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How Do I Amend My Tax Return

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How Do I Amend My Tax Return

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

The How Do I Amend My Tax Return

How do i amend my tax return Publication 514 - Main Content Table of Contents Choosing To Take Credit or DeductionChoice Applies to All Qualified Foreign Taxes Making or Changing Your Choice Why Choose the Credit?Credit for Taxes Paid or Accrued Foreign Currency and Exchange Rates Foreign Tax Redetermination Who Can Take the Credit?U. How do i amend my tax return S. How do i amend my tax return Citizens Resident Aliens Nonresident Aliens What Foreign Taxes Qualify for the Credit?Tax Must Be Imposed on You You Must Have Paid or Accrued the Tax Tax Must Be the Legal and Actual Foreign Tax Liability Tax Must Be an Income Tax (or Tax in Lieu of Income Tax) Foreign Taxes for Which You Cannot Take a CreditTaxes on Excluded Income Taxes for Which You Can Only Take an Itemized Deduction Taxes on Foreign Mineral Income Taxes From International Boycott Operations Taxes on Combined Foreign Oil and Gas Income Taxes of U. How do i amend my tax return S. How do i amend my tax return Persons Controlling Foreign Corporations and Partnerships Taxes Related to a Foreign Tax Credit Splitting Event How To Figure the CreditLimit on the Credit Separate Limit Income Allocation of Foreign Taxes Foreign Taxes From a Partnership or an S Corporation Figuring the Limit Qualified Dividends Capital Gains and Losses Allocation of Foreign and U. How do i amend my tax return S. How do i amend my tax return Losses Tax Treaties Carryback and CarryoverTime Limit on Tax Assessment Claim for Refund Taxes All Credited or All Deducted Married Couples How To Claim the CreditForm 1116 Records To Keep Simple Example — Filled-In Form 1116Part I—Taxable Income or Loss From Sources Outside the United States (for Category Checked Above) Part II—Foreign Taxes Paid or Accrued Part III—Figuring the Credit Part IV—Summary of Credits From Separate Parts III Comprehensive Example — Filled-In Form 1116Foreign earned income. How do i amend my tax return Employee business expenses. How do i amend my tax return Forms 1116 Computation of Taxable Income Part I—Taxable Income or Loss From Sources Outside the United States (for Category Checked Above) Part II—Foreign Taxes Paid or Accrued Part III—Figuring the Credit Part IV—Summary of Credits From Separate Parts III Unused Foreign Taxes How To Get Tax HelpLow Income Taxpayer Clinics Choosing To Take Credit or Deduction You can choose whether to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction. How do i amend my tax return You can change your choice for each year's taxes. How do i amend my tax return To choose the foreign tax credit, in most cases you must complete Form 1116 and attach it to your U. How do i amend my tax return S. How do i amend my tax return tax return. How do i amend my tax return However, you may qualify for the exception that allows you to claim the foreign tax credit without using Form 1116. How do i amend my tax return See How To Figure the Credit , later. How do i amend my tax return To choose to claim the taxes as an itemized deduction, use Schedule A (Form 1040), Itemized Deductions. How do i amend my tax return Figure your tax both ways—claiming the credit and claiming the deduction. How do i amend my tax return Then fill out your return the way that benefits you more. How do i amend my tax return See Why Choose the Credit, later. How do i amend my tax return Choice Applies to All Qualified Foreign Taxes As a general rule, you must choose to take either a credit or a deduction for all qualified foreign taxes. How do i amend my tax return If you choose to take a credit for qualified foreign taxes, you must take the credit for all of them. How do i amend my tax return You cannot deduct any of them. How do i amend my tax return Conversely, if you choose to deduct qualified foreign taxes, you must deduct all of them. How do i amend my tax return You cannot take a credit for any of them. How do i amend my tax return See What Foreign Taxes Qualify for the Credit , later, for the meaning of qualified foreign taxes. How do i amend my tax return There are exceptions to this general rule, which are described next. How do i amend my tax return Exceptions for foreign taxes not allowed as a credit. How do i amend my tax return   Even if you claim a credit for other foreign taxes, you can deduct any foreign tax that is not allowed as a credit if: You paid the tax to a country for which a credit is not allowed because it provides support for acts of international terrorism, or because the United States does not have or does not conduct diplomatic relations with it or recognize its government and that government is not otherwise eligible to purchase defense articles or services under the Arms Export Control Act, You paid withholding tax on dividends from foreign corporations whose stock you did not hold for the required period of time, You paid withholding tax on income or gain (other than dividends) from property you did not hold for the required period of time, You paid withholding tax on income or gain to the extent you had to make related payments on positions in substantially similar or related property, You participated in or cooperated with an international boycott, You paid taxes in connection with the purchase or sale of oil or gas, or You paid or accrued taxes on income or gain in connection with a covered asset acquisition. How do i amend my tax return Covered asset acquisitions include certain acquisitions that result in a stepped-up basis for U. How do i amend my tax return S. How do i amend my tax return tax purposes. How do i amend my tax return For more information, see Internal Revenue Code section 901(m). How do i amend my tax return The IRS intends to issue guidance that will explain this provision in greater detail. How do i amend my tax return   For more information on these items, see Taxes for Which You Can Only Take an Itemized Deduction , later, under Foreign Taxes for Which You Cannot Take a Credit. How do i amend my tax return Foreign taxes that are not income taxes. How do i amend my tax return   In most cases, only foreign income taxes qualify for the foreign tax credit. How do i amend my tax return Other taxes, such as foreign real and personal property taxes, do not qualify. How do i amend my tax return But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. How do i amend my tax return   In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. How do i amend my tax return However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040). How do i amend my tax return Carrybacks and carryovers. How do i amend my tax return   There is a limit on the credit you can claim in a tax year. How do i amend my tax return If your qualified foreign taxes exceed the credit limit, you may