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

Filing 2011 Tax Returns Free

Turbotax 1040xFree Online State Tax FilingEfile Online For Free Today2012 Tax Forms 1040 EzAmendment 1040xFree Tax FileBack Tax FilingFree 1040ez 2013Irs 2012 Tax Forms1040ez Fillable FormIrs Form 1040vNeed Print 1040x FormAarp Tax PreparationTax Forms For 2009Compare Tax SoftwareFree Taxact 2011Complete Tax Free FileWhere Can You File Your State Taxes For FreeFile State Income Tax FreeInstructions For Form 1040ezHow Long Does An Amended Tax Return TakeFree State Income Tax FormsAmended Tax ReturnsFiling 1040x Electronically1040ez Printable Tax FormsFreetax ComDownload A 1040ez Federal Tax Form1040 Ez 2011 Form1040ez Irs GovCan A Tax Return Be AmendedTax AdmendmentFilelate Com1040 Form 2012How Do I File My 2011 Tax ReturnIrs Estimated Tax Forms 2011File 2009 TaxesCan You File 1040x OnlineAmendment TaxesHow To File 2012 Tax Return In 20141040x Form 2012

Filing 2011 Tax Returns Free

Filing 2011 tax returns free 34. Filing 2011 tax returns free   Child Tax Credit Table of Contents Introduction Useful Items - You may want to see: Qualifying Child Amount of CreditLimits on the Credit Claiming the Credit Additional Child Tax Credit Completing Schedule 8812 (Form 1040A or 1040)Part I Parts II–IV Introduction The child tax credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. Filing 2011 tax returns free The additional child tax credit is a credit you may be able to take if you are not able to claim the full amount of the child tax credit. Filing 2011 tax returns free This chapter explains the following. Filing 2011 tax returns free Who is a qualifying child. Filing 2011 tax returns free The amount of the credit. Filing 2011 tax returns free How to claim the credit. Filing 2011 tax returns free The child tax credit and the additional child tax credit should not be confused with the child and dependent care credit discussed in chapter 32. Filing 2011 tax returns free If you have no tax. Filing 2011 tax returns free   Credits, such as the child tax credit or the credit for child and dependent care expenses, are used to reduce tax. Filing 2011 tax returns free If your tax on Form 1040, line 46, or Form 1040A, line 28, is zero, do not figure the child tax credit because there is no tax to reduce. Filing 2011 tax returns free However, you may qualify for the additional child tax credit on line 65 (Form 1040) or line 39 (Form 1040A). Filing 2011 tax returns free Useful Items - You may want to see: Publication 972 Child Tax Credit Form (and Instructions) Schedule 8812 (Form 1040A or 1040) Child Tax Credit W-4 Employee's Withholding Allowance Certificate Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you , later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. Filing 2011 tax returns free S. Filing 2011 tax returns free citizen, a U. Filing 2011 tax returns free S. Filing 2011 tax returns free national, or a resident of the United States. Filing 2011 tax returns free If the child was adopted, see Adopted child , later. Filing 2011 tax returns free For each qualifying child you must check the box on Form 1040 or Form 1040A, line 6c. Filing 2011 tax returns free Example 1. Filing 2011 tax returns free Your son turned 17 on December 30, 2013. Filing 2011 tax returns free He is a citizen of the United States and you claimed him as a dependent on your return. Filing 2011 tax returns free He is not a qualifying child for the child tax credit because he was not under age 17 at the end of 2013. Filing 2011 tax returns free Example 2. Filing 2011 tax returns free Your daughter turned 8 years old in 2013. Filing 2011 tax returns free She is not a citizen of the United States, has an ITIN, and lived in Mexico all of 2013. Filing 2011 tax returns free She is not a qualifying child for the child tax credit because she was not a resident of the United States for 2013. Filing 2011 tax returns free Filers who have certain child dependents with an Individual Taxpayer Identification Number (ITIN). Filing 2011 tax returns free   If you are claiming a child tax credit or additional child tax credit for a child you identified on your tax return with an ITIN instead of an SSN, you must complete Part I of Schedule 8812 (Form 1040A or 1040). Filing 2011 tax returns free   Although a child may be your dependent, you may only claim a child tax credit or additional child tax credit for a dependent who is a citizen, national, or resident of the United States. Filing 2011 tax returns free To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. Filing 2011 tax returns free For more information about the substantial presence test, see Publication 519, U. Filing 2011 tax returns free S. Filing 2011 tax returns free Tax Guide for Aliens. Filing 2011 tax returns free Adopted child. Filing 2011 tax returns free   An adopted child is always treated as your own child. Filing 2011 tax returns free An adopted child includes a child lawfully placed with you for legal adoption. Filing 2011 tax returns free   If you are a U. Filing 2011 tax returns free S. Filing 2011 tax returns free citizen or U. Filing 2011 tax returns free S. Filing 2011 tax returns free national and your adopted child lived with you all year as a member of your household in 2013, that child meets condition (7) above to be a qualifying child for the child tax credit. Filing 2011 tax returns free Exceptions to time lived with you. Filing 2011 tax returns free   A child is considered to have lived with you for more than half of 2013 if the child was born or died in 2013 and your home was this child's home for more than half the time he or she was alive. Filing 2011 tax returns free Temporary absences by you or the child for special circumstances, such as for school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. Filing 2011 tax returns free   There are also exceptions for kidnapped children and children of divorced or separated parents. Filing 2011 tax returns free For details, see Residency Test in chapter 3. Filing 2011 tax returns free Qualifying child of more than one person. Filing 2011 tax returns free   A special rule applies if your qualifying child is the qualifying child of more than one person. Filing 2011 tax returns free For details, see Special Rule for Qualifying Child of More Than One Person in chapter 3. Filing 2011 tax returns free Amount of Credit The maximum amount you can claim for the credit is $1,000 for each qualifying child. Filing 2011 tax returns free Limits on the Credit You must reduce your child tax credit if either (1) or (2) applies. Filing 2011 tax returns free The amount on Form 1040, line 46, or Form 1040A, line 28, is less than the credit. Filing 2011 tax returns free If this amount is zero, you cannot take this credit because there is no tax to reduce. Filing 2011 tax returns free But you may be able to take the additional child tax credit. Filing 2011 tax returns free See Additional Child Tax Credit , later. Filing 2011 tax returns free Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. Filing 2011 tax returns free Married filing jointly - $110,000. Filing 2011 tax returns free Single, head of household, or qualifying widow(er) - $75,000. Filing 2011 tax returns free Married filing separately - $55,000. Filing 2011 tax returns free Modified AGI. Filing 2011 tax returns free   For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you. Filing 