26-A. Amending 2012 tax return Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Amending 2012 tax return See Exceptions to the 50% Limit . Amending 2012 tax return Please click here for the text description of the image. Amending 2012 tax return Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Amending 2012 tax return Entertainment. Amending 2012 tax return    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Amending 2012 tax return Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. Amending 2012 tax return A meal as a form of entertainment. Amending 2012 tax return   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Amending 2012 tax return A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Amending 2012 tax return To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Amending 2012 tax return You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Amending 2012 tax return Separating costs. Amending 2012 tax return   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Amending 2012 tax return You must have a reasonable basis for making this allocation. Amending 2012 tax return For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Amending 2012 tax return Taking turns paying for meals or entertainment. Amending 2012 tax return   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Amending 2012 tax return Lavish or extravagant expenses. Amending 2012 tax return   You cannot deduct expenses for entertainment that are lavish or extravagant. Amending 2012 tax return An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Amending 2012 tax return Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Amending 2012 tax return Trade association meetings. Amending 2012 tax return    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Amending 2012 tax return These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Amending 2012 tax return Entertainment tickets. Amending 2012 tax return   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Amending 2012 tax return For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Amending 2012 tax return What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Amending 2012 tax return Club dues and membership fees. Amending 2012 tax return   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Amending 2012 tax return This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. Amending 2012 tax return   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Amending 2012 tax return You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Amending 2012 tax return Entertainment facilities. Amending 2012 tax return   Generally, you cannot deduct any expense for the use of an entertainment facility. Amending 2012 tax return This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Amending 2012 tax return   An entertainment facility is any property you own, rent, or use for entertainment. Amending 2012 tax return Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Amending 2012 tax return Out-of-pocket expenses. Amending 2012 tax return   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Amending 2012 tax return These are not expenses for the use of an entertainment facility. Amending 2012 tax return However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. Amending 2012 tax return Additional information. Amending 2012 tax return   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. Amending 2012 tax return Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Amending 2012 tax return This section explains the limits and rules for deducting the costs of gifts. Amending 2012 tax return $25 limit. Amending 2012 tax return   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Amending 2012 tax return A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Amending 2012 tax return   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Amending 2012 tax return This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. Amending 2012 tax return   If you and your spouse both give gifts, both of you are treated as one taxpayer. Amending 2012 tax return It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Amending 2012 tax return If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Amending 2012 tax return Incidental costs. Amending 2012 tax return   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Amending 2012 tax return   A cost is incidental only if it does not add substantial value to the gift. Amending 2012 tax return For example, the cost of customary gift wrapping is an incidental cost. Amending 2012 tax return However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Amending 2012 tax return Exceptions. Amending 2012 tax return   The following items are not considered gifts for purposes of the $25 limit. Amending 2012 tax return An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Amending 2012 tax return Examples include pens, desk sets, and plastic bags and cases. Amending 2012 tax return Signs, display racks, or other promotional material to be used on the business premises of the recipient. Amending 2012 tax return Gift or entertainment. Amending 2012 tax return   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Amending 2012 tax return However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Amending 2012 tax return    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Amending 2012 tax return You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Amending 2012 tax return    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Amending 2012 tax return You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Amending 2012 tax return Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . Amending 2012 tax return These expenses include the cost of transportation by air, rail, bus, taxi, etc. Amending 2012 tax return , and the cost of driving and maintaining your car. Amending 2012 tax return Transportation expenses include the ordinary and necessary costs of all of the following. Amending 2012 tax return Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. Amending 2012 tax return (Tax home is defined earlier under Travel Expenses . Amending 2012 tax return ) Visiting clients or customers. Amending 2012 tax return Going to a business meeting away from your regular workplace. Amending 2012 tax return Getting from your home to a temporary workplace when you have one or more regular places of work. Amending 2012 tax return These temporary workplaces can be either within the area of your tax home or outside that area. Amending 2012 tax return Transportation expenses do not include expenses you have while traveling away from home overnight. Amending 2012 tax return Those expenses are travel expenses, discussed earlier. Amending 2012 tax return However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Amending 2012 tax return See Car Expenses , later. Amending 2012 tax return Illustration of transportation expenses. Amending 2012 tax return    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. Amending 2012 tax return You may want to refer to it when deciding whether you can deduct your transportation expenses. Amending 2012 tax return Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Amending 2012 tax return However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. Amending 2012 tax return Temporary work location. Amending 2012 tax return   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Amending 2012 tax return   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Amending 2012 tax return   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Amending 2012 tax return   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Amending 2012 tax return It will not be treated as temporary after the date you determine it will last more than 1 year. Amending 2012 tax return   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Amending 2012 tax return You may have deductible travel expenses as discussed earlier in this chapter. Amending 2012 tax return No regular place of work. Amending 2012 tax return   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Amending 2012 tax return   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Amending 2012 tax return   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Amending 2012 tax return These are nondeductible commuting expenses. Amending 2012 tax return Two places of work. Amending 2012 tax