be able to carry over or carry back the excess to another tax year. How do i amend my tax return If you deduct qualified foreign taxes in a tax year, you cannot use a carryback or carryover in that year. How do i amend my tax return That is because you cannot take both a deduction and a credit for qualified foreign taxes in the same tax year. How do i amend my tax return   For more information on the limit, see How To Figure the Credit , later. How do i amend my tax return For more information on carrybacks and carryovers, see Carryback and Carryover , later. How do i amend my tax return Making or Changing Your Choice You can make or change your choice to claim a deduction or credit at any time during the period within 10 years from the regular due date for filing the return (without regard to any extension of time to file) for the tax year in which the taxes were actually paid or accrued. How do i amend my tax return You make or change your choice on your tax return (or on an amended return) for the year your choice is to be effective. How do i amend my tax return Example. How do i amend my tax return You paid foreign taxes for the last 13 years and chose to deduct them on your U. How do i amend my tax return S. How do i amend my tax return income tax returns. How do i amend my tax return You were timely in both filing your returns and paying your U. How do i amend my tax return S. How do i amend my tax return tax liability. How do i amend my tax return In February 2013, you file an amended return for tax year 2002 choosing to take a credit for your 2002 foreign taxes because you now realize that the credit is more advantageous than the deduction for that year. How do i amend my tax return Because the regular due date of your 2002 return was April 15, 2003, this choice is timely (within 10 years). How do i amend my tax return Because there is a limit on the credit for your 2002 foreign tax, you have unused 2002 foreign taxes. How do i amend my tax return Ordinarily, you first carry back unused foreign taxes arising in 2002 to, and claim them as a credit in, the 2 preceding tax years. How do i amend my tax return If you are unable to claim all of them in those 2 years, you carry them forward to the 10 years following the year in which they arose. How do i amend my tax return Because you originally chose to deduct your foreign taxes and the 10-year period for changing the choice for 2000 and 2001 has passed, you cannot change your choice and carry the unused 2002 foreign taxes back to tax years 2000 and 2001. How do i amend my tax return Because the 10-year periods for changing the choice have not passed for your 2003 through 2012 income tax returns, you can still choose to claim the credit for those years and carry forward any unused 2002 foreign taxes. How do i amend my tax return However, you must reduce the unused 2002 foreign taxes that you carry forward by the amount that would have been allowed as a carryback if you had timely carried back the foreign tax to tax years 2000 and 2001. How do i amend my tax return You cannot take a credit or a deduction for foreign taxes paid on income you exclude under the foreign earned income exclusion or the foreign housing exclusion. How do i amend my tax return See Foreign Earned Income and Housing Exclusions under Foreign Taxes for Which You Cannot Take a Credit, later. How do i amend my tax return Why Choose the Credit? The foreign tax credit is intended to relieve you of a double tax burden when your foreign source income is taxed by both the United States and the foreign country. How do i amend my tax return In most cases, if the foreign tax rate is higher than the U. How do i amend my tax return S. How do i amend my tax return rate, there will be no U. How do i amend my tax return S. How do i amend my tax return tax on the foreign income. How do i amend my tax return If the foreign tax rate is lower than the U. How do i amend my tax return S. How do i amend my tax return rate, U. How do i amend my tax return S. How do i amend my tax return tax on the foreign income will be limited to the difference between the rates. How do i amend my tax return The foreign tax credit can only reduce U. How do i amend my tax return S. How do i amend my tax return taxes on foreign source income; it cannot reduce U. How do i amend my tax return S. How do i amend my tax return taxes on U. How do i amend my tax return S. How do i amend my tax return source income. How do i amend my tax return Although no one rule covers all situations, in most cases it is better to take a credit for qualified foreign taxes than to deduct them as an itemized deduction. How do i amend my tax return This is because: A credit reduces your actual U. How do i amend my tax return S. How do i amend my tax return income tax on a dollar-for-dollar basis, while a deduction reduces only your income subject to tax, You can choose to take the foreign tax credit even if you do not itemize your deductions. How do i amend my tax return You then are allowed the standard deduction in addition to the credit, and If you choose to take the foreign tax credit, and the taxes paid or accrued exceed the credit limit for the tax year, you may be able to carry over or carry back the excess to another tax year. How do i amend my tax return (See Limit on credit under How To Figure the Credit, later. How do i amend my tax return ) Example 1. How do i amend my tax return For 2013, you and your spouse have adjusted gross income of $80,300, including $20,000 of dividend income from foreign sources. How do i amend my tax return None of the dividends are qualified dividends. How do i amend my tax return You file a joint return and can claim two $3,900 exemptions. How do i amend my tax return You had to pay $2,000 in foreign income taxes on the dividend income. How do i amend my tax return If you take the foreign taxes as an itemized deduction, your total itemized deductions are $15,000. How do i amend my tax return Your taxable income then is $57,500 and your tax is $7,736. How do i amend my tax return If you take the credit instead, your itemized deductions are only $13,000. How do i amend my tax return Your taxable income then is $59,500 and your tax before the credit is $8,036. How do i amend my tax return After the credit, however, your tax is only $6,036. How do i amend my tax return Therefore, your tax is $1,700 lower ($7,736 − $6,036) by taking the credit. How do i amend my tax return Example 2. How do i amend my tax return In 2013, you receive investment income of $5,000 from a foreign country, which imposes a tax of $1,500 on that income. How do i amend my tax return You report on your U. How do i amend my tax return S. How do i amend my tax return return this income as well as $56,000 of U. How do i amend my tax return S. How do i amend my tax return source wages and an allowable $49,000 partnership loss from a U. How do i amend my tax return S. How do i amend my tax return