2011 tax returns free Any amount excluded from income because of the exclusion of income from  Puerto Rico. Filing 2011 tax returns free On the dotted line next to Form 1040, line 38, enter the amount excluded and identify it as “EPRI. Filing 2011 tax returns free ” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. Filing 2011 tax returns free Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. Filing 2011 tax returns free Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. Filing 2011 tax returns free Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. Filing 2011 tax returns free   If you do not have any of the above, your modified AGI is the same as your AGI. Filing 2011 tax returns free AGI. Filing 2011 tax returns free   Your AGI is the amount on Form 1040, line 38, or Form 1040A, line 22. Filing 2011 tax returns free Claiming the Credit To claim the child tax credit, you must file Form 1040 or Form 1040A. Filing 2011 tax returns free You cannot claim the child tax credit on Form 1040EZ. Filing 2011 tax returns free You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child. Filing 2011 tax returns free If you claim the child tax credit with a child identified by an ITIN, you must also file Schedule 8812. Filing 2011 tax returns free To figure your credit, first review the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions. Filing 2011 tax returns free If you are instructed to use Publication 972, you may not use the worksheet in your tax return instructions; instead, you must use Publication 972 to figure the credit. Filing 2011 tax returns free If you are not instructed to use Publication 972, you may use the Child Tax Credit Worksheet in your Form 1040 or 1040A instructions or Publication 972 to figure the credit. Filing 2011 tax returns free Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. Filing 2011 tax returns free The additional child tax credit may give you a refund even if you do not owe any tax. Filing 2011 tax returns free How to claim the additional child tax credit. Filing 2011 tax returns free   To claim the additional child tax credit, follow the steps below. Filing 2011 tax returns free Make sure you figured the amount, if any, of your child tax credit. Filing 2011 tax returns free See Claiming the Credit , earlier. Filing 2011 tax returns free If you answered “Yes” on line 9 or line 10 of the Child Tax Credit Worksheet in the Form 1040 or Form 1040A instructions, or line 13 of the Child Tax Credit Worksheet in Publication 972, use Parts II through IV of Schedule 8812 to see if you can take the additional child tax credit. Filing 2011 tax returns free If you have an additional child tax credit on line 13 of Schedule 8812, carry it to Form 1040, line 65, or Form 1040A, line 39. Filing 2011 tax returns free Completing Schedule 8812 (Form 1040A or 1040) Schedule 8812 contains four parts, but can really be thought of as two sections. Filing 2011 tax returns free Part I is distinct and separate from Parts II–IV. Filing 2011 tax returns free If all your children are identified by social security numbers or IRS adoption taxpayer identification numbers and you are not claiming the additional child tax credit, you do not need to complete or attach Schedule 8812 to your tax return. Filing 2011 tax returns free Part I You only need to complete Part I if you are claiming the child tax credit for a child identified by an IRS individual taxpayer identification number (ITIN). Filing 2011 tax returns free When completing Part I, only answer the questions with regard to children identified by an ITIN; you do not need to complete Part I of Schedule 8812 for any child that is identified by a social security number (SSN) or an IRS adoption taxpayer identification number (ATIN). Filing 2011 tax returns free If all the children for whom you checked the box in column 4 of line 6c on your Form 1040 or Form 1040A are identified by an SSN or an ATIN, you do not need to complete Part I of Schedule 8812. Filing 2011 tax returns free Parts II–IV Parts II–IV help you figure your additional child tax credit. Filing 2011 tax returns free Generally, you should only complete Parts II–IV if you are instructed to do so after completing the Child Tax Credit Worksheet in your tax return instructions or Publication 972. Filing 2011 tax returns free See How to claim the additional child tax credit , earlier. Filing 2011 tax returns free Prev  Up  Next   Home   More Online Publications
Español

  • Avoid Jury Notices Rigged to Get Your ID
    There has been a resurgence of the 'jury duty scam,' first revealed by Scam Alert in May 2006. As in other telephone scams, the jury duty ruse can appear authentic because your caller ID screen may indicate that the call is coming from a local courthouse.
  • BBB Warns of Phishing Email Received from Epsilon Data Breach
    Just days after millions of customers' email addresses were stolen in one of the largest data breaches in U.S. history, the Better Business Bureau is seeing one of the first Epsilon data breach phishing scams. If you are a customer of one of the companies that had email data stolen, BBB is warning you to be on the lookout for phishing emails.
  • Digital Copier Identity Theft
    Did you know that digital copiers store what you've copied on a hard drive that if not wiped clean, can be retrieved when that copier is re-sold or junked after it is no longer useful to the company? It is scary to think about how much personal and company data could be on your organization's copier hard drive. Fortunately, there are some ways you can try to protect that information.
  • Fraudsters Claim a Red Cross Connection in New Phishing Scam
    The Federal Trade Commission is warning consumers about a scam targeting families of military members. A caller, claiming to work for the Red Cross, notifies an individual that their family member has been injured while on duty. To get immediate aid to the injured service member, the caller says, paperwork must be completed, and personal information must be verified.
  • FTC Cautions Consumers About Voter Registration Scams
    Have you received an unsolicited e-mail or phone call from someone who claims to represent your local election board or civic group and asks for your Social Security or credit card number to confirm your eligibility or registration to vote? According to the Federal Trade Commission scammers may send messages asking for your Social Security number or financial information supposedly to register you to vote -- or to confirm your registration -- when they really want to commit identity theft.
  • FTC Issues Alert about Identity Theft Scam -- Spammers Pose as Federal Government Operation
    A new Spam Scam Alert from the Federal Trade Commission could help consumers avoid becoming identity theft victims. The Alert, Someone Is Phishing For Your Information, warns that consumers may receive e-mails that claim to be from regulations.gov, a government Web site where consumers can comment on federal rule-making. The e-mails' subject lines typically read, "Official information," information.
  • OnGuardOnline.gov Urges Taxpayers to Contact the IRS If They Suspect Tax-Related Identity Theft
    OnGuardOnline.gov is informing consumers that an unexpected message from the Internal Revenue Service (IRS) could be a warning sign that their Social Security number is being misused by an identity thief.
