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Free file state federal taxes 2. Free file state federal taxes   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. Free file state federal taxes Providing information. Free file state federal taxes Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. Free file state federal taxes Fuel used between airfield and farm. Free file state federal taxes Fuel not used for farming. Free file state federal taxes Vehicles not considered highway vehicles. Free file state federal taxes Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. Free file state federal taxes This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. Free file state federal taxes Information on the refund of second tax is included. Free file state federal taxes This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. Free file state federal taxes Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. Free file state federal taxes Exported taxable fuel. Free file state federal taxes   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. Free file state federal taxes Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Free file state federal taxes Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. Free file state federal taxes Gasoline and Aviation Gasoline Ultimate Purchasers. Free file state federal taxes   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free file state federal taxes On a farm for farming purposes (credit only). Free file state federal taxes Off-highway business use. Free file state federal taxes Export. Free file state federal taxes In a boat engaged in commercial fishing. Free file state federal taxes In certain intercity and local buses. Free file state federal taxes In a school bus. Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes In a highway vehicle owned by the United States that is not used on a highway. Free file state federal taxes Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free file state federal taxes In an aircraft or vehicle owned by an aircraft museum. Free file state federal taxes   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. Free file state federal taxes On a farm for farming purposes (credit only). Free file state federal taxes Export. Free file state federal taxes In foreign trade. Free file state federal taxes Certain helicopter and fixed-wing air ambulance uses. Free file state federal taxes In commercial aviation (other than foreign trade). Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). Free file state federal taxes In an aircraft owned by an aircraft museum. Free file state federal taxes In military aircraft. Free file state federal taxes Claims by persons who paid the tax to the government. Free file state federal taxes   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. Free file state federal taxes See Filing Claims, later. Free file state federal taxes Sales by registered ultimate vendors. Free file state federal taxes   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. Free file state federal taxes A state or local government for its exclusive use (including essential government use by an Indian tribal government). Free file state federal taxes A nonprofit educational organization for its exclusive use. Free file state federal taxes   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. Free file state federal taxes A sample certificate is included as Model Certificate M in the Appendix. Free file state federal taxes The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. Free file state federal taxes   The ultimate vendor must be registered by the IRS. Free file state federal taxes See Registration Requirements, earlier. Free file state federal taxes Credit card purchases. Free file state federal taxes   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free file state federal taxes   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free file state federal taxes How to make the claim. Free file state federal taxes   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). Free file state federal taxes Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. Free file state federal taxes Ultimate purchasers. Free file state federal taxes   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free file state federal taxes On a farm for farming purposes. Free file state federal taxes Off-highway business use. Free file state federal taxes Export. Free file state federal taxes In a qualified local bus. Free file state federal taxes In a school bus. Free file state federal taxes Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes In a highway vehicle owned by the United States that is not used on a highway. Free file state federal taxes Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free file state federal taxes In a vehicle owned by an aircraft museum. Free file state federal taxes As a fuel in a propulsion engine of a diesel-powered train. Free file state federal taxes Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. Free file state federal taxes Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free file state federal taxes Registered ultimate vendor (state use). Free file state federal taxes   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free file state federal taxes The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. Free file state federal taxes The ultimate vendor must be registered by the IRS. Free file state federal taxes See Registration Requirements, earlier. Free file state federal taxes Registered ultimate vendor (blocked pump). Free file state federal taxes   This is an ultimate vendor that sells undyed kerosene from a blocked pump. Free file state federal taxes   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. Free file state federal taxes Blocked pump. Free file state federal taxes   A blocked pump is a fuel pump that meets all the following requirements. Free file state federal taxes It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. Free file state federal taxes It is at a fixed location. Free file state federal taxes It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. Free file state federal taxes ” It meets either of the following conditions. Free file state federal taxes It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. Free file state federal taxes It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. Free file state federal taxes Registered ultimate vendor (certain intercity and local buses). Free file state federal taxes   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. Free file state federal taxes   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free file state federal taxes A sample waiver is included as Model Waiver N in the Appendix. Free file state federal taxes The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free file state federal taxes Credit Card Purchases. Free file state federal taxes   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free file state federal taxes   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free file state federal taxes Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. Free file state federal taxes The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. Free file state federal taxes 198 per gallon is $. Free file state federal taxes 197 (if exported, the claim rate is $. Free file state federal taxes 198). Free file state federal taxes The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. Free file state federal taxes On a farm for farming purposes. Free file state federal taxes Off-highway business use. Free file state federal taxes Export. Free file state federal taxes In a qualified local bus. Free file state federal taxes In a school bus. Free file state federal taxes Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes In a highway vehicle owned by the United States that is not used on a highway. Free file state federal taxes Exclusive use by a nonprofit educational organization. Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free file state federal taxes In an aircraft or vehicle owned by an aircraft museum. Free file state federal taxes Blender claims. Free file state federal taxes   The claim rate for undyed diesel fuel taxed at $. Free file state federal taxes 244 and used to produce a diesel-water fuel emulsion is $. Free file state federal taxes 046 per gallon of diesel fuel so used. Free file state federal taxes The blender must be registered by the IRS in order to make the claim. Free file state federal taxes The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. Free file state federal taxes 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. Free file state federal taxes Kerosene for Use in Aviation Ultimate purchasers. Free file state federal taxes   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. Free file state federal taxes   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. Free file state federal taxes Generally, the ultimate purchaser is the aircraft operator. Free file state federal taxes   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. Free file state federal taxes On a farm for farming purposes. Free file state federal taxes Certain helicopter and fixed-wing aircraft uses. Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes Exclusive use by a nonprofit educational organization. Free file state federal taxes In an aircraft owned by an aircraft museum. Free file state federal taxes In military aircraft. Free file state federal taxes Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. Free file state federal taxes   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. Free file state federal taxes At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. Free file state federal taxes   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. Free file state federal taxes For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. Free file state federal taxes 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. Free file state federal taxes 025 per gallon part of the tax. Free file state federal taxes The ultimate vendor may make this claim. Free file state federal taxes The operator may make a claim for the $. Free file state federal taxes 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. Free file state federal taxes 175 tax per gallon. Free file state federal taxes Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. Free file state federal taxes   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. Free file state federal taxes A sample waiver is included as Model Waiver L in the Appendix. Free file state federal taxes The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free file state federal taxes   Noncommercial aviation means any use of an aircraft not described as commercial aviation. Free file state federal taxes For the definition of commercial aviation, see Commercial aviation on page 11. Free file state federal taxes Kerosene for use in nonexempt, noncommercial aviation. Free file state federal taxes   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. Free file state federal taxes The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. Free file state federal taxes A sample certificate is included as Model Certificate Q in the Appendix. Free file state federal taxes The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free file state federal taxes Kerosene for use in aviation by a state or local government. Free file state federal taxes   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free file state federal taxes The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. Free file state federal taxes The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. Free file state federal taxes A sample certificate is included as Model Certificate P in the Appendix. Free file state federal taxes The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free file state federal taxes Credit card purchases. Free file state federal taxes   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free file state federal taxes   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free file state federal taxes Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. Free file state federal taxes While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. Free file state federal taxes The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. Free file state federal taxes On a farm for farming purposes. Free file state federal taxes Off-highway business use. Free file state federal taxes In a boat engaged in commercial fishing. Free file state federal taxes In certain intercity and local buses. Free file state federal taxes In a school bus. Free file state federal taxes In a qualified local bus. Free file state federal taxes Exclusive use by a qualified blood collector organization. Free file state federal taxes Exclusive use by a nonprofit educational organization. Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free file state federal taxes In an aircraft or vehicle owned by an aircraft museum. Free file state federal taxes Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. Free file state federal taxes See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. Free file state federal taxes Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. Free file state federal taxes This is in addition to all other taxes imposed on the sale or use of the fuel. Free file state federal taxes The section 4081(e) refund (discussed below) cannot be claimed. Free file state federal taxes If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. Free file state federal taxes No credit against any tax is allowed for this tax. Free file state federal taxes For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. Free file state federal taxes Conditions to allowance of refund. Free file state federal taxes   A claim for refund of the tax is allowed only if all the following conditions are met. Free file state federal taxes A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). Free file state federal taxes After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). Free file state federal taxes The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). Free file state federal taxes The person that paid the first tax has met the reporting requirements, discussed next. Free file state federal taxes Reporting requirements. Free file state federal taxes   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. Free file state federal taxes A model first taxpayer's report is shown in the Appendix as Model Certificate B. Free file state federal taxes The report must contain all information needed to complete the model. Free file state federal taxes   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. Free file state federal taxes Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. Free file state federal taxes Optional reporting. Free file state federal taxes   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. Free file state federal taxes However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. Free file state federal taxes Providing information. Free file state federal taxes   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. Free file state federal taxes If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. Free file state federal taxes   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. Free file state federal taxes If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. Free file state federal taxes A model statement of subsequent seller is shown in the Appendix as Model Certificate A. Free file state federal taxes The statement must contain all information necessary to complete the model. Free file state federal taxes   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. Free file state federal taxes Each buyer must be given a copy of the report. Free file state federal taxes Refund claim. Free file state federal taxes   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. Free file state federal taxes You must make your claim for refund on Form 8849. Free file state federal taxes Complete Schedule 5 (Form 8849) and attach it to your Form 8849. Free file state federal