partnership. How do i amend my tax return Your share of the partnership's gross income is $25,000 and your share of its expenses is $74,000. How do i amend my tax return You are single, entitled to one $3,900 exemption, and have other itemized deductions of $6,850. How do i amend my tax return If you deduct the foreign tax on your U. How do i amend my tax return S. How do i amend my tax return return, your taxable income is a negative $250 ($5,000 + $56,000 − $49,000 − $1,500 − $6,850 − $3,900) and your tax is $0. How do i amend my tax return If you take the credit instead, your taxable income is $1,250 ($5,000 + $56,000 − $49,000 − $3,900 − $6,850) and your tax before the credit is $126. How do i amend my tax return You can take a credit of only $113 because of limits discussed later. How do i amend my tax return Your tax after the credit is $13 ($126 − $113), which is $13 more than if you deduct the foreign tax. How do i amend my tax return If you choose the credit, you will have unused foreign taxes of $1,387 ($1,500 − $113). How do i amend my tax return When deciding whether to take the credit or the deduction this year, you will need to consider whether you can benefit from a carryback or carryover of that unused foreign tax. How do i amend my tax return Credit for Taxes Paid or Accrued You can claim the credit for a qualified foreign tax in the tax year in which you pay it or accrue it, depending on your method of accounting. How do i amend my tax return “Tax year” refers to the tax year for which your U. How do i amend my tax return S. How do i amend my tax return return is filed, not the tax year for which your foreign return is filed. How do i amend my tax return Accrual method of accounting. How do i amend my tax return   If you use an accrual method of accounting, you can claim the credit only in the year in which you accrue the tax. How do i amend my tax return You are using an accrual method of accounting if you report income when you earn it, rather than when you receive it, and you deduct your expenses when you incur them, rather than when you pay them. How do i amend my tax return   In most cases, foreign taxes accrue when all the events have taken place that fix the amount of the tax and your liability to pay it. How do i amend my tax return Generally, this occurs on the last day of the tax year for which your foreign return is filed. How do i amend my tax return Contesting your foreign tax liability. How do i amend my tax return   If you are contesting your foreign tax liability, you cannot accrue it and take a credit until the amount of foreign tax due is finally determined. How do i amend my tax return However, if you choose to pay the tax liability you are contesting, you can take a credit for the amount you pay before a final determination of foreign tax liability is made. How do i amend my tax return Once your liability is determined, the foreign tax credit is allowable for the year to which the foreign tax relates. How do i amend my tax return If the amount of foreign taxes taken as a credit differs from the final foreign tax liability, you may have to adjust the credit, as discussed later under Foreign Tax Redetermination . How do i amend my tax return You may have to post a bond. How do i amend my tax return   If you claim a credit for taxes accrued but not paid, you may have to post an income tax bond to guarantee your payment of any tax due in the event the amount of foreign tax paid differs from the amount claimed. How do i amend my tax return   The IRS can request this bond at any time without regard to the Time Limit on Tax Assessment discussed later under Carryback and Carryover. How do i amend my tax return Cash method of accounting. How do i amend my tax return   If you use the cash method of accounting, you can choose to take the credit either in the year you pay the tax or in the year you accrue it. How do i amend my tax return You are using the cash method of accounting if you report income in the year you actually or constructively receive it, and deduct expenses in the year you pay them. How do i amend my tax return Choosing to take credit in the year taxes accrue. How do i amend my tax return   Even if you use the cash method of accounting, you can choose to take a credit for foreign taxes in the year they accrue. How do i amend my tax return You make the choice by checking the box in Part II of Form 1116. How do i amend my tax return Once you make that choice, you must follow it in all later years and take a credit for foreign taxes in the year they accrue. How do i amend my tax return   In addition, the choice to take the credit when foreign taxes accrue applies to all foreign taxes qualifying for the credit. How do i amend my tax return You cannot take a credit for some foreign taxes when paid and take a credit for others when accrued. How do i amend my tax return   If you make the choice to take the credit when foreign taxes accrue and pay them in a later year, you cannot claim a deduction for any part of the previously accrued taxes. How do i amend my tax return Credit based on taxes paid in earlier year. How do i amend my tax return   If, in earlier years, you took the credit based on taxes paid, and this year you choose to take the credit based on taxes accrued, you may be able to take the credit this year for taxes from more than one year. How do i amend my tax return Example. How do i amend my tax return Last year you took the credit based on taxes paid. How do i amend my tax return This year you chose to take the credit based on taxes accrued. How do i amend my tax return During the year you paid foreign income taxes owed for last year. How do i amend my tax return You also accrued foreign income taxes for this year that you did not pay by the end of the year. How do i amend my tax return You can base the credit on your return for this year on both last year's taxes that you paid and this year's taxes that you accrued. How do i amend my tax return Foreign Currency and Exchange Rates U. How do i amend my tax return S. How do i amend my tax return income tax is imposed on income expressed in U. How do i amend my tax return S. How do i amend my tax return dollars, while in most cases the foreign tax is imposed on income expressed in foreign currency. How do i amend my tax return Therefore, fluctuations in the value of the foreign currency relative to the U. How do i amend my tax return S. How do i amend my tax return dollar may affect the foreign tax credit. How do i amend my tax return Translating foreign currency into U. How do i amend my tax return S. How do i amend my tax return dollars. How do i amend my tax return   If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. How do i amend my tax return S. How do i amend my tax return dollars. How do i amend my tax return How and when you do this depends on your functional currency. How do i amend my tax return In most cases, your functional currency is the U. How do i amend