  • Tips to Avoid Being Scammed This Holiday Season
    As the holidays approach, the FBI reminds the public to use caution when making online purchases. Cyber criminals continue to create ways to steal your money and personal information. If a deal looks too good to be true, it likely is. Here are some tips you can use to avoid becoming a victim of cyber fraud.

The Filing 2011 Tax Returns Free

Filing 2011 tax returns free 8. Filing 2011 tax returns free   Business Expenses Table of Contents Introduction Useful Items - You may want to see: Bad DebtsAccrual method. Filing 2011 tax returns free Cash method. Filing 2011 tax returns free Car and Truck ExpensesOffice in the home. Filing 2011 tax returns free Methods for Deducting Car and Truck Expenses Reimbursing Your Employees for Expenses Depreciation Employees' PayFringe benefits. Filing 2011 tax returns free InsuranceHow to figure the deduction. Filing 2011 tax returns free Interest Legal and Professional FeesTax preparation fees. Filing 2011 tax returns free Pension Plans Rent Expense Taxes Travel, Meals, and EntertainmentTransportation. Filing 2011 tax returns free Taxi, commuter bus, and limousine. Filing 2011 tax returns free Baggage and shipping. Filing 2011 tax returns free Car or truck. Filing 2011 tax returns free Meals and lodging. Filing 2011 tax returns free Cleaning. Filing 2011 tax returns free Telephone. Filing 2011 tax returns free Tips. Filing 2011 tax returns free More information. Filing 2011 tax returns free Business Use of Your HomeExceptions to exclusive use. Filing 2011 tax returns free Other Expenses You Can Deduct Expenses You Cannot Deduct Introduction You can deduct the costs of operating your business. Filing 2011 tax returns free These costs are known as business expenses. Filing 2011 tax returns free These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year. Filing 2011 tax returns free To be deductible, a business expense must be both ordinary and necessary. Filing 2011 tax returns free An ordinary expense is one that is common and accepted in your field of business. Filing 2011 tax returns free A necessary expense is one that is helpful and appropriate for your business. Filing 2011 tax returns free An expense does not have to be indispensable to be considered necessary. Filing 2011 tax returns free For more information about the general rules for deducting business expenses, see chapter 1 in Publication 535, Business Expenses. Filing 2011 tax returns free If you have an expense that is partly for business and partly personal, separate the personal part from the business part. Filing 2011 tax returns free The personal part is not deductible. Filing 2011 tax returns free Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 946 How To Depreciate Property See chapter 12 for information about getting publications and forms. Filing 2011 tax returns free Bad Debts If someone owes you money you cannot collect, you have a bad debt. Filing 2011 tax returns free There are two kinds of bad debts, business bad debts and nonbusiness bad debts. Filing 2011 tax returns free A business bad debt is generally one that comes from operating your trade or business. Filing 2011 tax returns free You may be able to deduct business bad debts as an expense on your business tax return. Filing 2011 tax returns free Business bad debt. Filing 2011 tax returns free   A business bad debt is a loss from the worthlessness of a debt that was either of the following. Filing 2011 tax returns free Created or acquired in your business. Filing 2011 tax returns free Closely related to your business when it became partly or totally worthless. Filing 2011 tax returns free A debt is closely related to your business if your primary motive for incurring the debt is a business reason. Filing 2011 tax returns free   Business bad debts are mainly the result of credit sales to customers. Filing 2011 tax returns free They can also be the result of loans to suppliers, clients, employees, or distributors. Filing 2011 tax returns free Goods and services customers have not paid for are shown in your books as either accounts receivable or notes receivable. Filing 2011 tax returns free If you are unable to collect any part of these accounts or notes receivable, the uncollectible part is a business bad debt. Filing 2011 tax returns free    You can take a bad debt deduction for these accounts and notes receivable only if the amount you were owed was included in your gross income either for the year the deduction is claimed or for a prior year. Filing 2011 tax returns free Accrual method. Filing 2011 tax returns free   If you use an accrual method of accounting, you normally report income as you earn it. Filing 2011 tax returns free You can take a bad debt deduction for an uncollectible receivable if you have included the uncollectible amount in income. Filing 2011 tax returns free Cash method. Filing 2011 tax returns free   If you use the cash method of accounting, you normally report income when you receive payment. Filing 2011 tax returns free You cannot take a bad debt deduction for amounts owed to you that you have not received and cannot collect if you never included those amounts in income. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about business bad debts, see chapter 10 in Publication 535. Filing 2011 tax returns free Nonbusiness bad debts. Filing 2011 tax returns free   All other bad debts are nonbusiness bad debts and are deductible as short-term capital losses on Form 8949 and Schedule D (Form 1040). Filing 2011 tax returns free For more information on nonbusiness bad debts, see Publication 550, Investment Income and Expenses. Filing 2011 tax returns free Car and Truck Expenses If you use your car or truck in your business, you may be able to deduct the costs of operating and maintaining your vehicle. Filing 2011 tax returns free You also may be able to deduct other costs of local transportation and traveling away from home overnight on business. Filing 2011 tax returns free You may qualify for a tax credit for qualified plug-in electric vehicles, qualified plug-in electric drive motor vehicles, and alternative motor vehicles you place in service during the year. Filing 2011 tax returns free See Form 8936 and Form 8910 for more information. Filing 2011 tax returns free Local transportation expenses. Filing 2011 tax returns free   Local transportation expenses include the ordinary and necessary costs of all the following. Filing 2011 tax returns free Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Filing 2011 tax returns free Tax home is defined later. Filing 2011 tax returns free Visiting clients or customers. Filing 2011 tax returns free Going to a business meeting away from your regular workplace. Filing 2011 tax returns free Getting from your home to a temporary workplace when you have one or more regular places of work. Filing 2011 tax returns free These temporary workplaces can be either within the area of your tax home or outside that area. Filing 2011 tax returns free Local business transportation does not include expenses you have while traveling away from home overnight. Filing 2011 tax returns free Those expenses are deductible as travel expenses and are discussed later under Travel, Meals, and Entertainment. Filing 2011 tax returns free However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Filing 2011 tax returns free   Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Filing 2011 tax returns free It includes the entire city or general area in which your business or work is located. Filing 2011 tax returns free Example. Filing 2011 tax returns free You operate a printing business out of rented office space. Filing 2011 tax returns free You use your van to deliver completed jobs to your customers. Filing 2011 tax returns free You can deduct the cost of round-trip transportation between your customers and your print shop. Filing 2011 tax returns free    You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. Filing 2011 tax returns free These costs are personal commuting expenses. Filing 2011 tax returns free Office in the home. Filing 2011 tax returns free   Your workplace can be your home if you have an