taxes Do not include this claim with a claim under another tax provision. Free file state federal taxes You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. Free file state federal taxes You must submit the following information with your claim. Free file state federal taxes A copy of the first taxpayer's report (discussed earlier). Free file state federal taxes A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. Free file state federal taxes Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. Free file state federal taxes If applicable, the type of use number from Table 2-1 is indicated in each heading. Free file state federal taxes Type of use table. Free file state federal taxes   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. Free file state federal taxes For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. Free file state federal taxes Table 2-1. Free file state federal taxes Type of Use Table No. Free file state federal taxes Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. Free file state federal taxes 1). Free file state federal taxes   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Free file state federal taxes Farm. Free file state federal taxes   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. Free file state federal taxes It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. Free file state federal taxes A fish farm is an area where fish are grown or raised — not merely caught or harvested. Free file state federal taxes Farming purposes. Free file state federal taxes   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. Free file state federal taxes To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Free file state federal taxes To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Free file state federal taxes To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Free file state federal taxes To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Free file state federal taxes For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Free file state federal taxes Commodity means a single raw product. Free file state federal taxes For example, apples and peaches are two separate commodities. Free file state federal taxes To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. Free file state federal taxes , is incidental to your farming operations. Free file state federal taxes Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. Free file state federal taxes   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. Free file state federal taxes However, see Custom application of fertilizer and pesticide, next. Free file state federal taxes   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. Free file state federal taxes For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. Free file state federal taxes Custom application of fertilizer and pesticide. Free file state federal taxes   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. Free file state federal taxes Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Free file state federal taxes For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Free file state federal taxes For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. Free file state federal taxes Fuel used between airfield and farm. Free file state federal taxes   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. Free file state federal taxes Fuel not used for farming. Free file state federal taxes   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. Free file state federal taxes Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. Free file state federal taxes For personal use, such as mowing the lawn. Free file state federal taxes In processing, packaging, freezing, or canning operations. Free file state federal taxes In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Free file state federal taxes Off-highway business use (No. Free file state federal taxes 2). Free file state federal taxes   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. Free file state federal taxes The terms “highway vehicle,” “public highway,” and “registered” are defined below. Free file state federal taxes Do not consider any use in a boat as an off-highway business use. Free file state federal taxes   Off-highway business use includes fuels used in any of the following ways. Free file state federal taxes In stationary machines such as generators, compressors, power saws, and similar equipment. Free file state federal taxes For cleaning purposes. Free file state federal taxes In forklift trucks, bulldozers, and earthmovers. Free file state federal taxes   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Free file state federal taxes Example. Free file state federal taxes Caroline owns a landscaping business. Free file state federal taxes She uses power lawn mowers and chain saws in her business. Free file state federal taxes The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. Free file state federal taxes The gasoline used in her personal lawn mower at home does not qualify. Free file state federal taxes Highway vehicle. Free file state federal taxes   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Free file state federal taxes Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Free file state federal taxes A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Free file state federal taxes A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Free file state federal taxes A special kind of cargo, goods, supplies, or materials. Free file state federal taxes Some off-highway task unrelated to highway transportation, except as discussed next. Free file state federal taxes Vehicles not considered highway vehicles. Free file state federal taxes   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. Free file state federal taxes Specially designed mobile machinery for nontransportation functions. Free file state federal taxes A self-propelled vehicle is not a highway vehicle if all the following apply. Free file state federal taxes The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Free file state federal taxes The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Free file state federal taxes The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Free file state federal taxes The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. Free file state federal taxes Vehicles specially designed for off-highway transportation. Free file state federal taxes A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. Free file state federal taxes To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Free file state federal taxes It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Free file state federal taxes Nontransportation trailers and semitrailers. Free file state federal taxes A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Free file state federal taxes For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Free file state federal taxes Public highway. Free file state federal taxes   A public highway includes any road in the United States that is not a private roadway. Free file state federal taxes This includes federal, state, county, and city roads and streets. Free file state federal taxes Registered. Free file state federal taxes   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. Free file state federal taxes Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. Free file state federal taxes A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. Free file state federal taxes Dual use of propulsion motor. Free file state federal taxes   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. Free file state federal taxes It does not matter if the special equipment is mounted on the vehicle. Free file state federal taxes Example. Free file state federal taxes The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. Free file state federal taxes The fuel used in the motor to run the mixer is not off-highway business use. Free file state federal taxes Use in separate motor. Free file state federal taxes   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. Free file state federal taxes If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. Free file state federal taxes You may make a reasonable estimate based on your operating experience and supported by your records. Free file state federal taxes   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. Free file state federal taxes Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. Free file state federal taxes The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. Free file state federal taxes Example. Free file state federal taxes Hazel owns a refrigerated truck. Free file state federal taxes It has a separate motor for the refrigeration unit. Free file state federal taxes The same tank supplies both motors. Free file state federal taxes Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. Free file state federal taxes Therefore, 10% of the fuel is used in an off-highway business use. Free file state federal taxes Fuel lost or destroyed. Free file state federal taxes   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. Free file state federal taxes Export (No. Free file state federal taxes 3). Free file state federal taxes   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. Free file state federal taxes Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. Free file state federal taxes In a boat engaged in commercial fishing (No. Free file state federal taxes 4). Free file state federal taxes   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. Free file state federal taxes They include boats used in both fresh and salt water fishing. Free file state federal taxes They do not include boats used for both sport fishing and commercial fishing on the same trip. Free file state federal taxes In certain intercity and local buses (No. Free file state federal taxes 5). Free file state federal taxes   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Free file state federal taxes The bus must be engaged in one of the following activities. Free file state federal taxes Scheduled transportation along regular routes. Free file state federal taxes Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. Free file state federal taxes Vans and similar vehicles used for van-pooling or taxi service do not qualify. Free file state federal taxes Available to the general public. Free file state federal taxes   This means you offer service to more than a limited number of persons or organizations. Free file state federal taxes If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. Free file state federal taxes A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. Free file state federal taxes Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. Free file state federal taxes In a qualified local bus (No. Free file state federal taxes 6). Free file state federal taxes   In a qualified local bus means fuel used in a bus meeting all the following requirements. Free file state federal taxes It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. Free file state federal taxes It operates along scheduled, regular routes. Free file state federal taxes It has a seating capacity of at least 20 adults (excluding the driver). Free file state federal taxes It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. Free file state federal taxes Intracity passenger land transportation. Free file state federal taxes   This is the land transportation of passengers between points located within the same metropolitan area. Free file state federal taxes It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. Free file state federal taxes Under contract. Free file state federal taxes   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. Free file state federal taxes More than a nominal subsidy. Free file state federal taxes   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. Free file state federal taxes A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. Free file state federal taxes In a school bus (No. Free file state federal taxes 7). Free file state federal taxes   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. Free file state federal taxes A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. Free file state federal taxes For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. Free file state federal taxes 8). Free file state federal taxes   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. Free file state federal taxes In foreign trade (No. Free file state federal taxes 9). Free file state federal taxes   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. Free file state federal taxes The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. Free file state federal taxes In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. Free file state federal taxes Certain helicopter and fixed-wing aircraft uses (No. Free file state federal taxes 10). Free file state federal taxes   Includes: Certain helicopter uses. Free file state federal taxes   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. Free file state federal taxes Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Free file state federal taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free file state federal taxes Providing emergency medical transportation. Free file state federal taxes   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free file state federal taxes For item (1), treat each flight segment as a separate flight. Free file state federal taxes Fixed-wing aircraft uses. Free file state federal taxes   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. Free file state federal taxes Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free file state federal taxes Providing emergency medical transportation. Free file state federal taxes The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free file state federal taxes During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free file state federal taxes Exclusive use by a qualified blood collector organization (No. Free file state federal taxes 11). Free file state federal taxes   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. Free file state federal taxes Qualified blood collector organization. Free file state federal taxes   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. Free file state federal taxes In a highway vehicle owned by the United States that is not used on a highway (No. Free file state federal taxes 12). Free file state federal taxes   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. Free file state federal taxes This use applies whether or not the vehicle is registered or required to be registered for highway use. Free file state federal taxes Exclusive use by a nonprofit educational organization (No. Free file state federal taxes 13). Free file state federal taxes   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. Free file state federal taxes It has a regular faculty and curriculum. Free file state federal taxes It has a regularly enrolled body of students who attend the place where the instruction normally occurs. Free file state federal taxes   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. Free file state federal taxes Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. Free file state federal taxes 14). Free file state federal taxes   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. Free file state federal taxes A state or local government is any state, any political subdivision thereof, or the District of Columbia. Free file state federal taxes An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Free file state federal taxes Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. Free file state federal taxes In an aircraft or vehicle owned by an aircraft museum (No. Free file state federal taxes 15). Free file state federal taxes   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. Free file state federal taxes It is exempt from income tax as an organization described in section 501(c)(3). Free file state federal taxes It is operated as a museum under a state (or District of Columbia) charter. Free file state federal taxes