my tax return S. How do i amend my tax return dollar unless you are required to use the currency of a foreign country. How do i amend my tax return   You must make all federal income tax determinations in your functional currency. How do i amend my tax return The U. How do i amend my tax return S. How do i amend my tax return dollar is the functional currency for all taxpayers except some qualified business units. How do i amend my tax return A qualified business unit is a separate and clearly identified unit of a trade or business that maintains separate books and records. How do i amend my tax return Unless you are self-employed, your functional currency is the U. How do i amend my tax return S. How do i amend my tax return dollar. How do i amend my tax return   Even if you are self-employed and have a qualified business unit, your functional currency is the U. How do i amend my tax return S. How do i amend my tax return dollar if any of the following apply. How do i amend my tax return You conduct the business primarily in dollars. How do i amend my tax return The principal place of business is located in the United States. How do i amend my tax return You choose to or are required to use the dollar as your functional currency. How do i amend my tax return The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. How do i amend my tax return   If your functional currency is the U. How do i amend my tax return S. How do i amend my tax return dollar, you must immediately translate into dollars all items of income, expense, etc. How do i amend my tax return , that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. How do i amend my tax return If there is more than one exchange rate, use the one that most properly reflects your income. How do i amend my tax return In most cases, you can get exchange rates from banks and U. How do i amend my tax return S. How do i amend my tax return Embassies. How do i amend my tax return   If your functional currency is not the U. How do i amend my tax return S. How do i amend my tax return dollar, make all income tax determinations in your functional currency. How do i amend my tax return At the end of the year, translate the results, such as income or loss, into U. How do i amend my tax return S. How do i amend my tax return dollars to report on your income tax return. How do i amend my tax return    For more information, write to: Internal Revenue Service International Section Philadelphia, PA 19255-0725 Rate of exchange for foreign taxes paid. How do i amend my tax return   Use the rate of exchange in effect on the date you paid the foreign taxes to the foreign country unless you meet the exception discussed next. How do i amend my tax return If your tax was withheld in foreign currency, use the rate of exchange in effect for the date on which the tax was withheld. How do i amend my tax return If you make foreign estimated tax payments, you use the rate of exchange in effect for the date on which you made the estimated tax payment. How do i amend my tax return   The exchange rate rules discussed here apply even if the foreign taxes are paid or accrued with respect to a foreign tax credit splitting event (discussed later). How do i amend my tax return Exception. How do i amend my tax return   If you claim the credit for foreign taxes on an accrual basis, in most cases you must use the average exchange rate for the tax year to which the taxes relate. How do i amend my tax return This rule applies to accrued taxes relating to tax years beginning after 1997 and only under the following conditions. How do i amend my tax return The foreign taxes are paid on or after the first day of the tax year to which they relate. How do i amend my tax return The foreign taxes are paid not later than 2 years after the close of the tax year to which they relate. How do i amend my tax return The foreign tax liability is not denominated in an inflationary currency (defined in the Form 1116 instructions). How do i amend my tax return (This condition applies to taxes paid or accrued in tax years beginning after November 6, 2007. How do i amend my tax return )   For all other foreign taxes, you should use the exchange rate in effect on the date you paid them. How do i amend my tax return Election to use exchange rate on date paid. How do i amend my tax return   If you have accrued foreign taxes that you are otherwise required to convert using the average exchange rate, you may elect to use the exchange rate in effect on the date the foreign taxes are paid if the taxes are denominated in a nonfunctional foreign currency. How do i amend my tax return If any of the accrued taxes are unpaid, you must translate them into U. How do i amend my tax return S. How do i amend my tax return dollars using the exchange rate on the last day of the U. How do i amend my tax return S. How do i amend my tax return tax year to which those taxes relate. How do i amend my tax return You may make the election for all nonfunctional currency foreign income taxes or only those nonfunctional currency foreign income taxes that are attributable to qualified business units with a U. How do i amend my tax return S. How do i amend my tax return dollar functional currency. How do i amend my tax return Once made, the election applies to the tax year for which made and all subsequent tax years unless revoked with the consent of the IRS. How do i amend my tax return The election is available for tax years beginning after 2004. How do i amend my tax return It must be made by the due date (including extensions) for filing the tax return for the first tax year to which the election applies. How do i amend my tax return Make the election by attaching a statement to the applicable tax return. How do i amend my tax return The statement must identify whether the election is made for all foreign taxes or only for foreign taxes attributable to qualified business units with a U. How do i amend my tax return S. How do i amend my tax return dollar functional currency. How do i amend my tax return Foreign Tax Redetermination A foreign tax redetermination is any change in your foreign tax liability that may affect your U. How do i amend my tax return S. How do i amend my tax return foreign tax credit claimed. How do i amend my tax return The year in which to claim the credit remains the year to which the foreign taxes paid or accrued relate, even if the change in foreign tax liability occurs in a later year. How do i amend my tax return If a foreign tax redetermination occurs, a redetermination of your U. How do i amend my tax return S. How do i amend my tax return tax liability is required if any of the following conditions apply. How do i amend my tax return The accrued taxes when paid differ from the amounts claimed as a credit. How do i amend my tax return The accrued taxes you claimed as a credit in one tax year are not paid within 2 years after the end of that tax year. How do i amend my tax