return   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Amending 2012 tax return However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Amending 2012 tax return   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Amending 2012 tax return You cannot deduct them. Amending 2012 tax return Armed Forces reservists. Amending 2012 tax return   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Amending 2012 tax return You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. Amending 2012 tax return   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Amending 2012 tax return In this case, your transportation generally is a nondeductible commuting expense. Amending 2012 tax return However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Amending 2012 tax return   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Amending 2012 tax return   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Amending 2012 tax return These expenses are discussed earlier under Travel Expenses . Amending 2012 tax return   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. Amending 2012 tax return See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. Amending 2012 tax return Commuting expenses. Amending 2012 tax return   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Amending 2012 tax return These costs are personal commuting expenses. Amending 2012 tax return You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Amending 2012 tax return You cannot deduct commuting expenses even if you work during the commuting trip. Amending 2012 tax return Example. Amending 2012 tax return You sometimes use your cell phone to make business calls while commuting to and from work. Amending 2012 tax return Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Amending 2012 tax return These activities do not change the trip from personal to business. Amending 2012 tax return You cannot deduct your commuting expenses. Amending 2012 tax return Parking fees. Amending 2012 tax return   Fees you pay to park your car at your place of business are nondeductible commuting expenses. Amending 2012 tax return You can, however, deduct business-related parking fees when visiting a customer or client. Amending 2012 tax return Advertising display on car. Amending 2012 tax return   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Amending 2012 tax return If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Amending 2012 tax return Car pools. Amending 2012 tax return   You cannot deduct the cost of using your car in a nonprofit car pool. Amending 2012 tax return Do not include payments you receive from the passengers in your income. Amending 2012 tax return These payments are considered reimbursements of your expenses. Amending 2012 tax return However, if you operate a car pool for a profit, you must include payments from passengers in your income. Amending 2012 tax return You can then deduct your car expenses (using the rules in this chapter). Amending 2012 tax return Hauling tools or instruments. Amending 2012 tax return   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Amending 2012 tax return However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Amending 2012 tax return Union members' trips from a union hall. Amending 2012 tax return   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Amending 2012 tax return Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Amending 2012 tax return Office in the home. Amending 2012 tax return   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Amending 2012 tax return (See chapter 28 for information on determining if your home office qualifies as a principal place of business. Amending 2012 tax return ) Figure 26-B. Amending 2012 tax return When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Amending 2012 tax return (Do not use this chart if your home is your principal place of business. Amending 2012 tax return See Office in the home . Amending 2012 tax return ) Please click here for the text description of the image. Amending 2012 tax return Figure 26-B. Amending 2012 tax return Local Transportation Examples of deductible transportation. Amending 2012 tax return   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Amending 2012 tax return Example 1. Amending 2012 tax return You regularly work in an office in the city where you live. Amending 2012 tax return Your employer sends you to a 1-week training session at a different office in the same city. Amending 2012 tax return You travel directly from your home to the training location and return each day. Amending 2012 tax return You can deduct the cost of your daily round-trip transportation between your home and the training location. Amending 2012 tax return Example 2. Amending 2012 tax return Your principal place of business is in your home. Amending 2012 tax return You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Amending 2012 tax return Example 3. Amending 2012 tax return You have no regular office, and you do not have an office in your home. Amending 2012 tax return In this case, the location of your first business contact inside the metropolitan area is considered your office. Amending 2012 tax return Transportation expenses between your home and this first contact are nondeductible commuting expenses. Amending 2012 tax return Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Amending 2012 tax return While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. Amending 2012 tax return With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. Amending 2012 tax return Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. Amending 2012 tax return You generally can use one of the two following methods to figure your deductible expenses. Amending 2012 tax return Standard mileage rate. Amending 2012 tax return Actual car expenses. Amending 2012 tax return If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Amending 2012 tax return See Leasing a car under Actual Car Expenses, later. Amending 2012 tax return In this chapter, “car” includes a van, pickup, or panel truck. Amending 2012 tax return Rural mail carriers. Amending 2012 tax return   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Amending 2012 tax return Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. Amending 2012 tax return   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Amending 2012 tax return You must complete Form 2106 and attach it to your Form 1040. Amending 2012 tax return   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Amending 2012 tax return It is given as an equipment maintenance allowance (EMA) to employees of the U. Amending 2012 tax return S. Amending 2012 tax return Postal Service. Amending 2012 tax return It is at the rate contained in the 1991 collective bargaining agreement. Amending 2012 tax return Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Amending 2012 tax return See your employer for information on your reimbursement. Amending 2012 tax return If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Amending 2012 tax return Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Amending 2012 tax return For 2013, the standard mileage rate for business use is 56½ cents per mile. Amending 2012 tax return If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. Amending 2012 tax return You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Amending 2012 tax return See Reimbursements under How To Report, later. Amending 2012 tax return Choosing the standard mileage rate. Amending 2012 tax return   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Amending 2012 tax return Then in later years, you can choose to use either the standard mileage rate or actual expenses. Amending 2012 tax return   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Amending 2012 tax return   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Amending 2012 tax return You cannot revoke the choice. Amending 2012 tax return However, in a later year, you can switch from the standard mileage rate to the actual expenses method. Amending 2012 tax return If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Amending 2012 tax return Example. Amending 2012 tax return Larry is an employee who occasionally uses his own car for business purposes. Amending 2012 tax return He purchased the car in 2011, but he did not claim any unreimburse