office in your home that qualifies as your principal place of business. Filing 2011 tax returns free For more information, see Business Use of Your Home, later. Filing 2011 tax returns free Example. Filing 2011 tax returns free You are a graphics designer. Filing 2011 tax returns free You operate your business out of your home. Filing 2011 tax returns free Your home qualifies as your principal place of business. Filing 2011 tax returns free You occasionally have to drive to your clients to deliver your completed work. Filing 2011 tax returns free You can deduct the cost of the round-trip transportation between your home and your clients. Filing 2011 tax returns free Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. Filing 2011 tax returns free Standard mileage rate. Filing 2011 tax returns free Actual expenses. Filing 2011 tax returns free Standard mileage rate. Filing 2011 tax returns free   You may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Filing 2011 tax returns free For 2013, the standard mileage rate is 56. Filing 2011 tax returns free 5 cents per mile. Filing 2011 tax returns free    If you choose to use the standard mileage rate for a year, you cannot deduct your actual expenses for that year except for business-related parking fees and tolls. Filing 2011 tax returns free Choosing the standard mileage rate. Filing 2011 tax returns free   If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. Filing 2011 tax returns free In later years, you can choose to use either the standard mileage rate or actual expenses. Filing 2011 tax returns free   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Filing 2011 tax returns free Standard mileage rate not allowed. Filing 2011 tax returns free   You cannot use the standard mileage rate if you: Operate five or more cars at the same time, Claimed a depreciation deduction using any method other than straight line, for example, ACRS or MACRS, Claimed a section 179 deduction on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Filing 2011 tax returns free Parking fees and tolls. Filing 2011 tax returns free   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Filing 2011 tax returns free (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Filing 2011 tax returns free ) Actual expenses. Filing 2011 tax returns free   If you do not choose to use the standard mileage rate, you may be able to deduct your actual car or truck expenses. Filing 2011 tax returns free    If you qualify to use both methods, figure your deduction both ways to see which gives you a larger deduction. Filing 2011 tax returns free   Actual car expenses include the costs of the following items. Filing 2011 tax returns free Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Filing 2011 tax returns free You can divide your expenses based on the miles driven for each purpose. Filing 2011 tax returns free Example. Filing 2011 tax returns free You are the sole proprietor of a flower shop. Filing 2011 tax returns free You drove your van 20,000 miles during the year. Filing 2011 tax returns free 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use (including commuting miles). Filing 2011 tax returns free You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about the rules for claiming car and truck expenses, see Publication 463. Filing 2011 tax returns free Reimbursing Your Employees for Expenses You generally can deduct the amount you reimburse your employees for car and truck expenses. Filing 2011 tax returns free The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Filing 2011 tax returns free For details, see chapter 11 in Publication 535. Filing 2011 tax returns free That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Filing 2011 tax returns free Depreciation If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Filing 2011 tax returns free You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. Filing 2011 tax returns free This method of deducting the cost of business property is called depreciation. Filing 2011 tax returns free The discussion here is brief. Filing 2011 tax returns free You will find more information about depreciation in Publication 946. Filing 2011 tax returns free What property can be depreciated?   You can depreciate property if it meets all the following requirements. Filing 2011 tax returns free It must be property you own. Filing 2011 tax returns free It must be used in business or held to produce income. Filing 2011 tax returns free You never can depreciate inventory (explained in chapter 2) because it is not held for use in your business. Filing 2011 tax returns free It must have a useful life that extends substantially beyond the year it is placed in service. Filing 2011 tax returns free It must have a determinable useful life, which means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Filing 2011 tax returns free You never can depreciate the cost of land because land does not wear out, become obsolete, or get used up. Filing 2011 tax returns free It must not be excepted property. Filing 2011 tax returns free This includes property placed in service and disposed of in the same year. Filing 2011 tax returns free Repairs. Filing 2011 tax returns free    You cannot depreciate repairs and replacements that do not increase the value of your property, make it more useful, or lengthen its useful life. Filing 2011 tax returns free You can deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. Filing 2011 tax returns free Depreciation method. Filing 2011 tax returns free   The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). Filing 2011 tax returns free MACRS is discussed in detail in Publication 946. Filing 2011 tax returns free Section 179 deduction. Filing 2011 tax returns free   You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Filing 2011 tax returns free This deduction is known as the “section 179 deduction. Filing 2011 tax returns free ” The maximum amount you can elect to deduct during 2013 is generally $500,000 (higher limits apply to certain property). Filing 2011 tax returns free See IRC 179(e). Filing 2011 tax returns free   This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Filing 2011 tax returns free The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2013 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2013). Filing 2011 tax returns free Special rules apply to trucks and vans. Filing 2011 tax returns free For more information, see Publication 946. Filing 2011 tax returns free It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction. Filing 2011 tax returns free    Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. Filing 2011 tax returns free For more information, see the Instructions for Form 4562 or Publication 946. Filing 2011 tax returns free Listed property. Filing 2011 tax returns free   You must follow special rules and recordkeeping requirements when depreciating listed property. Filing 2011 tax returns free Listed property is any of the following. Filing 2011 tax returns free Most passenger automobiles. Filing 2011 tax returns free Most other property used for transportation. Filing 2011 tax returns free Any property of a type generally used for entertainment, recreation, or amusement. Filing 2011 tax returns free Certain computers and related peripheral equipment. Filing 2011 tax returns free   For more information about listed property, see Publication 946. Filing 2011 tax returns free Form 4562. Filing 2011 tax returns free   Use Form 4562, Depreciation and Amortization, if you are claiming any of the following. Filing 2011 tax returns free Depreciation on property placed in service during the current tax year. Filing 2011 tax returns free A section 179 deduction. Filing 2011 tax returns free Depreciation on any listed property (regardless of when it was placed in service). Filing 2011 tax returns free    If you have to use Form 4562, you must file Schedule C. Filing 2011 tax returns free You cannot use Schedule C-EZ. Filing 2011 tax returns free   Employees' Pay You can generally deduct on Schedule C the pay you give your employees for the services they perform for your business. Filing 2011 tax returns free The pay may be in cash, property, or