return If this applies to you, you must reduce the credit previously claimed by the amount of the unpaid taxes. How do i amend my tax return You will not be allowed a credit for the unpaid taxes until you pay them. How do i amend my tax return When you pay the accrued taxes, a new foreign tax redetermination occurs and you must translate the taxes into U. How do i amend my tax return S. How do i amend my tax return dollars using the exchange rate as of the date they were paid. How do i amend my tax return The foreign tax credit is allowed for the year to which the foreign tax relates. How do i amend my tax return See Rate of exchange for foreign taxes paid , earlier, under Foreign Currency and Exchange Rates. How do i amend my tax return The foreign taxes you paid are refunded in whole or in part. How do i amend my tax return For taxes taken into account when accrued but translated into dollars on the date of payment, the dollar value of the accrued tax differs from the dollar value of the tax paid because of fluctuations in the exchange rate between the date of accrual and the date of payment. How do i amend my tax return However, no redetermination is required if the change in foreign tax liability for each foreign country is solely attributable to exchange rate fluctuations and is less than the smaller of: $10,000, or 2% of the total dollar amount of the foreign tax initially accrued for that foreign country for the U. How do i amend my tax return S. How do i amend my tax return tax year. How do i amend my tax return In this case, you must adjust your U. How do i amend my tax return S. How do i amend my tax return tax in the tax year in which the accrued foreign taxes are paid. How do i amend my tax return Notice to the Internal Revenue Service (IRS) of Redetermination You are required to notify the IRS about a foreign tax credit redetermination that affects your U. How do i amend my tax return S. How do i amend my tax return tax liability for each tax year affected by the redetermination. How do i amend my tax return In most cases, you must file Form 1040X, Amended U. How do i amend my tax return S. How do i amend my tax return Individual Income Tax Return, with a revised Form 1116 and a statement that contains information sufficient for the IRS to redetermine your U. How do i amend my tax return S. How do i amend my tax return tax liability for the year or years affected. How do i amend my tax return See Contents of statement , later. How do i amend my tax return You are not required to attach Form 1116 for a tax year affected by a redetermination if: The amount of your creditable taxes paid or accrued during the tax year is not more than $300 ($600 if married filing a joint return) as a result of the foreign tax redetermination, and You meet the requirements listed under Exemption from foreign tax credit limit under How To Figure the Credit, later. How do i amend my tax return There are other exceptions to this requirement. How do i amend my tax return They are discussed later under Due date of notification to IRS . How do i amend my tax return Contents of statement. How do i amend my tax return   The statement must include all of the following. How do i amend my tax return Your name, address, and taxpayer identification number. How do i amend my tax return The tax year or years that are affected by the foreign tax redetermination. How do i amend my tax return The date or dates the foreign taxes were accrued, if applicable. How do i amend my tax return The date or dates the foreign taxes were paid. How do i amend my tax return The amount of foreign taxes paid or accrued on each date (in foreign currency) and the exchange rate used to translate each amount. How do i amend my tax return Information sufficient to determine any interest due from or owing to you, including the amount of any interest paid to you by the foreign government and the dates received. How do i amend my tax return   In the case of any foreign taxes that were not paid before the date two years after the close of the tax year to which those taxes relate, you must provide the amount of those taxes in foreign currency and the exchange rate that was used to translate that amount when originally claimed as a credit. How do i amend my tax return   If any foreign tax was refunded in whole or in part, you must provide the date and amount (in foreign currency) of each refund, the exchange rate that was used to translate each amount when originally claimed as a credit, and the exchange rate for the date the refund was received (for purposes of computing foreign currency gain or loss under Internal Revenue Code section 988). How do i amend my tax return Due date of notification to IRS. How do i amend my tax return   If you pay less foreign tax than you originally claimed a credit for, in most cases you must file a notification by the due date (with extensions) of your original return for your tax year in which the foreign tax redetermination occurred. How do i amend my tax return There is no limit on the time the IRS has to redetermine and assess the correct U. How do i amend my tax return S. How do i amend my tax return tax due. How do i amend my tax return If you pay more foreign tax than you originally claimed a credit for, you have 10 years to file a claim for refund of U. How do i amend my tax return S. How do i amend my tax return taxes. How do i amend my tax return See Time Limit on Refund Claims , later. How do i amend my tax return   Exceptions to this due date are explained in the next two paragraphs. How do i amend my tax return Multiple redeterminations of U. How do i amend my tax return S. How do i amend my tax return tax liability for same tax year. How do i amend my tax return   Where more than one foreign tax redetermination requires a redetermination of U. How do i amend my tax return S. How do i amend my tax return tax liability for the same tax year and those redeterminations occur in the same tax year or within two consecutive tax years, you can file for that tax year one notification (Form 1040X with a Form 1116 and the required statement) that reflects all those tax redeterminations. How do i amend my tax return If you choose to file one notification, the due date for that notification is the due date of the original return (with extensions) for the year in which the first foreign tax redetermination that reduced your foreign tax liability occurred. How do i amend my tax return However, foreign tax redeterminations with respect to the tax year for which a redetermination of U. How do i amend my tax return S. How do i amend my tax return tax liability is required may occur after the due date for providing that notification. How do i amend my tax return In this situation, you may have to file more than one Form 1040X for that tax year. How do i amend my tax return Additional U. How do i amend my tax return S. How do i amend my tax return tax due eliminated by foreign tax credit