It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. Free file state federal taxes   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). Free file state federal taxes In military aircraft (No. Free file state federal taxes 16). Free file state federal taxes   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. Free file state federal taxes In commercial aviation (other than foreign trade). Free file state federal taxes   See Commercial aviation, earlier, for the definition. Free file state federal taxes Use in a train. Free file state federal taxes   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. Free file state federal taxes This includes use in a locomotive, work train, switching engine, and track maintenance machine. Free file state federal taxes Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. Free file state federal taxes The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. Free file state federal taxes Biodiesel or renewable diesel mixture credit claimant. Free file state federal taxes   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. Free file state federal taxes Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). Free file state federal taxes   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. Free file state federal taxes The credit is based on the gallons of biodiesel or renewable diesel in the mixture. Free file state federal taxes Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. Free file state federal taxes Claim requirements. Free file state federal taxes   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. Free file state federal taxes Alternative fuel credit claimant. Free file state federal taxes   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. Free file state federal taxes Carbon capture requirement. Free file state federal taxes   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. Free file state federal taxes Alternative fuel credit. Free file state federal taxes   The registered alternative fueler is the person eligible to make the claim. Free file state federal taxes An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. Free file state federal taxes An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. Free file state federal taxes Alternative fuel mixture credit claimant. Free file state federal taxes   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. Free file state federal taxes The credit is based on the gallons of alternative fuel in the mixture. Free file state federal taxes An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). Free file state federal taxes Registration. Free file state federal taxes   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. Free file state federal taxes See Registration Requirements in chapter 1. Free file state federal taxes Credits for fuel provide incentive for United States production. Free file state federal taxes   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. Free file state federal taxes The United States includes any possession of the United States. Free file state federal taxes Credit for fuels derived from paper or pulp production. Free file state federal taxes   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. Free file state federal taxes How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. Free file state federal taxes Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Free file state federal taxes See Notice 2005-4 and the Instructions for Form 720 for more information. Free file state federal taxes Also see Notice 2013-26 on page 984 of I. Free file state federal taxes R. Free file state federal taxes B. Free file state federal taxes 2013-18 at www. Free file state federal taxes irs. Free file state federal taxes gov/pub/irs-irbs/irb13-18. Free file state federal taxes pdf; and see chapter 2, later. Free file state federal taxes Coordination with income tax credit. Free file state federal taxes   Only one credit may be taken for any amount of biodiesel or renewable diesel. Free file state federal taxes If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. Free file state federal taxes   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. Free file state federal taxes Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. Free file state federal taxes   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. Free file state federal taxes   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. Free file state federal taxes Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. Free file state federal taxes This section also covers recordkeeping requirements and when to include the credit or refund in your income. Free file state federal taxes Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. Free file state federal taxes In some cases, you will have to attach additional information. Free file state federal taxes You need to keep records that support your claim for a credit or refund. Free file state federal taxes Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Free file state federal taxes Ultimate purchaser. Free file state federal taxes   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free file state federal taxes If you are an ultimate purchaser, you must keep the following records. Free file state federal taxes The number of gallons purchased and used during the period covered by your claim. Free file state federal taxes The dates of the purchases. Free file state federal taxes The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. Free file state federal taxes The nontaxable use for which you used the fuel. Free file state federal taxes The number of gallons used for each nontaxable use. Free file state federal taxes It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. Free file state federal taxes If the fuel is exported, you must have proof of exportation. Free file state federal taxes   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. Free file state federal taxes Exceptions. Free file state federal taxes    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. Free file state federal taxes However, see Claims by credit card issuers, later, for an exception. Free file state federal taxes The ultimate purchaser may not claim a credit or refund as follows. Free file state federal taxes The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. Free file state federal taxes A new certificate is required each year or when any information in the current certificate expires. Free file state federal taxes The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. Free file state federal taxes A new waiver is required each year or when any information in the current waiver expires. Free file state federal taxes The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. Free file state federal taxes A new waiver is required each year or when any information in the current waiver expires. Free file state federal taxes The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. Free file state federal taxes A new certificate is required each year or when any information in the current certificate expires. Free file state federal taxes Registered ultimate vendor. Free file state federal taxes   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free file state federal taxes If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. Free file state federal taxes   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. Free file state federal taxes You are required to have a valid certificate or waiver in your possession in order to make the claim. Free file state federal taxes   In addition, you must have a registration number that has not been revoked or suspended. Free file state federal taxes See Form 637. Free file state federal taxes State use. Free file state federal taxes   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. Free file state federal taxes If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. Free file state federal taxes The name and taxpayer identification number of each person (government unit) that bought the fuel. Free file state federal taxes The number of gallons sold to each person. Free file state federal taxes An unexpired certificate from the buyer. Free file state federal taxes See Model Certificate P in the Appendix. Free file state federal taxes The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free file state federal taxes Nonprofit educational organization and state use. Free file state federal taxes   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. Free file state federal taxes If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. Free file state federal taxes The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. Free file state federal taxes The number of gallons sold to each person. Free file state federal taxes An unexpired certificate from the buyer. Free file state federal taxes See Model Certificate M in the Appendix. Free file state federal taxes  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free file state federal taxes Blocked pump. Free file state federal taxes   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. Free file state federal taxes If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. Free file state federal taxes The date of each sale. Free file state federal taxes The name and address of the buyer. Free file state federal taxes The number of gallons sold to that buyer. Free file state federal taxes Certain intercity and local bus use. Free file state federal taxes   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. Free file state federal taxes You must keep the following information. Free file state federal taxes The date of each sale. Free file state federal taxes The name and address of the buyer. Free file state federal taxes The number of gallons sold to the buyer. Free file state federal taxes A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free file state federal taxes See Model Waiver N in the Appendix. Free file state federal taxes Kerosene for use in commercial aviation or noncommercial aviation. Free file state federal taxes   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. Free file state federal taxes See Kerosene for use in aviation, earlier, for a list of nontaxable uses. Free file state federal taxes You must keep the following information. Free file state federal taxes The date of each sale. Free file state federal taxes The name and address of the buyer. Free file state federal taxes The number of gallons sold to the buyer. Free file state federal taxes A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free file state federal taxes See Model Waiver L in the Appendix. Free file state federal taxes Kerosene for use in nonexempt, noncommercial aviation. Free file state federal taxes   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. Free file state federal taxes You must keep the following information. Free file state federal taxes The date of each sale. Free file state federal taxes The name and address of the buyer. Free file state federal taxes The number of gallons sold to the buyer. Free file state federal taxes A copy of the certificate signed by the buyer at the time the credit or payment is claimed. Free file state federal taxes See Model Certificate Q in the Appendix. Free file state federal taxes Claims by credit card issuers. Free file state federal taxes   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. Free file state federal taxes An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). Free file state federal taxes   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. Free file state federal taxes However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free file state federal taxes   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. Free file state federal taxes A state is not allowed to make a claim for these fuels. Free file state federal taxes However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free file state federal taxes   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. Free file state federal taxes The total number of gallons. Free file state federal taxes Its registration number. Free file state federal taxes A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. Free file state federal taxes A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. Free file state federal taxes Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. Free file state federal taxes Taxpayer identification number. Free file state federal taxes   To file a claim, you must have a taxpayer identification number. Free file state federal taxes Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. Free file state federal taxes   If you normally file only a U. Free file state federal taxes S. Free file state federal taxes individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. Free file state federal taxes You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. Free file state federal taxes To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Free file state federal taxes   If you operate a business, use your EIN. Free file state federal taxes If you do not have an EIN, you may apply for one online. Free file state federal taxes Go to the IRS website at irs. Free file state federal taxes gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. Free file state federal taxes You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Free file state federal taxes Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. Free file state federal taxes Complete and attach to Form 8849 the appropriate Form 8849 schedules. Free file state federal taxes The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Free file state federal taxes If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. Free file state federal taxes See the Instructions for Form 720. Free file state federal taxes Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. Free file state federal taxes The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. Free file state federal taxes The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. Free file state federal taxes To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. Free file state federal taxes Only one claim may be made for any particular amount of alternative fuel. Free file state federal taxes Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. Free file state federal taxes See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. Free file state federal taxes A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. Free file state federal taxes If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. Free file state federal taxes Credit only. Free file state federal taxes   You can claim the following taxes only as a credit on Form 4136. Free file state federal taxes Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. Free file state federal taxes Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. Free file state federal taxes Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. Free file state federal taxes Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). Free file state federal taxes When to file. Free file state federal taxes   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). Free file state federal taxes You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Free file state federal taxes Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. Free file state federal taxes How to claim a credit. Free file state federal taxes   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. Free file state federal taxes Individuals. Free file state federal taxes   You claim the credit on the “Credits from” line of Form 1040. Free file state federal taxes Also check box b on that line. Free file state federal taxes If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Free file state federal taxes Partnerships. Free file state federal taxes   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free file state federal taxes , showing each partner's share of the number of gallons of each fuel sold or used for a non
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Information Reporting Program Advisory Committee (IRPAC) Open Season