services. Filing 2011 tax returns free To be deductible, your employees' pay must be an ordinary and necessary expense and you must pay or incur it in the tax year. Filing 2011 tax returns free In addition, the pay must meet both the following tests. Filing 2011 tax returns free The pay must be reasonable. Filing 2011 tax returns free The pay must be for services performed. Filing 2011 tax returns free Chapter 2 in Publication 535 explains and defines these requirements. Filing 2011 tax returns free You cannot deduct your own salary or any personal withdrawals you make from your business. Filing 2011 tax returns free As a sole proprietor, you are not an employee of the business. Filing 2011 tax returns free If you had employees during the year, you must use Schedule C. Filing 2011 tax returns free You cannot use Schedule C-EZ. Filing 2011 tax returns free Kinds of pay. Filing 2011 tax returns free   Some of the ways you may provide pay to your employees are listed below. Filing 2011 tax returns free For an explanation of each of these items, see chapter 2 in Publication 535. Filing 2011 tax returns free Awards. Filing 2011 tax returns free Bonuses. Filing 2011 tax returns free Education expenses. Filing 2011 tax returns free Fringe benefits (discussed later). Filing 2011 tax returns free Loans or advances you do not expect the employee to repay if they are for personal services actually performed. Filing 2011 tax returns free Property you transfer to an employee as payment for services. Filing 2011 tax returns free Reimbursements for employee business expenses. Filing 2011 tax returns free Sick pay. Filing 2011 tax returns free Vacation pay. Filing 2011 tax returns free Fringe benefits. Filing 2011 tax returns free   A fringe benefit is a form of pay for the performance of services. Filing 2011 tax returns free The following are examples of fringe benefits. Filing 2011 tax returns free Benefits under qualified employee benefit programs. Filing 2011 tax returns free Meals and lodging. Filing 2011 tax returns free The use of a car. Filing 2011 tax returns free Flights on airplanes. Filing 2011 tax returns free Discounts on property or services. Filing 2011 tax returns free Memberships in country clubs or other social clubs. Filing 2011 tax returns free Tickets to entertainment or sporting events. Filing 2011 tax returns free   Employee benefit programs include the following. Filing 2011 tax returns free Accident and health plans. Filing 2011 tax returns free Adoption assistance. Filing 2011 tax returns free Cafeteria plans. Filing 2011 tax returns free Dependent care assistance. Filing 2011 tax returns free Educational assistance. Filing 2011 tax returns free Group-term life insurance coverage. Filing 2011 tax returns free Welfare benefit funds. Filing 2011 tax returns free   You can generally deduct the cost of fringe benefits you provide on your Schedule C in whatever category the cost falls. Filing 2011 tax returns free For example, if you allow an employee to use a car or other property you lease, deduct the cost of the lease as a rent or lease expense. Filing 2011 tax returns free If you own the property, include your deduction for its cost or other basis as a section 179 deduction or a depreciation deduction. Filing 2011 tax returns free    You may be able to exclude all or part of the fringe benefits you provide from your employees' wages. Filing 2011 tax returns free For more information about fringe benefits and the exclusion of benefits, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Filing 2011 tax returns free Insurance You can generally deduct premiums you pay for the following kinds of insurance related to your business. Filing 2011 tax returns free Fire, theft, flood, or similar insurance. Filing 2011 tax returns free Credit insurance that covers losses from business bad debts. Filing 2011 tax returns free Group hospitalization and medical insurance for employees, including long-term care insurance. Filing 2011 tax returns free Liability insurance. Filing 2011 tax returns free Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Filing 2011 tax returns free Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Filing 2011 tax returns free Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Filing 2011 tax returns free Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Filing 2011 tax returns free Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Filing 2011 tax returns free If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Filing 2011 tax returns free If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Filing 2011 tax returns free Life insurance covering your employees if you are not directly or indirectly the beneficiary under the contract. Filing 2011 tax returns free Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Filing 2011 tax returns free Nondeductible premiums. Filing 2011 tax returns free   You cannot deduct premiums on the following kinds of insurance. Filing 2011 tax returns free Self-insurance reserve funds. Filing 2011 tax returns free You cannot deduct amounts credited to a reserve set up for self-insurance. Filing 2011 tax returns free This applies even if you cannot get business insurance coverage for certain business risks. Filing 2011 tax returns free However, your actual losses may be deductible. Filing 2011 tax returns free For more information, see Publication 547, Casualties, Disasters, and Thefts. Filing 2011 tax returns free Loss of earnings. Filing 2011 tax returns free You cannot deduct premiums for a policy that pays for your lost earnings due to sickness or disability. Filing 2011 tax returns free However, see item (8) in the previous list. Filing 2011 tax returns free Certain life insurance and annuities. Filing 2011 tax returns free For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Filing 2011 tax returns free You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Filing 2011 tax returns free A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Filing 2011 tax returns free For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Filing 2011 tax returns free The disallowance applies without regard to whom the policy covers. Filing 2011 tax returns free Insurance to secure a loan. Filing 2011 tax returns free If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Filing 2011 tax returns free Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Filing 2011 tax returns free In the event of death, the proceeds of the policy are not taxed as income even if they are used to liquidate the debt. Filing 2011 tax returns free Self-employed health insurance deduction. Filing 2011 tax returns free   You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for you and your family. Filing 2011 tax returns free How to figure the deduction. Filing 2011 tax returns free   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Filing 2011 tax returns free However, if any of the following apply, you must use the worksheet in chapter 6 of Publication 535. Filing 2011 tax returns free You have more than one source of income subject to self-employment tax. Filing 2011 tax returns free You file Form 2555 or Form 2555-EZ (relating to foreign earned income). Filing 2011 tax returns free You are using amounts paid for qualified long-term care insurance to figure the deduction. Filing 2011 tax returns free Prepayment. Filing 2011 tax returns free   You cannot deduct expenses in advance, even if you pay them in advance. Filing 2011 tax returns free This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Filing 2011 tax returns free Example. Filing 2011 tax returns free In 2013, you signed a 3-year insurance contract. Filing 2011 tax returns free Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Filing 2011 tax returns free You can deduct in 2014 and 2015 the premium allocable to those years. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about deducting insurance, see chapter 6 in Publication 535. Filing 2011 tax returns free Interest You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your business. Filing 2011 tax returns free Interest relates to your business if you use the proceeds of the loan for a business expense. Filing 2011 tax returns free It does not matter what type of property secures the loan. Filing 2011 tax returns free You can deduct interest on a debt only if you meet all of the following requirements. Filing 2011 tax returns free You are legally liable for that debt. Filing 2011 tax returns free Both you and the lender intend that the debt be repaid. Filing 2011 tax returns free You and the lender have a true debtor-creditor relationship. Filing 2011 tax returns free You cannot deduct on Schedule C or C-EZ the interest you paid on personal loans. Filing 2011 tax returns free If a loan is part business and part personal, you must divide the interest between the personal part and the business part. Filing 2011 tax returns free Example. Filing 2011 tax returns free In 2013, you paid $600 interest on a car loan. Filing 2011 tax returns free During 2013, you used the car 60% for business and 40% for personal purposes. Filing 2011 tax returns free You are claiming actual expenses on the car. Filing 2011 tax returns free You can only deduct $360 (60% × $600) for 2013 on Schedule C or C-EZ. Filing 2011 tax returns free The remaining interest of $240 is a nondeductible personal expense. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about deducting interest, see chapter 4 in Publication 535. Filing 2011 tax returns free That chapter explains the following items. Filing 2011 tax returns free Interest you can deduct. Filing 2011 tax returns free Interest you cannot deduct. Filing 2011 tax returns free How to allocate interest between personal and business use. Filing 2011 tax returns free When to deduct interest. Filing 2011 tax returns free The rules for a below-market interest rate loan. Filing 2011 tax returns free (This is generally a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Filing 2011 tax returns free ) Legal and Professional Fees Legal and professional fees, such as fees charged by accountants, that are ordinary and necessary expenses directly related to operating your business are deductible on Schedule C or C-EZ. Filing 2011 tax returns free However, you usually cannot deduct legal fees you pay to acquire business assets. Filing 2011 tax returns free Add them to the basis of the property. Filing 2011 tax returns free If the fees include payments for work of a personal nature (such as making a will), you can take a business deduction only for the part of the fee related to your business. Filing 2011 tax returns free The personal part of legal fees for producing or collecting taxable income, doing or keeping your job, or for tax advice may be deductible on Schedule A (Form 1040) if you itemize deductions. Filing 2011 tax returns free For more information, see Publication 529, Miscellaneous Deductions. Filing 2011 tax returns free Tax preparation fees. Filing 2011 tax returns free   You can deduct on Schedule C or C-EZ the cost of preparing that part of your tax return relating to your business as a sole proprietor or statutory employee. Filing 2011 tax returns free You can deduct the remaining cost on Schedule A (Form 1040) if you itemize your deductions. Filing 2011 tax returns free   You can also deduct on Schedule C or C-EZ the amount you pay or incur in resolving asserted tax deficiencies for your business as a sole proprietor or statutory employee. Filing 2011 tax returns free Pension Plans You can set up and maintain the following small business retirement plans for yourself and your employees. Filing 2011 tax returns free SEP (Simplified Employee Pension) plans. Filing 2011 tax returns free SIMPLE (Savings Incentive Match Plan for Employees) plans. Filing 2011 tax returns free Qualified plans (including Keogh or H. Filing 2011 tax returns free R. Filing 2011 tax returns free 10 plans). Filing 2011 tax returns free SEP, SIMPLE, and qualified plans offer you and your employees a tax favored way to save for retirement. Filing 2011 tax returns free You can deduct contributions you make to the plan for your employees on line 19 of Schedule C. Filing 2011 tax returns free If you are a sole proprietor, you can deduct contributions you make to the plan for yourself on line 28 of Form 1040. Filing 2011 tax returns free You can also deduct trustees' fees if contributions to the plan do not cover them. Filing 2011 tax returns free Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. Filing 2011 tax returns free You may also be able to claim a tax credit of 50% of the first $1,000 of qualified startup costs if you begin a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. Filing 2011 tax returns free Under certain plans, employees can have you contribute limited amounts of their before-tax pay to a plan. Filing 2011 tax returns free These amounts (and earnings on them) are generally tax free until your employees receive distributions from the plan. Filing 2011 tax returns free For more information on retirement plans for small business, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Filing 2011 tax returns free Publication 590, Individual Retirement Arrangements (IRAs), discusses other tax favored ways to save for retirement. Filing 2011 tax returns free Rent Expense Rent is any amount you pay for the use of property you do not own. Filing 2011 tax returns free In general, you can deduct rent as a business expense only if the rent is for property you use in your business. Filing 2011 tax returns free If you have or will receive equity in or title to the property, you cannot deduct the rent. Filing 2011 tax returns free Unreasonable rent. Filing 2011 tax returns free   You cannot take a rental deduction for unreasonable rents. Filing 2011 tax returns free Ordinarily, the issue of reasonableness arises only if you and the lessor are related. Filing 2011 tax returns free Rent paid to a related person is reasonable if it is the same amount you would pay to a stranger for use of the same property. Filing 2011 tax returns free Rent is not unreasonable just because it is figured as a percentage of gross receipts. Filing 2011 tax returns free   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Filing 2011 tax returns free For a list of the other related persons, see section 267 of the Internal Revenue Code. Filing 2011 tax returns free Rent on your home. Filing 2011 tax returns free   If you rent your home and use part of it as your place of business, you may be able to deduct the rent you pay for that part. Filing 2011 tax returns free You must meet the requirements for business use of your home. Filing 2011 tax returns free For more information, see Business Use of Your Home , later. Filing 2011 tax returns free Rent paid in advance. Filing 2011 tax returns free   Generally, rent paid in your business is deductible in the year paid or accrued. Filing 2011 tax returns free If you pay rent in advance, you can deduct only the amount that applies to your use of the rented property during the tax year. Filing 2011 tax returns free You can deduct the rest of your payment only over the period to which it applies. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about rent, see chapter 3 in Publication 535. Filing 2011 tax returns free Taxes You can deduct on Schedule C or C-EZ various federal, state, local, and foreign taxes directly attributable to your business. Filing 2011 tax returns free Income taxes. Filing 2011 tax returns free   You can deduct on Schedule C or C-EZ a state tax on gross income (as distinguished from net income) directly attributable to your business. Filing 2011 tax returns free You can deduct other state and local income taxes on Schedule A (Form 1040) if you itemize your deductions. Filing 2011 tax returns free Do not deduct federal income tax. Filing 2011 tax returns free Employment taxes. Filing 2011 tax returns free   You can deduct the social security, Medicare, and federal unemployment (FUTA) taxes you paid out of your own funds as an employer. Filing 2011 tax returns free Employment taxes are discussed briefly in chapter 1. Filing 2011 tax returns free You can also deduct payments you made as an employer to a state unemployment compensation fund or to a state disability benefit fund. Filing 2011 tax returns free Deduct these payments as taxes. Filing 2011 tax returns free Self-employment tax. Filing 2011 tax returns free   You can deduct one-half of your self-employment tax on line 27 of Form 1040. Filing 2011 tax returns free Self-employment tax is discussed in chapters 1 and 10. Filing 2011 tax returns free Personal property tax. Filing 2011 tax returns free   You can deduct on Schedule C or C-EZ any tax imposed by a state or local government on personal property used in your business. Filing 2011 tax returns free   You can also deduct registration fees for the right to use property within a state or local area. Filing 2011 tax returns free Example. Filing 2011 tax returns free May and Julius Winter drove their car 7,000 business miles out of a total of 10,000 miles. Filing 2011 tax returns free They had to pay $25 for their annual state license tags and $20 for their city registration sticker. Filing 2011 tax returns free They also paid $235 in city personal property tax on the car, for a total of $280. Filing 2011 tax returns free They are claiming their actual car expenses. Filing 2011 tax returns free Because they used the car 70% for business, they can deduct 70% of the $280, or $196, as a business expense. Filing 2011 tax returns free Real estate taxes. Filing 2011 tax returns free   You can deduct on Schedule C or C-EZ the real estate taxes you pay on your business property. Filing 2011 tax returns free Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. Filing 2011 tax returns free The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Filing 2011 tax returns free   For more information about real estate taxes, see chapter 5 in Publication 535. Filing 2011 tax returns free That chapter explains special rules for deducting the following items. Filing 2011 tax returns free Taxes for local benefits, such as those for sidewalks, streets, water mains, and sewer lines. Filing 2011 tax returns free Real estate taxes when you buy or sell property during the year. Filing 2011 tax returns free Real estate taxes if you use an accrual method of accounting and choose to accrue real estate tax related to a definite period ratably over that period. Filing 2011 tax returns free Sales tax. Filing 2011 tax returns free   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. Filing 2011 tax returns free If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. Filing 2011 tax returns free If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. Filing 2011 tax returns free If the property is depreciable, add the sales tax to the basis for depreciation. Filing 2011 tax returns free For information on the basis of property, see Publication 551, Basis of Assets. Filing 2011 tax returns free    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Filing 2011 tax returns free Do not include these taxes in gross receipts or sales. Filing 2011 tax returns free Excise taxes. Filing 2011 tax returns free   You can deduct on Schedule C or C-EZ all excise taxes that are ordinary and necessary expenses of carrying on your business. Filing 2011 tax returns free Excise taxes are discussed briefly in chapter 1. Filing 2011 tax returns free Fuel taxes. Filing 2011 tax returns free   Taxes on gasoline, diesel fuel, and other motor fuels you use in your business are usually included as part of the cost of the fuel. Filing 2011 tax returns free Do not deduct these taxes as a separate item. Filing 2011 tax returns free   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. Filing 2011 tax returns free For more information, see Publication 510, Excise Taxes. Filing 2011 tax returns free Travel, Meals, and Entertainment This section briefly explains the kinds of travel and entertainment expenses you can deduct on Schedule C or C-EZ. Filing 2011 tax returns free Table 8-1. Filing 2011 tax returns free When Are Entertainment Expenses Deductible? (Note. Filing 2011 tax returns free The following is a summary of the rules for deducting entertainment expenses. Filing 2011 tax returns free For more details about these rules, see Publication 463. Filing 2011 tax returns free ) General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Filing 2011 tax returns free Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Filing 2011 tax returns free An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Filing 2011 tax returns free A necessary expense is one that is helpful and appropriate, although not necessarily required, for your business. Filing 2011 tax returns free Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Filing 2011 tax returns free   Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion. Filing 2011 tax returns free Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Filing 2011 tax returns free You cannot deduct expenses that are lavish or extravagant under the circumstances. Filing 2011 tax returns free You generally can deduct only 50% of your unreimbursed entertainment expenses. Filing 2011 tax returns free Travel expenses. Filing 2011 tax returns free   These are the ordinary and necessary expenses of traveling away from home for your business. Filing 2011 tax returns free You are traveling away from home if both the following conditions are met. Filing 2011 tax returns free 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. Filing 2011 tax returns free You need to get sleep or rest to meet the demands of your work while away from home. Filing 2011 tax returns free Generally, your tax home is your regular place of business, regardless of where you maintain your family home. Filing 2011 tax returns free It includes the entire city or general area in which your business is located. Filing 2011 tax returns free See Publication 463 for more information. Filing 2011 tax returns free   The following is a brief discussion of the expenses you can deduct. Filing 2011 tax returns free Transportation. Filing 2011 tax returns free   You can deduct the cost of travel by airplane, train, bus, or car between your home and your business destination. Filing 2011 tax returns free Taxi, commuter bus, and limousine. Filing 2011 tax returns free   You can deduct fares for these and other types of transportation between the airport or station and your hotel, or between the hotel and your work location away from home. Filing 2011 tax returns free Baggage and shipping. Filing 2011 tax returns free   You can deduct the cost of sending baggage and sample or display material between your regular and temporary work locations. Filing 2011 tax returns free Car or truck. Filing 2011 tax returns free   You can deduct the costs of operating and maintaining your vehicle when traveling away from home on business. Filing 2011 tax returns free You can deduct actual expenses or the standard mileage rate (discussed earlier under Car and Truck Expenses), as well as business-related tolls and parking. Filing 2011 tax returns free If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Filing 2011 tax returns free Meals and lodging. Filing 2011 tax returns free   You can deduct the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Filing 2011 tax returns free In most cases, you can deduct only 50% of your meal expenses. Filing 2011 tax returns free Cleaning. Filing 2011 tax returns free   You can deduct the costs of dry cleaning and laundry while on your business trip. Filing 2011 tax returns free Telephone. Filing 2011 tax returns free   You can deduct the cost of business calls while on your business trip, including business communication by fax machine or other communication devices. Filing 2011 tax returns free Tips. Filing 2011 tax returns free   You can deduct the tips you pay for any expense in this list. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information about travel expenses, see Publication 463. Filing 2011 tax returns free Entertainment expenses. Filing 2011 tax returns free   You may be able to deduct business-related entertainment expenses for entertaining a client, customer, or employee. Filing 2011 tax returns free In most cases, you can deduct only 50% of these expenses. Filing 2011 tax returns free   The following are examples of entertainment expenses. Filing 2011 tax returns free Entertaining guests at nightclubs, athletic clubs, theaters, or sporting events. Filing 2011 tax returns free Providing meals, a hotel suite, or a car to business customers or their families. Filing 2011 tax returns free To be deductible, the expenses must meet the rules listed in Table 8-1. Filing 2011 tax returns free For details about these rules, see Publication 463. Filing 2011 tax returns free Reimbursing your employees for expenses. Filing 2011 tax returns free   You generally can deduct the amount you reimburse your employees for travel and entertainment expenses. Filing 2011 tax returns free The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan. Filing 2011 tax returns free For details, see chapter 11 in Publication 535. Filing 2011 tax returns free That chapter explains accountable and nonaccountable plans and tells you whether to report the reimbursement on your employee's Form W-2, Wage and Tax Statement. Filing 2011 tax returns free Business Use of Your Home To deduct expenses related to the part of your home used for business, you must meet specific requirements. Filing 2011 tax returns free Even then, your deduction may be limited. Filing 2011 tax returns free To qualify to claim expenses for business use of your home, you must meet the following tests. Filing 2011 tax returns free Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use , later), Regular, For your business, and The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your business, or A separate structure (not attached to your home) you use in connection with your business. Filing 2011 tax returns free Exclusive use. Filing 2011 tax returns free   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Filing 2011 tax returns free The area used for business can be a room or other separately identifiable space. Filing 2011 tax returns free The space does not need to be marked off by a permanent partition. Filing 2011 tax returns free   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Filing 2011 tax returns free Example. Filing 2011 tax returns free You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Filing 2011 tax returns free Your family also uses the den for recreation. Filing 2011 tax returns free The den is not used exclusively in your profession, so you cannot claim a business deduction for its use. Filing 2011 tax returns free Exceptions to exclusive use. Filing 2011 tax returns free   You do not have to meet the exclusive use test if you use part of your home in either of the following ways. Filing 2011 tax returns free For the storage of inventory or product samples. Filing 2011 tax returns free As a daycare facility. Filing 2011 tax returns free For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Filing 2011 tax returns free Regular use. Filing 2011 tax returns free   To qualify under the regular use test, you must use a specific area of your home for business on a continuing basis. Filing 2011 tax returns free You do not meet the test if your business use of the area is only occasional or incidental, even if you do not use that area for any other purpose. Filing 2011 tax returns free Principal place of business. Filing 2011 tax returns free   You can have more than one business location, including your home, for a single trade or business. Filing 2011 tax returns free To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that business. Filing 2011 tax returns free To determine your principal place of business, you must consider all the facts and circumstances. Filing 2011 tax returns free   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Filing 2011 tax returns free You use it exclusively and regularly for administrative or management activities of your business. Filing 2011 tax returns free You have no other fixed location where you conduct substantial administrative or management activities of your business. Filing 2011 tax returns free   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Filing 2011 tax returns free The relative importance of the activities performed at each location. Filing 2011 tax returns free If the relative importance factor does not determine your principal place of business, you can also consider the time spent at each location. Filing 2011 tax returns free   If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Filing 2011 tax returns free However, for other ways to qualify to deduct home office expenses, see Publication 587. Filing 2011 tax returns free Deduction limit. Filing 2011 tax returns free   If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. Filing 2011 tax returns free If your gross income from the business use is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. Filing 2011 tax returns free   Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation (with depreciation taken last), allocable to the business is limited to the gross income from the business use of your home minus the sum of the following. Filing 2011 tax returns free The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). Filing 2011 tax returns free The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. Filing 2011 tax returns free Do not include in (2) above your deduction for one-half of your self-employment tax. Filing 2011 tax returns free   Use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Filing 2011 tax returns free New simplified method. Filing 2011 tax returns free    The IRS now provides a simplified method to determine your expenses for business use of your home. Filing 2011 tax returns free The simplified method is an alternative to calculating and substantiating actual expenses. Filing 2011 tax returns free In most cases, you will figure your deduction by multiplying $5 by the area of your home used for a qualified business use. Filing 2011 tax returns free The area you use to figure your deduction is limited to 300 square feet. Filing 2011 tax returns free For more information, see the Instructions for Schedule C. Filing 2011 tax returns free More information. Filing 2011 tax returns free   For more information on deducting expenses for the business use of your home, see Publication 587. Filing 2011 tax returns free Other Expenses You Can Deduct You may also be able to deduct the following expenses. Filing 2011 tax returns free See Publication 535 to find out whether you can deduct them. Filing 2011 tax returns free Advertising. Filing 2011 tax returns free Bank fees. Filing 2011 tax returns free Donations to business organizations. Filing 2011 tax returns free Education expenses. Filing 2011 tax returns free Energy efficient commercial buildings deduction expenses. Filing 2011 tax returns free Impairment-related expenses. Filing 2011 tax returns free Interview expense allowances. Filing 2011 tax returns free Licenses and regulatory fees. Filing 2011 tax returns free Moving machinery. Filing 2011 tax returns free Outplacement services. Filing 2011 tax returns free Penalties and fines you pay for late performance or nonperformance of a contract. Filing 2011 tax returns free Repairs that keep your property in a normal efficient operating condition. Filing 2011 tax returns free Repayments of income. Filing 2011 tax returns free Subscriptions to trade or professional publications. Filing 2011 tax returns free Supplies and materials. Filing 2011 tax returns free Utilities. Filing 2011 tax returns free Expenses You Cannot Deduct You usually cannot deduct the following as business expenses. Filing 2011 tax returns free For more information, see Publication 535. Filing 2011 tax returns free Bribes and kickbacks. Filing 2011 tax returns free Charitable contributions. Filing 2011 tax returns free Demolition expenses or losses. Filing 2011 tax returns free Dues to business, social, athletic, luncheon, sporting, airline, and hotel clubs. Filing 2011 tax returns free Lobbying expenses. Filing 2011 tax returns free Penalties and fines you pay to a governmental agency or instrumentality because you broke the law. Filing 2011 tax returns free Personal, living, and family expenses. Filing 2011 tax returns free Political contributions. Filing 2011 tax returns free Repairs that add to the value of your property or significantly increase its life. Filing 2011 tax returns free Prev  Up  Next   Home   More Online Publications