carryback or carryover. How do i amend my tax return   If a foreign tax redetermination requires a redetermination of U. How do i amend my tax return S. How do i amend my tax return tax liability that would otherwise result in an additional amount of U. How do i amend my tax return S. How do i amend my tax return tax due, but the additional tax is eliminated by a carryback or carryover of an unused foreign tax, you do not have to amend your tax return for the year affected by the redetermination. How do i amend my tax return Instead, you can notify the IRS by attaching a statement to the original return for the tax year in which the foreign tax redetermination occurred. How do i amend my tax return You must file the statement by the due date (with extensions) of that return. How do i amend my tax return The statement must show the amount of the unused foreign taxes paid or accrued and a detailed schedule showing the computation of the carryback or carryover (including the amounts carried back or over to the year for which a redetermination on U. How do i amend my tax return S. How do i amend my tax return tax liability is required). How do i amend my tax return Failure-to-notify penalty. How do i amend my tax return   If you fail to notify the IRS of a foreign tax redetermination and cannot show reasonable cause for the failure, you may have to pay a penalty. How do i amend my tax return   For each month, or part of a month, that the failure continues, you pay a penalty of 5% of the tax due resulting from a redetermination of your U. How do i amend my tax return S. How do i amend my tax return tax. How do i amend my tax return This penalty cannot be more than 25% of the tax due. How do i amend my tax return Foreign tax refund. How do i amend my tax return   If you receive a foreign tax refund without interest from the foreign government, you will not have to pay interest on the amount of tax due resulting from the adjustment to your U. How do i amend my tax return S. How do i amend my tax return tax for the time before the date of the refund. How do i amend my tax return   However, if you receive a foreign tax refund with interest, you must pay interest to the IRS up to the amount of the interest paid to you by the foreign government. How do i amend my tax return The interest you must pay cannot be more than the interest you would have had to pay on taxes that were unpaid for any other reason for the same period. How do i amend my tax return Interest also is owed from the time you receive a refund until you pay the additional tax due. How do i amend my tax return Foreign tax imposed on foreign refund. How do i amend my tax return   If your foreign tax refund is taxed by the foreign country, you cannot take a separate credit or deduction for this additional foreign tax. How do i amend my tax return However, when you refigure the foreign tax credit taken for the original foreign tax, reduce the amount of the refund by the foreign tax paid on the refund. How do i amend my tax return Example. How do i amend my tax return You paid a foreign income tax of $3,000 in 2011, and received a foreign tax refund of $500 in 2013 on which a foreign tax of $100 was imposed. How do i amend my tax return When you refigure your credit for 2011, you must reduce the $3,000 you paid by $400. How do i amend my tax return Time Limit on Refund Claims You have 10 years to file a claim for refund of U. How do i amend my tax return S. How do i amend my tax return tax if you find that you paid or accrued a larger foreign tax than you claimed a credit for. How do i amend my tax return The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year in which the taxes were actually paid or accrued. How do i amend my tax return You have 10 years to file your claim regardless of whether you claim the credit for taxes paid or taxes accrued. How do i amend my tax return The 10-year period applies to claims for refund or credit based on: Fixing math errors in figuring qualified foreign taxes, Reporting qualified foreign taxes not originally reported on the return, or Any other change in the size of the credit (including one caused by correcting the foreign tax credit limit). How do i amend my tax return The special 10-year period also applies to making or changing your choice to claim a deduction or credit for foreign taxes. How do i amend my tax return See Making or Changing Your Choice discussed earlier under Choosing To Take Credit or Deduction. How do i amend my tax return Who Can Take the Credit? U. How do i amend my tax return S. How do i amend my tax return citizens, resident aliens, and nonresident aliens who paid foreign income tax and are subject to U. How do i amend my tax return S. How do i amend my tax return tax on foreign source income may be able to take a foreign tax credit. How do i amend my tax return U. How do i amend my tax return S. How do i amend my tax return Citizens If you are a U. How do i amend my tax return S. How do i amend my tax return citizen, you are taxed by the United States on your worldwide income wherever you live. How do i amend my tax return You are normally entitled to take a credit for foreign taxes you pay or accrue. How do i amend my tax return Resident Aliens If you are a resident alien of the United States, you can take a credit for foreign taxes subject to the same general rules as U. How do i amend my tax return S. How do i amend my tax return citizens. How do i amend my tax return If you are a bona fide resident of Puerto Rico for the entire tax year, you also come under the same rules. How do i amend my tax return Usually, you can take a credit only for those foreign taxes imposed on income you actually or constructively received while you had resident alien status. How do i amend my tax return For information on alien status, see Publication 519. How do i amend my tax return Nonresident Aliens If you are a nonresident alien, you cannot take the credit in most cases. How do i amend my tax return However, you may be able to take the credit if: You were a bona fide resident of Puerto Rico during your entire tax year, or You pay or accrue tax to a foreign country or U. How do i amend my tax return S. How do i amend my tax return possession on income from foreign sources that is effectively connected with a trade or business in the United States. How do i amend my tax return But if you must pay tax to a foreign country or U. How do i amend my tax return S. How do i amend my tax return possession on income from U. How do i amend my tax return S. How do i amend my tax return sources only because you are a citizen or a resident of that country or U. How do i amend my tax return S. How do i amend my tax return possession, do not use that tax in figuring the amount of your credit. How do i amend my tax return For information on alien status and effectively connected income, see Publication 519. How do i amend my tax return What Foreign Taxes Qualify for the Credit? In