The Internal Revenue Service (IRS) is requesting nominations for membership in the Information Reporting Program Advisory Committee (IRPAC) for a three-year term beginning in January 2015. 

About IRPAC:

IRPAC advises the IRS on information reporting and administration issues of mutual concern to the private sector and the federal government. The committee works with the IRS Commissioner and other IRS leadership to provide recommendations on a wide range of information reporting administration issues. Membership is balanced to include representation from industries including insurance, banking, the tax professional community, small and large businesses, colleges and universities, state tax administrations, software, foreign financial institutions and the payroll industry. Federally-registered lobbyists cannot be members of the IRPAC.

IRPAC members meet in Washington, DC, approximately five times a year for two-day sessions. Members are not paid for their services. However, travel expenses for working sessions, public meetings and orientation sessions, such as airfare, per diem, and transportation are reimbursed within prescribed federal travel limitations.

Learn more about IRPAC:

How to Apply:

Nominations of qualified individuals may come from individuals or organizations. Nominations for the six current vacancies should describe and document the proposed member’s qualifications for IRPAC membership, including the applicant’s past or current affiliations and dealings with the particular tax segment or segments of the community that he or she wishes to represent on the committee. IRPAC will be comprised of 21 members. It is important that the IRPAC continue to represent a diverse taxpayer and stakeholder base. Accordingly, to maintain membership diversity, selection is based on applicant’s qualifications as well as the segment or group he/she represents. In addition, FBI and practitioner (if applicable) checks are required of all applicants. Applicants cannot be federally-registered lobbyists.

Applicants must complete the following:

Written nominations must be received on or before May 30, 2014. Nominations should be sent to:

Ms. Caryl Grant
National Public Liaison
CL:NPL:SRM
Room 7559 IR
1111 Constitution Avenue, NW
Washington, DC 20224
Attn: IRPAC Nominations

Or may be submitted via fax to 202-317-6553. For additional information, please e-mail publicliaison@irs.gov.

 

