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Free Online State Taxes

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Free Online State Taxes

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

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