most cases, the following four tests must be met for any foreign tax to qualify for the credit. How do i amend my tax return The tax must be imposed on you. How do i amend my tax return You must have paid or accrued the tax. How do i amend my tax return The tax must be the legal and actual foreign tax liability. How do i amend my tax return The tax must be an income tax (or a tax in lieu of an income tax). How do i amend my tax return Certain foreign taxes do not qualify for the credit even if the four tests are met. How do i amend my tax return See Foreign Taxes for Which You Cannot Take a Credit, later. How do i amend my tax return Tax Must Be Imposed on You You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U. How do i amend my tax return S. How do i amend my tax return possession. How do i amend my tax return For example, a tax that is deducted from your wages is considered to be imposed on you. How do i amend my tax return You cannot shift the right to claim the credit by contract or other means. How do i amend my tax return Foreign country. How do i amend my tax return   A foreign country includes any foreign state and its political subdivisions. How do i amend my tax return Income, war profits, and excess profits taxes paid or accrued to a foreign city or province qualify for the foreign tax credit. How do i amend my tax return U. How do i amend my tax return S. How do i amend my tax return possessions. How do i amend my tax return   For foreign tax credit purposes, all qualified taxes paid to U. How do i amend my tax return S. How do i amend my tax return possessions are considered foreign taxes. How do i amend my tax return For this purpose, U. How do i amend my tax return S. How do i amend my tax return possessions include Puerto Rico and American Samoa. How do i amend my tax return   When the term “foreign country” is used in this publication, it includes U. How do i amend my tax return S. How do i amend my tax return possessions unless otherwise stated. How do i amend my tax return You Must Have Paid or Accrued the Tax In most cases, you can claim the credit only if you paid or accrued the foreign tax to a foreign country or U. How do i amend my tax return S. How do i amend my tax return possession. How do i amend my tax return However, the paragraphs that follow describe some instances in which you can claim the credit even if you did not directly pay or accrue the tax yourself. How do i amend my tax return Joint return. How do i amend my tax return   If you file a joint return, you can claim the credit based on the total foreign income taxes paid or accrued by you and your spouse. How do i amend my tax return Combined income. How do i amend my tax return   If foreign tax is imposed on the combined income of two or more persons (for example, spouses), the tax is allocated among, and considered paid by, these persons on a pro rata basis in proportion to each person's portion of the combined income, as determined under foreign law and Regulations section 1. How do i amend my tax return 901-2(f)(3)(iii). How do i amend my tax return Combined income with respect to each foreign tax that is imposed on a combined basis (and combined income subject to tax exemption or preferential tax rates) is computed separately, and the tax on that combined income is allocated separately. How do i amend my tax return   These rules apply to foreign taxes paid or accrued in tax years beginning after February 14, 2012. How do i amend my tax return However, you can choose to apply the new rules to foreign taxes paid or accrued in tax years beginning after December 31, 2010, and before February 15, 2012. How do i amend my tax return For more details, see paragraphs (f) and (h) of Regulations section 1. How do i amend my tax return 901-2. How do i amend my tax return For similar rules applicable to prior tax years, see Regulations section 1. How do i amend my tax return 901-2 (revised as of April 1, 2011). How do i amend my tax return Example. How do i amend my tax return You and your spouse reside in Country X, which imposes income tax on your combined incomes. How do i amend my tax return Both of you use the “u” as your functional currency. How do i amend my tax return Country X apportions tax based on income. How do i amend my tax return You had income of 30,000u and your spouse had income of 20,000u. How do i amend my tax return Your filing status on your U. How do i amend my tax return S. How do i amend my tax return income tax return is married filing separately. How do i amend my tax return You can claim only 60% (30,000u/50,000u) of the foreign taxes imposed on your income on your U. How do i amend my tax return S income tax return. How do i amend my tax return Your spouse can claim only 40% (20,000u/50,000u). How do i amend my tax return Partner or S corporation shareholder. How do i amend my tax return   If you are a member of a partnership, or a shareholder in an S corporation, you can claim the credit based on your proportionate share of the foreign income taxes paid or accrued by the partnership or the S corporation. How do i amend my tax return These amounts will be shown on the Schedule K-1 you receive from the partnership or S corporation. How do i amend my tax return However, if you are a shareholder in an S corporation that in turn owns stock in a foreign corporation, you cannot claim a credit for your share of foreign taxes paid by the foreign corporation. How do i amend my tax return Beneficiary. How do i amend my tax return   If you are a beneficiary of an estate or trust, you may be able to claim the credit based on your proportionate share of foreign income taxes paid or accrued by the estate or trust. How do i amend my tax return This amount will be shown on the Schedule K-1 you receive from the estate or trust. How do i amend my tax return However, you must show that the tax was imposed on income of the estate and not on income received by the decedent. How do i amend my tax return Mutual fund shareholder. How do i amend my tax return   If you are a shareholder of a mutual fund or other regulated investment company (RIC), you may be able to claim the credit based on your share of foreign income taxes paid by the fund if it chooses to pass the credit on to its shareholders. How do i amend my tax return You should receive from the mutual fund or other RIC a Form 1099-DIV, or similar statement, showing your share of the foreign income, and your share of the foreign taxes paid. How do i amend my tax return If you do not receive this information, you will need to contact the fund. How do i amend my tax return Controlled foreign corporation shareholder. How do i amend my tax return   If you are a shareholder of a controlled foreign corporation and choose to be taxed at corporate rates on the amount you must include in gross income from that corporation, you can claim the credit based on your share of foreign taxes paid or accrued by the controlled foreign