Page Last Reviewed or Updated: 28-Mar-2014

The Free File State Federal Taxes

Free file state federal taxes 11. Free file state federal taxes   Other Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Reimbursement of Travel, Meals, and EntertainmentReimbursements Miscellaneous ExpensesMeaning of generally enforced. Free file state federal taxes Kickbacks. Free file state federal taxes Form 1099-MISC. Free file state federal taxes Exception. Free file state federal taxes Tax preparation fees. Free file state federal taxes Covered executive branch official. Free file state federal taxes Exceptions to denial of deduction. Free file state federal taxes Indirect political contributions. Free file state federal taxes Type of deduction. Free file state federal taxes Repayment—$3,000 or less. Free file state federal taxes Repayment—over $3,000. Free file state federal taxes Method 1. Free file state federal taxes Method 2. Free file state federal taxes Repayment does not apply. Free file state federal taxes Year of deduction (or credit). Free file state federal taxes Telephone. Free file state federal taxes What's New Standard mileage rate. Free file state federal taxes  Beginning in 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for business use is 56. Free file state federal taxes 5 cents per mile. Free file state federal taxes For more information, see Car and truck expenses under Miscellaneous Expenses. Free file state federal taxes Introduction This chapter covers business expenses that may not have been explained to you, as a business owner, in previous chapters of this publication. Free file state federal taxes Topics - This chapter discusses: Travel, meals, and entertainment Bribes and kickbacks Charitable contributions Education expenses Lobbying expenses Penalties and fines Repayments (claim of right) Other miscellaneous expenses Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 463 Travel, Entertainment, Gift, and Car Expenses 526 Charitable Contributions 529 Miscellaneous Deductions 544 Sales and Other Dispositions of Assets 970 Tax Benefits for Education 1542 Per Diem Rates See chapter 12 for information about getting publications and forms. Free file state federal taxes Reimbursement of Travel, Meals, and Entertainment The following discussion explains how to handle any reimbursements or allowances you may provide to your employees under a reimbursement or allowance arrangement for travel, meals, and entertainment expenses. Free file state federal taxes If you are self-employed and report your income and expenses on Schedule C or C-EZ (Form 1040), see Publication 463. Free file state federal taxes To be deductible for tax purposes, expenses incurred for travel, meals, and entertainment must be ordinary and necessary expenses incurred while carrying on your trade or business. Free file state federal taxes Generally, you also must show that entertainment expenses (including meals) are directly related to, or associated with, the conduct of your trade or business. Free file state federal taxes For more information on travel, meals, and entertainment, including deductibility, see Publication 463. Free file state federal taxes Reimbursements A “reimbursement or allowance arrangement” provides for payment of advances, reimbursements, and allowances for travel, meals, and entertainment expenses incurred by your employees during the ordinary course of business. Free file state federal taxes If the expenses are substantiated, you can deduct the allowable amount on your tax return. Free file state federal taxes Because of differences between accounting methods and tax law, the amount you can deduct for tax purposes may not be the same as the amount you deduct on your business books and records. Free file state federal taxes For example, you can deduct 100% of the cost of meals on your business books and records. Free file state federal taxes However, only 50% of these costs are allowed by law as a tax deduction. Free file state federal taxes How you deduct a business expense under a reimbursement or allowance arrangement depends on whether you have: An accountable plan, or A nonaccountable plan. Free file state federal taxes If you reimburse these expenses under an accountable plan, deduct them as travel, meals, or entertainment expenses. Free file state federal taxes If you reimburse these expenses under a nonaccountable plan, report the reimbursements as wages on Form W-2, Wage and Tax Statement, and deduct them as wages on the appropriate line of your tax return. Free file state federal taxes If you make a single payment to your employees and it includes both wages and an expense reimbursement, you must specify the amount of the reimbursement and report it accordingly. Free file state federal taxes See Table 11-1 , Reporting Reimbursements. Free file state federal taxes Accountable Plans An accountable plan requires your employees to meet all of the following requirements. Free file state federal taxes Each employee must: Have paid or incurred deductible expenses while performing services as your employee, Adequately account to you for these expenses within a reasonable period of time, and Return any excess reimbursement or allowance within a reasonable period of time. Free file state federal taxes An arrangement under which you advance money to employees is treated as meeting (3) above only if the following requirements are also met. Free file state federal taxes The advance is reasonably calculated not to exceed the amount of anticipated expenses. Free file state federal taxes You make the advance within a reasonable period of time of your employee paying or incurring the expense. Free file state federal taxes If any expenses reimbursed under this arrangement are not substantiated, or an excess reimbursement is not returned within a reasonable period of time by an employee, you cannot treat these expenses as reimbursed under an accountable plan. Free file state federal taxes Instead, treat the reimbursed expenses as paid under a nonaccountable plan, discussed later. Free file state federal taxes Adequate accounting. Free file state federal taxes   Your employees must adequately account to you for their travel, meals, and entertainment expenses. Free file state federal taxes They must give you documentary evidence of their travel, mileage, and other employee business expenses. Free file state federal taxes This evidence should include items such as receipts, along with either a statement of expenses, an account book, a day-planner, or similar record in which the employee entered each expense at or near the time the expense was incurred. Free file state federal taxes Excess reimbursement or allowance. Free file state federal taxes   An excess reimbursement or allowance is any amount you pay to an employee that is more than the business-related expenses for which the employee adequately accounted. Free file state federal taxes The employee must return any excess reimbursement or other expense allowance to you within a reasonable period of time. Free file state federal taxes Reasonable period of time. Free file state federal taxes   A reasonable period of time depends on the facts and circumstances. Free file state federal taxes Generally, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Free file state federal taxes You give an advance within 30 days of the time the employee pays or incurs the expense. Free file state federal taxes Your employees adequately account for their expenses within 60 days after the expenses were paid or incurred. Free file state federal taxes Your employees return any excess reimbursement within 120 days after the expenses were paid or incurred. Free file state federal taxes You give a periodic statement (at least quarterly) to your employees that asks them to either return or adequately account for outstanding advances and they comply within 120 days of the date of the statement. Free file state federal taxes How to deduct. Free file state federal taxes   You can claim a deduction for travel, meals, and entertainment expenses if you reimburse your employees for these expenses under an accountable plan. Free file state federal taxes Generally, the amount you can deduct for meals and entertainment is subject to a 50% limit, discussed later. Free file state federal taxes If you are a sole proprietor, or are filing as a single member limited liability company, deduct the travel reimbursement on line 24a and the deductible part of the meals and entertainment reimbursement on line 24b, Schedule C (Form 1040) or line 2, Schedule C-EZ (Form 1040). Free file state federal taxes   If you are filing an income tax return for a corporation, include the reimbursement on the Other deductions line of Form 1120, U. Free file state federal taxes S. Free file state federal taxes Corporation Income Tax Return. Free file state federal taxes If you are filing any other business income tax return, such as a partnership or S corporation return, deduct the reimbursement on the appropriate line of the return as provided in the instructions for that return. Free file state federal taxes Table 11-1. Free file state federal taxes Reporting Reimbursements IF the type of reimbursement (or other expense allowance) arrangement is under THEN the employer reports on Form W-2 An accountable plan with: Actual expense reimbursement:  Adequate accounting made and excess returned No amount. Free file state federal taxes Actual expense reimbursement:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Free file state federal taxes Per diem or mileage allowance up to the federal rate:  Adequate accounting made and excess returned No amount. Free file state federal taxes Per diem or mileage allowance up to the federal rate:  Adequate accounting and return of excess both required but excess not returned The excess amount as wages in box 1. Free file state federal taxes The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free file state federal taxes Per diem or mileage allowance exceeds the federal rate:  Adequate accounting made up to the federal rate only and excess not returned The excess amount as wages in box 1. Free file state federal taxes The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Free file state federal taxes A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan The entire amount as wages in box 1. Free file state federal taxes No reimbursement plan The entire amount as wages in box 1. Free file state federal taxes Per Diem and Car Allowances You can reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. Free file state federal taxes In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Free file state federal taxes Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. Free file state federal taxes Federal rate. Free file state federal taxes   The federal rate can be figured using any one of the following methods. Free file state federal taxes For car expenses: The standard mileage rate. Free file state federal taxes A fixed and variable rate (FAVR). Free file state federal taxes For per diem amounts: The regular federal per diem rate. Free file state federal taxes The standard meal allowance. Free file state federal taxes The high-low rate. Free file state federal taxes Car allowance. Free file state federal taxes   Your employee is considered to have accounted to you for car expenses that do not exceed the standard mileage rate. Free file state federal taxes Beginning in 2013, the standard business mileage rate is 56. Free file state federal taxes 5 cents per mile. Free file state federal taxes   You can choose to reimburse your employees using a fixed and variable rate (FAVR) allowance. Free file state federal taxes This is an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your employees' variable operating costs (such as gas, oil, etc. Free file state federal taxes ) plus a flat amount to cover your employees' fixed costs (such as depreciation, insurance, etc. Free file state federal taxes ). Free file state federal taxes For information on using a FAVR allowance, see Revenue Procedure 2010-51, available at www. Free file state federal taxes irs. Free file state federal taxes gov/irb/2010-51_IRB/ar14. Free file state federal taxes html and Notice 2012-72, available at www. Free file state federal taxes irs. Free file state federal taxes gov/irb/2012-50_IRB/ar10. Free file state federal taxes html. Free file state federal taxes Per diem allowance. Free file state federal taxes   If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. Free file state federal taxes Regular federal per diem rate. Free file state federal taxes   The regular federal per diem rate is the highest amount the federal government will pay to its employees while away from home on travel. Free file state federal taxes It has two components: Lodging expense, and Meal and incidental expense (M&IE). Free file state federal taxes The rates are different for different locations. Free file state federal taxes Publication 1542 lists the rates in the continental United States. Free file state federal taxes Standard meal allowance. Free file state federal taxes   The federal rate for meal and incidental expenses (M&IE) is the standard meal allowance. Free file state federal taxes You can pay only an M&IE allowance to employees who travel away from home if: You pay the employee for actual expenses for lodging based on receipts submitted to you, You provide for the lodging, You pay for the actual expense of the lodging directly to the provider, You do not have a reasonable belief that lodging expenses were incurred by the employee, or The allowance is computed on a basis similar to that used in computing the employee's wages (that is, number of hours worked or miles traveled). Free file state federal taxes Internet access. Free file state federal taxes    Per diem rates are available on the Internet. Free file state federal taxes You can access per diem rates at www. Free file state federal taxes gsa. Free file state federal taxes gov/perdiemrates. Free file state federal taxes High-low method. Free file state federal taxes   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Free file state federal taxes It eliminates the need to keep a current list of the per diem rate for each city. Free file state federal taxes   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 ($65 for M&IE) for certain high-cost locations. Free file state federal taxes All other areas have a per diem amount of $163 ($52 for M&IE). Free file state federal taxes The high-cost locations eligible for the higher per diem amount under the high-low method are listed in Publication 1542. Free file state federal taxes   Effective October 1, 2013, the per diem rate for high-cost locations increased to $251 ($65 for M&IE). Free file state federal taxes The rate for all other locations increased to $170 ($52 for M&IE). Free file state federal taxes For October, November, and December 2013, you can either continue to use the rates described in the preceding paragraph or change to the new rates. Free file state federal taxes However, you must use the same rate for all employees reimbursed under the high-low method. Free file state federal taxes   For more information about the high-low method, see Notice 2013-65, available at www. Free file state federal taxes irs. Free file state federal taxes gov/irb/2013-44_IRB/ar13. Free file state federal taxes html. Free file state federal taxes See Publication 1542 (available on the Internet at IRS. Free file state federal taxes gov) for the current per diem rates for all locations. Free file state federal taxes Reporting per diem and car allowances. Free file state federal taxes   The following discussion explains how to report per diem and car allowances. Free file state federal taxes The manner in which you report them depends on how the allowance compares to the federal rate. Free file state federal taxes See Table 11-1. Free file state federal taxes Allowance less than or equal to the federal rate. Free file state federal taxes   If your allowance for the employee is less than or equal to the appropriate federal rate, that allowance is not included as part of the employee's pay in box 1 of the employee's Form W-2. Free file state federal taxes Deduct the allowance as travel expenses (including meals that may be subject to the 50% limit, discussed later). Free file state federal taxes See How to deduct under Accountable Plans, earlier. Free file state federal taxes Allowance more than the federal rate. Free file state federal taxes   If your employee's allowance is more than the appropriate federal rate, you must report the allowance as two separate items. Free file state federal taxes   Include the allowance amount up to the federal rate in box 12 (code L) of the employee's Form W-2. Free file state federal taxes Deduct it as travel expenses (as explained above). Free file state federal taxes This part of the allowance is treated as reimbursed under an accountable plan. Free file state federal taxes   Include the amount that is more than the federal rate in box 1 (and in boxes 3 and 5 if they apply) of the employee's Form W-2. Free file state federal taxes Deduct it as wages subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Free file state federal taxes This part of the allowance is treated as reimbursed under a nonaccountable plan as explained later under Nonaccountable Plans. Free file state federal taxes Meals and Entertainment Under an accountable plan, you can generally deduct only 50% of any otherwise deductible business-related meal and entertainment expenses you reimburse your employees. Free file state federal taxes The deduction limit applies even if you reimburse them for 100% of the expenses. Free file state federal taxes Application of the 50% limit. Free file state federal taxes   The 50% deduction limit applies to reimbursements you make to your employees for expenses they incur for meals while traveling away from home on business and for entertaining business customers at your place of business, a restaurant, or another location. Free file state federal taxes It applies to expenses incurred at a business convention or reception, business meeting, or business luncheon at a club. Free file state federal taxes The deduction limit may also apply to meals you furnish on your premises to your employees. Free file state federal taxes Related expenses. Free file state federal taxes   Taxes and tips relating to a meal or entertainment activity you reimburse to your employee under an accountable plan are included in the amount subject to the 50% limit. Free file state federal taxes Reimbursements you make for expenses, such as cover charges for admission to a nightclub, rent paid for a room to hold a dinner or cocktail party, or the amount you pay for parking at a sports arena, are all subject to the 50% limit. Free file state federal taxes However, the cost of transportation to and from an otherwise allowable business meal or a business-related entertainment activity is not subject to the 50% limit. Free file state federal taxes Amount subject to 50% limit. Free file state federal taxes   If you provide your employees with a per diem allowance only for meal and incidental expenses, the amount treated as an expense for food and beverages is the lesser of the following. Free file state federal taxes The per diem allowance. Free file state federal taxes The federal rate for M&IE. Free file state federal taxes   If you provide your employees with a per diem allowance that covers lodging, meals, and incidental expenses, you must treat an amount equal to the federal M&IE rate for the area of travel as an expense for food and beverages. Free file state federal taxes If the per diem allowance you provide is less than the federal per diem rate for the area of travel, you can treat 40% of the per diem allowance as the amount for food and beverages. Free file state federal taxes Meal expenses when subject to “hours of service” limits. Free file state federal taxes   You can deduct 80% of the cost of reimbursed meals your employees consume while away from their tax home on business during, or incident to, any period subject to the Department of Transportation's “hours of service” limits. Free file state federal taxes   See Publication 463 for a detailed discussion of individuals subject to the Department of Transportation's “hours of service” limits. Free file state federal taxes De minimis (minimal) fringe benefit. Free file state federal taxes   The 50% limit does not apply to an expense for food or beverage that is excluded from the gross income of an employee because it is a de minimis fringe benefit. Free file state federal taxes See Publication 15-B for additional information on de minimis fringe benefits. Free file state federal taxes Company cafeteria or executive dining room. Free file state federal taxes   The cost of food and beverages you provide primarily to your employees on your business premises is deductible. Free file state federal taxes This includes the cost of maintaining the facilities for providing the food and beverages. Free file state federal taxes These expenses are subject to the 50% limit unless they qualify as a de minimis fringe benefit, as just discussed, or unless they are compensation to your employees (explained later). Free file state federal taxes Employee activities. Free file state federal taxes   The expense of providing recreational, social, or similar activities (including the use of a facility) for your employees is deductible and is not subject to the 50% limit. Free file state federal taxes The benefit must be primarily for your employees who are not highly compensated. Free file state federal taxes   For this purpose, a highly compensated employee is an employee who meets either of the following requirements. Free file state federal taxes Owned a 10% or more interest in the business during the year or the preceding year. Free file state federal taxes An employee is treated as owning any interest owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Free file state federal taxes Received more than $115,000 in pay for the preceding year. Free file state federal taxes You can choose to include only employees who were also in the top 20% of employees when ranked by pay for the preceding year. Free file state federal taxes   For example, the expenses for food, beverages, and entertainment for a company-wide picnic are not subject to the 50% limit. Free file state federal taxes Meals or entertainment treated as compensation. Free file state federal taxes   The 50% limit does not apply to either of the following. Free file state federal taxes Expenses for meals or entertainment that you treat as: Compensation to an employee who was the recipient of the meals or entertainment, and Wages subject to withholding of federal income tax. Free file state federal taxes Expenses for meals or entertainment if: A recipient of the meals or entertainment who is not your employee has to include the expenses in gross income as compensation for services or as a prize or award, and You include that amount on a Form 1099 issued to the recipient, if a Form 1099 is required. Free file state federal taxes Sales of meals or entertainment. Free file state federal taxes   You can deduct the cost of meals or entertainment (including the use of facilities) you sell to the public. Free file state federal taxes For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a business expense that is fully deductible. Free file state federal taxes The 50% limit does not apply to this expense. Free file state federal taxes Providing meals or entertainment to general public to promote goodwill. Free file state federal taxes   You can deduct the cost of providing meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Free file state federal taxes The 50% limit does not apply to this expense. Free file state federal taxes Director, stockholder, or employee meetings. Free file state federal taxes   You can deduct entertainment expenses directly related to business meetings of your employees, partners, stockholders, agents, or directors. Free file state federal taxes You can provide some minor social activities, but the main purpose of the meeting must be your company's business. Free file state federal taxes These expenses are subject to the 50% limit. Free file state federal taxes Trade association meetings. Free file state federal taxes   You can deduct expenses directly related to and necessary for attending business meetings or conventions of certain tax-exempt organizations. Free file state federal taxes These organizations include business leagues, chambers of commerce, real estate boards, and trade and professional associations. Free file state federal taxes Nonaccountable Plans A nonaccountable plan is an arrangement that does not meet the requirements for an accountable plan. Free file state federal taxes All amounts paid, or treated as paid, under a nonaccountable plan are reported as wages on Form W-2. Free file state federal taxes The payments are subject to income tax withholding, social security, Medicare, and federal unemployment taxes. Free file state federal taxes You can deduct the reimbursement as compensation or wages only to the extent it meets the deductibility tests for employees' pay in chapter 2. Free file state federal taxes Deduct the allowable amount as compensation or wages on the appropriate line of your income tax return, as provided in its instructions. Free file state federal taxes Miscellaneous Expenses In addition to travel, meal, and entertainment expenses, there are other expenses you can deduct. Free file state federal taxes Advertising expenses. Free file state federal taxes   You generally can deduct reasonable advertising expenses that are directly related to your business activities. Free file state federal taxes Generally, you cannot deduct amounts paid to influence legislation (i. Free file state federal taxes e. Free file state federal taxes , lobbying). Free file state federal taxes See Lobbying expenses , later. Free file state federal taxes   You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. Free file state federal taxes For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U. Free file state federal taxes S. Free file state federal taxes Savings Bonds, or to participate in similar causes is usually deductible. Free file state federal taxes Anticipated liabilities. Free file state federal taxes   Anticipated liabilities or reserves for anticipated liabilities are not deductible. Free file state federal taxes For example, assume you sold 1-year TV service contracts this year totaling $50,000. Free file state federal taxes From experience, you know you will have expenses of about $15,000 in the coming year for these contracts. Free file state federal taxes You cannot deduct any of the $15,000 this year by charging expenses to a reserve or liability account. Free file state federal taxes You can deduct your expenses only when you actually pay or accrue them, depending on your accounting method. Free file state federal taxes Bribes and kickbacks. Free file state federal taxes   Engaging in the payment of bribes or kickbacks is a serious criminal matter. Free file state federal taxes Such activity could result in criminal prosecution. Free file state federal taxes Any payments that appear to have been made, either directly or indirectly, to an official or employee of any government or an agency or instrumentality of any government are not deductible for tax purposes and are in violation of the law. Free file state federal taxes   Payments paid directly or indirectly to a person in violation of any federal or state law (but only if that state law is generally enforced, defined below) that provides for a criminal penalty or for the loss of a license or privilege to engage in a trade or business are also not allowed as a deduction for tax purposes. Free file state federal taxes Meaning of “generally enforced. Free file state federal taxes ”   A state law is considered generally enforced unless it is never enforced or enforced only for infamous persons or persons whose violations are extraordinarily flagrant. Free file state federal taxes For example, a state law is generally enforced unless proper reporting of a violation of the law results in enforcement only under unusual circumstances. Free file state federal taxes Kickbacks. Free file state federal taxes   A kickback is a payment for referring a client, patient, or customer. Free file state federal taxes The common kickback situation occurs when money or property is given to someone as payment for influencing a third party to purchase from, use the services of, or otherwise deal with the person who pays the kickback. Free file state federal taxes In many cases, the person whose business is being sought or enjoyed by the person who pays the kickback is not aware of the payment. Free file state federal taxes   For example, the Yard Corporation is in the business of repairing ships. Free file state federal taxes It returns 10% of the repair bills as kickbacks to the captains and chief officers of the vessels it repairs. Free file state federal taxes Although this practice is considered an ordinary and necessary expense of getting business, it is clearly a violation of a state law that is generally enforced. Free file state federal taxes These expenditures are not deductible for tax purposes, whether or not the owners of the shipyard are subsequently prosecuted. Free file state federal taxes Form 1099-MISC. Free file state federal taxes   It does not matter whether any kickbacks paid during the tax year are deductible on your income tax return in regards to information reporting. Free file state federal taxes See Form 1099-MISC for more information. Free file state federal taxes Car and truck expenses. Free file state federal taxes   The costs of operating a car, truck, or other vehicle in your business are deductible. Free file state federal taxes For more information on how to figure your deduction, see Publication 463. Free file state federal taxes Charitable contributions. Free file state federal taxes   Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Free file state federal taxes If the payments are charitable contributions or gifts, you cannot deduct them as business expenses. Free file state federal taxes However, corporations (other than S corporations) can deduct charitable contributions on their income tax returns, subject to limitations. Free file state federal taxes See the Instructions for Form 1120 for more information. Free file state federal taxes Sole proprietors, partners in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Free file state federal taxes Example. Free file state federal taxes You paid $15 to a local church for a half-page ad in a program for a concert it is sponsoring. Free file state federal taxes The purpose of the ad was to encourage readers to buy your products. Free file state federal taxes Your payment is not a charitable contribution. Free file state federal taxes You can deduct it as an advertising expense. Free file state federal taxes Example. Free file state federal taxes You made a $100,000 donation to a committee organized by the local Chamber of Commerce to bring a convention to your city, intended to increase business activity, including yours. Free file state federal taxes Your payment is not a charitable contribution. Free file state federal taxes You can deduct it as a business expense. Free file state federal taxes See Publication 526 for a discussion of donated inventory, including capital gain property. Free file state federal taxes Club dues and membership fees. Free file state federal taxes   Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or any other social purpose. Free file state federal taxes This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs, and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Free file state federal taxes Exception. Free file state federal taxes   The following organizations are not treated as clubs organized for business, pleasure, recreation, or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities. Free file state federal taxes Boards of trade. Free file state federal taxes Business leagues. Free file state federal taxes Chambers of commerce. Free file state federal taxes Civic or public service organizations. Free file state federal taxes Professional organizations such as bar associations and medical associations. Free file state federal taxes Real estate boards. Free file state federal taxes Trade associations. Free file state federal taxes Credit card convenience fees. Free file state federal taxes   Credit card companies charge a fee to businesses who accept their cards. Free file state federal taxes This fee when paid or incurred by the business can be deducted as a business expense. Free file state federal taxes Damages recovered. Free file state federal taxes   Special rules apply to compensation you receive for damages sustained as a result of patent infringement, breach of contract or fiduciary duty, or antitrust violations. Free file state federal taxes You must include this compensation in your income. Free file state federal taxes However, you may be able to take a special deduction. Free file state federal taxes The deduction applies only to amounts recovered for actual economic injury, not any additional amount. Free file state federal taxes The deduction is the smaller of the following. Free file state federal taxes The amount you received or accrued for damages in the tax year reduced by the amount you paid or incurred in the year to recover that amount. Free file state federal taxes Your losses from the injury you have not deducted. Free file state federal taxes Demolition expenses or losses. Free file state federal taxes   Amounts paid or incurred to demolish a structure are not deductible. Free file state federal taxes These amounts are added to the basis of the land where the demolished structure was located. Free file state federal taxes Any loss for the remaining undepreciated basis of a demolished structure would not be recognized until the property is disposed of. Free file state federal taxes Education expenses. Free file state federal taxes   Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Free file state federal taxes See Education Expenses in chapter 2. Free file state federal taxes   You can also deduct the cost of your own education (including certain related travel) related to your trade or business. Free file state federal taxes You must be able to show the education maintains or improves skills required in your trade or business, or that it is required by law or regulations, for keeping your license to practice, status, or job. Free file state federal taxes For example, an attorney can deduct the cost of attending Continuing Legal Education (CLE) classes that are required by the state bar association to maintain his or her license to practice law. Free file state federal taxes   Education expenses you incur to meet the minimum requirements of your present trade or business, or those that qualify you for a new trade or business, are not deductible. Free file state federal taxes This is true even if the education maintains or improves skills presently required in your business. Free file state federal taxes For more information on education expenses, see Publication 970. Free file state federal taxes Franchise, trademark, trade name. Free file state federal taxes   If you buy a franchise, trademark, or trade name, you can deduct the amount you pay or incur as a business expense only if your payments are part of a series of payments that are: Contingent on productivity, use, or disposition of the item, Payable at least annually for the entire term of the transfer agreement, and Substantially equal in amount (or payable under a fixed formula). Free file state federal taxes   When determining the term of the transfer agreement, include all renewal options and any other period for which you and the transferrer reasonably expect the agreement to be renewed. Free file state federal taxes   A franchise includes an agreement that gives one of the parties to the agreement the right to distribute, sell, or provide goods, services, or facilities within a specified area. Free file state federal taxes Impairment-related expenses. Free file state federal taxes   If you are disabled, you can deduct expenses necessary for you to be able to work (impairment-related expenses) as a business expense, rather than as a medical expense. Free file state federal taxes   You are disabled if you have either of the following. Free file state federal taxes A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed. Free file state federal taxes A physical or mental impairment that substantially limits one or more of your major life activities. Free file state federal taxes   The expense qualifies as a business expense if all the following apply. Free file state federal taxes Your work clearly requires the expense for you to satisfactorily perform that work. Free file state federal taxes The goods or services purchased are clearly not needed or used, other than incidentally, in your personal activities. Free file state federal taxes Their treatment is not specifically provided for under other tax law provisions. Free file state federal taxes Example. Free file state federal taxes You are blind. Free file state federal taxes You must use a reader to do your work, both at and away from your place of work. Free file state federal taxes The reader's services are only for your work. Free file state federal taxes You can deduct your expenses for the reader as a business expense. Free file state federal taxes Internet-related expenses. Free file state federal taxes   Generally, you can deduct internet-related expenses including domain registrations fees and webmaster consulting costs. Free file state federal taxes If you are starting a business you may have to amortize these expenses as start-up costs. Free file state federal taxes For more information about amortizing start-up and organizational costs, see chapter 8. Free file state federal taxes Interview expense allowances. Free file state federal taxes   Reimbursements you make to job candidates for transportation or other expenses related to interviews for possible employment are not wages. Free file state federal taxes You can deduct the reimbursements as a business expense. Free file state federal taxes However, expenses for food, beverages, and entertainment are subject to the 50% limit discussed earlier under Meals and Entertainment. Free file state federal taxes Legal and professional fees. Free file state federal taxes   Fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business are deductible as business expenses. Free file state federal taxes However, usually legal fees you pay to acquire business assets are not deductible. Free file state federal taxes These costs are added to the basis of the property. Free file state federal taxes   Fees that include payments for work of a personal nature (such as drafting a will, or damages arising from a personal injury) are not allowed as a business deduction on Schedule C or C-EZ. Free file state federal taxes If the invoice includes both business and personal charges, compute the business portion as follows: multiply the total amount of the bill by a fraction, the numerator of which is the amount attributable to business matters, the denominator of which is the total amount paid. Free file state federal taxes The result is the portion of the invoice attributable to business expenses. Free file state federal taxes The portion attributable to personal matters is the difference between the total amount and the business portion (computed above). Free file state federal taxes   Legal fees relating to personal tax advice may be deductible on Schedule A (Form 1040), if you itemize deductions. Free file state federal taxes However, the deduction is subject to the 2% limitation on miscellaneous itemized deductions. Free file state federal taxes See Publication 529, Miscellaneous Deductions. Free file state federal taxes Tax preparation fees. Free file state federal taxes   The cost of hiring a tax professional, such as a C. Free file state federal taxes P. Free file state federal taxes A. Free file state federal taxes , to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C or Schedule C-EZ. Free file state federal taxes Any remaining cost may be deductible on Schedule A (Form 1040) if you itemize deductions. Free file state federal taxes   You can also claim a business deduction for amounts paid or incurred in resolving asserted tax deficiencies for your business operated as a sole proprietor. Free file state federal taxes Licenses and regulatory fees. Free file state federal taxes   Licenses and regulatory fees for your trade or business paid annually to state or local governments generally are deductible. Free file state federal taxes Some licenses and fees may have to be amortized. Free file state federal taxes See chapter 8 for more information. Free file state federal taxes Lobbying expenses. Free file state federal taxes   Generally, lobbying expenses are not deductible. Free file state federal taxes Lobbying expenses include amounts paid or incurred for any of the following activities. Free file state federal taxes Influencing legislation. Free file state federal taxes Participating in or intervening in any political campaign for, or against, any candidate for public office. Free file state federal taxes Attempting to influence the general public, or segments of the public, about elections, legislative matters, or referendums. Free file state federal taxes Communicating directly with covered executive branch officials (defined later) in any attempt to influence the official actions or positions of those officials. Free file state federal taxes Researching, preparing, planning, or coordinating any of the preceding activities. Free file state federal taxes   Your expenses for influencing legislation and communicating directly with a covered executive branch official include a portion of your labor costs and general and administrative costs of your business. Free file state federal taxes For information on making this allocation, see section 1. Free file state federal taxes 162-28 of the regulations. Free file state federal taxes   You cannot claim a charitable or business expense deduction for amounts paid to an organization if both of the following apply. Free file state federal taxes The organization conducts lobbying activities on matters of direct financial interest to your business. Free file state federal taxes A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses. Free file state federal taxes   If a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues. Free file state federal taxes Covered executive branch official. Free file state federal taxes   For purposes of this discussion, a covered executive branch official is any of the following. Free file state federal taxes The President. Free file state federal taxes The Vice President. Free file state federal taxes Any officer or employee of the White House Office of the Executive Office of the President and the two most senior level officers of each of the other agencies in the Executive Office. Free file state federal taxes Any individual who: Is serving in a position in Level I of the Executive Schedule under section 5312 of title 5, United States Code, Has been designated by the President as having Cabinet-level status, or Is an immediate deputy of an individual listed in item (a) or (b). Free file state federal taxes Exceptions to denial of deduction. Free file state federal taxes   The general denial of the deduction does not apply to the following. Free file state federal taxes Expenses of appearing before, or communicating with, any committee or member of any local council or similar governing body concerning its legislation (local legislation) if the legislation is of direct interest to you or to you and an organization of which you are a member. Free file state federal taxes An Indian tribal government is treated as a local council or similar governing body. Free file state federal taxes Any in-house expenses for influencing legislation and communicating directly with a covered executive branch official if those expenses for the tax year do not exceed $2,000 (excluding overhead expenses). Free file state federal taxes Expenses incurred by taxpayers engaged in the trade or business of lobbying (professional lobbyists) on behalf of another person (but does apply to payments by the other person to the lobbyist for lobbying activities). Free file state federal taxes Moving machinery. Free file state federal taxes   Generally, the cost of moving machinery from one city to another is a deductible expense. Free file state federal taxes So is the cost of moving machinery from one plant to another, or from one part of your plant to another. Free file state federal taxes You can deduct the cost of installing the machinery in the new location. Free file state federal taxes However, you must capitalize the costs of installing or moving newly purchased machinery. Free file state federal taxes Outplacement services. Free file state federal taxes   The costs of outplacement services you provide to your employees to help them find new employment, such as career counseling, résumé assistance, skills assessment, etc. Free file state federal taxes are deductible. Free file state federal taxes   The costs of outplacement services may cover more than one deduction category. Free file state federal taxes For example, deduct as a utilities expense the cost of telephone calls made under this service and deduct as rental expense the cost of renting machinery and equipment for this service. Free file state federal taxes   For information on whether the value of outplacement services is includable in your employees' income, see Publication 15-B. Free file state federal taxes Penalties and fines. Free file state federal taxes   Penalties paid for late performance or nonperformance of a contract are generally deductible. Free file state federal taxes For instance, you own and operate a construction company. Free file state federal taxes Under a contract, you are to finish construction of a building by a certain date. Free file state federal taxes Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. Free file state federal taxes You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. Free file state federal taxes These additional costs are deductible business expenses. Free file state federal taxes   On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible. Free file state federal taxes These fines or penalties include the following amounts. Free file state federal taxes Paid because of a conviction for a crime or after a plea of guilty or no contest in a criminal proceeding. Free file state federal taxes Paid as a penalty imposed by federal, state, or local law in a civil action, including certain additions to tax and additional amounts and assessable penalties imposed by the Internal Revenue Code. Free file state federal taxes Paid in settlement of actual or possible liability for a fine or penalty, whether civil or criminal. Free file state federal taxes Forfeited as collateral posted for a proceeding that could result in a fine or penalty. Free file state federal taxes   Examples of nondeductible penalties and fines include the following. Free file state federal taxes Fines for violating city housing codes. Free file state federal taxes Fines paid by truckers for violating state maximum highway weight laws. Free file state federal taxes Fines for violating air quality laws. Free file state federal taxes Civil penalties for violating federal laws regarding mining safety standards and discharges into navigable waters. Free file state federal taxes   A fine or penalty does not include any of the following. Free file state federal taxes Legal fees and related expenses to defend yourself in a prosecution or civil action for a violation of the law imposing the fine or civil penalty. Free file state federal taxes Court costs or stenographic and printing charges. Free file state federal taxes Compensatory damages paid to a government. Free file state federal taxes Political contributions. Free file state federal taxes   Contributions or gifts paid to political parties or candidates are not deductible. Free file state federal taxes In addition, expenses paid or incurred to take part in any political campaign of a candidate for public office are not deductible. Free file state federal taxes Indirect political contributions. Free file state federal taxes   You cannot deduct indirect political contributions and costs of taking part in political activities as business expenses. Free file state federal taxes Examples of nondeductible expenses include the following. Free file state federal taxes Advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate. Free file state federal taxes Admission to a dinner or program (including, but not limited to, galas, dances, film presentations, parties, and sporting events) if any of the proceeds from the function are for, or intended for, the use of a political party or candidate. Free file state federal taxes Admission to an inaugural ball, gala, parade, concert, or similar event if identified with a political party or candidate. Free file state federal taxes Repairs. Free file state federal taxes   The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. Free file state federal taxes Routine maintenance that keeps your property in a normal efficient operating condition, but that does not materially increase the value or substantially prolong the useful life of the property, is deductible in the year that it is incurred. Free file state federal taxes Otherwise, the cost must be capitalized and depreciated. Free file state federal taxes See Form 4562 and its instructions for how to compute and claim the depreciation deduction. Free file state federal taxes   The cost of repairs includes the costs of labor, supplies, and certain other items. Free file state federal taxes The value of your own labor is not deductible. Free file state federal taxes Examples of repairs include: Reconditioning floors (but not replacement), Repainting the interior and exterior walls of a building, Cleaning and repairing roofs and gutters, and Fixing plumbing leaks (but not replacement of fixtures). Free file state federal taxes Repayments. Free file state federal taxes   If you had to repay an amount you included in your income in an earlier year, you may be able to deduct the amount repaid for the year in which you repaid it. Free file state federal taxes Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Free file state federal taxes Type of deduction. Free file state federal taxes   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Free file state federal taxes For instance, if you repay an amount you previously reported as a capital gain, deduct the repayment as a capital loss on Form 8949. Free file state federal taxes If you reported it as self-employment income, deduct it as a business deduction on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Free file state federal taxes   If you reported the amount as wages, unemployment compensation, or other nonbusiness ordinary income, enter it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is subject to the 2% limitation. Free file state federal taxes However, if the repayment is over $3,000 and Method 1 (discussed later) applies, deduct it on Schedule A (Form 1040) as a miscellaneous itemized deduction that is not subject to the 2% limitation. Free file state federal taxes Repayment—$3,000 or less. Free file state federal taxes   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Free file state federal taxes Repayment—over $3,000. Free file state federal taxes   If the amount you repaid was more than $3,000, you can deduct the repayment, as described earlier. Free file state federal taxes However, you can instead choose to take a tax credit for the year of repayment if you included the income under a “claim of right. Free file state federal taxes ” This means that at the time you included the income, it appeared that you had an unrestricted right to it. Free file state federal taxes If you qualify for this choice, figure your tax under both methods and use the method that results in less tax. Free file state federal taxes Method 1. Free file state federal taxes   Figure your tax for 2013 claiming a deduction for the repaid amount. Free file state federal taxes Method 2. Free file state federal taxes   Figure your tax for 2013 claiming a credit for the repaid amount. Free file state federal taxes Follow these steps. Free file state federal taxes Figure your tax for 2013 without deducting the repaid amount. Free file state federal taxes Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Free file state federal taxes Subtract the tax in (2) from the tax shown on your return for the earlier year. Free file state federal taxes This is the amount of your credit. Free file state federal taxes Subtract the answer in (3) from the tax for 2013 figured without the deduction (step 1). Free file state federal taxes   If Method 1 results in less tax, deduct the amount repaid as discussed earlier under Type of deduction. Free file state federal taxes   If Method 2 results in less tax, claim the credit on line 71 of Form 1040, and write “I. Free file state federal taxes R. Free file state federal taxes C. Free file state federal taxes 1341” next to line 71. Free file state federal taxes Example. Free file state federal taxes For 2012, you filed a return and reported your income on the cash method. Free file state federal taxes In 2013, you repaid $5,000 included in your 2012 gross income under a claim of right. Free file state federal taxes Your filing status in 2013 and 2012 is single. Free file state federal taxes Your income and tax for both years are as follows:   2012  With Income 2012  Without Income Taxable Income $15,000 $10,000 Tax $ 1,819 $ 1,069   2013  Without Deduction 2013  With Deduction Taxable Income $49,950 $44,950 Tax $8,423 $7,173 Your tax under Method 1 is $7,173. Free file state federal taxes Your tax under Method 2 is $7,673, figured as follows: Tax previously determined for 2012 $ 1,819 Less: Tax as refigured − 1,069 Decrease in 2012 tax $ 750 Regular tax liability for 2013 $8,423 Less: Decrease in 2012 tax − 750 Refigured tax for 2013 $ 7,673 Because you pay less tax under Method 1, you should take a deduction for the repayment in 2013. Free file state federal taxes Repayment does not apply. Free file state federal taxes   This discussion does not apply to the following. Free file state federal taxes Deductions for bad debts. Free file state federal taxes Deductions from sales to customers, such as returns and allowances, and similar items. Free file state federal taxes Deductions for legal and other expenses of contesting the repayment. Free file state federal taxes Year of deduction (or credit). Free file state federal taxes   If you use the cash method of accounting, you can take the deduction (or credit, if applicable) for the tax year in which you actually make the repayment. Free file state federal taxes If you use any other accounting method, you can deduct the repayment or claim a credit for it only for the tax year in which it is a proper deduction under your accounting method. Free file state federal taxes For example, if you use the accrual method, you are entitled to the deduction or credit in the tax year in which the obligation for the repayment accrues. Free file state federal taxes Subscriptions. Free file state federal taxes   Subscriptions to professional, technical, and trade journals that deal with your business field are deductible. Free file state federal taxes Supplies and materials. Free file state federal taxes   Unless you have deducted the cost in any earlier year, you generally can deduct the cost of materials and supplies actually consumed and used during the tax year. Free file state federal taxes   If you keep incidental materials and supplies on hand, you can deduct the cost of the incidental materials and supplies you bought during the tax year if all the following requirements are met. Free file state federal taxes You do not keep a record of when they are used. Free file state federal taxes You do not take an inventory of the amount on hand at the beginning and end of the tax year. Free file state federal taxes This method does not distort your income. Free file state federal taxes   You can also deduct the cost of books, professional instruments, equipment, etc. Free file state federal taxes , if you normally use them within a year. Free file state federal taxes However, if the usefulness of these items extends substantially beyond the year they are placed in service, you generally must recover their costs through depreciation. Free file state federal taxes For more information regarding depreciation see Publication 946, How To Depreciate Property. Free file state federal taxes Utilities. Free file state federal taxes   Business expenses for heat, lights, power, telephone service, and water and sewerage are deductible. Free file state federal taxes However, any part due to personal use is not deductible. Free file state federal taxes Telephone. Free file state federal taxes   You cannot deduct the cost of basic local telephone service (including any taxes) for the first telephone line you have in your home, even if you have an office in your home. Free file state federal taxes However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. Free file state federal taxes Prev  Up  Next   Home   More Online Publications