corporation. How do i amend my tax return If you make this election, you must claim the credit by filing Form 1118, Foreign Tax Credit—Corporations. How do i amend my tax return Controlled foreign corporation. How do i amend my tax return   A controlled foreign corporation is a foreign corporation in which U. How do i amend my tax return S. How do i amend my tax return shareholders own more than 50% of the voting power or value of the stock. How do i amend my tax return You are considered a U. How do i amend my tax return S. How do i amend my tax return shareholder if you own, directly or indirectly, 10% or more of the total voting power of all classes of the foreign corporation's stock. How do i amend my tax return See Internal Revenue Code sections 951(b) and 958(b) for more information. How do i amend my tax return Tax Must Be the Legal and Actual Foreign Tax Liability The amount of foreign tax that qualifies is not necessarily the amount of tax withheld by the foreign country. How do i amend my tax return Only the legal and actual foreign tax liability that you paid or accrued during the year qualifies for the credit. How do i amend my tax return Foreign tax refund. How do i amend my tax return   You cannot take a foreign tax credit for income taxes paid to a foreign country if it is reasonably certain the amount would be refunded, credited, rebated, abated, or forgiven if you made a claim. How do i amend my tax return   For example, the United States has tax treaties with many countries allowing U. How do i amend my tax return S. How do i amend my tax return citizens and residents reductions in the rates of tax of those foreign countries. How do i amend my tax return However, some treaty countries require U. How do i amend my tax return S. How do i amend my tax return citizens and residents to pay the tax figured without regard to the lower treaty rates and then claim a refund for the amount by which the tax actually paid is more than the amount of tax figured using the lower treaty rate. How do i amend my tax return The qualified foreign tax is the amount figured using the lower treaty rate and not the amount actually paid, because the excess tax is refundable. How do i amend my tax return Subsidy received. How do i amend my tax return   Tax payments a foreign country returns to you in the form of a subsidy do not qualify for the foreign tax credit. How do i amend my tax return This rule applies even if the subsidy is given to a person related to you, or persons who participated with you in a transaction or a related transaction. How do i amend my tax return A subsidy can be provided by any means but must be determined, directly or indirectly, in relation to the amount of tax, or to the base used to figure the tax. How do i amend my tax return   The term “subsidy” includes any type of benefit. How do i amend my tax return Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. How do i amend my tax return Shareholder receiving refund for corporate tax in integrated system. How do i amend my tax return   Under some foreign tax laws and treaties, a shareholder is considered to have paid part of the tax that is imposed on the corporation. How do i amend my tax return You may be able to claim a refund of these taxes from the foreign government. How do i amend my tax return You must include the refund (including any amount withheld) in your income in the year received. How do i amend my tax return Any tax withheld from the refund is a qualified foreign tax. How do i amend my tax return Example. How do i amend my tax return You are a shareholder of a French corporation. How do i amend my tax return You receive a $100 refund of the tax paid to France by the corporation on the earnings distributed to you as a dividend. How do i amend my tax return The French government imposes a 15% withholding tax ($15) on the refund you received. How do i amend my tax return You receive a check for $85. How do i amend my tax return You include $100 in your income. How do i amend my tax return The $15 of tax withheld is a qualified foreign tax. How do i amend my tax return Tax Must Be an Income Tax (or Tax in Lieu of Income Tax) In most cases, only income, war profits, and excess profits taxes (income taxes) qualify for the foreign tax credit. How do i amend my tax return Foreign taxes on wages, dividends, interest, and royalties qualify for the credit in most cases. How do i amend my tax return Furthermore, foreign taxes on income can qualify even though they are not imposed under an income tax law if the tax is in lieu of an income, war profits, or excess profits tax. How do i amend my tax return See Taxes in Lieu of Income Taxes , later. How do i amend my tax return Income Tax Simply because the levy is called an income tax by the foreign taxing authority does not make it an income tax for this purpose. How do i amend my tax return A foreign levy is an income tax only if it meets both of the following requirements. How do i amend my tax return It is a tax; that is, you have to pay it and you get no specific economic benefit (discussed below) from paying it. How do i amend my tax return The predominant character of the tax is that of an income tax in the U. How do i amend my tax return S. How do i amend my tax return sense. How do i amend my tax return A foreign levy may meet these requirements even if the foreign tax law differs from U. How do i amend my tax return S. How do i amend my tax return tax law. How do i amend my tax return The foreign law may include in income items that U. How do i amend my tax return S. How do i amend my tax return law does not include, or it may allow certain exclusions or deductions that U. How do i amend my tax return S. How do i amend my tax return law does not allow. How do i amend my tax return Specific economic benefit. How do i amend my tax return   In most cases, you get a specific economic benefit if you receive, or are considered to receive, an economic benefit from the foreign country imposing the levy, and: If there is a generally imposed income tax, the economic benefit is not available on substantially the same terms to all persons subject to the income tax, or If there is no generally imposed income tax, the economic benefit is not available on substantially the same terms to the population of the foreign country in general. How do i amend my tax return   You are considered to receive a specific economic benefit if you have a business transaction with a person who receives a specific economic benefit from the foreign country and, under the terms and conditions of the transaction, you receive directly or indirectly all or part of the benefit. How do i amend my tax return   However, see the exception discussed later under Pension, unemployment, and disability fund payments . How do i amend my tax return Economic benefits. How do i amend my tax return   Economic benefits include the following. How do i amend my tax return Goods. How do i amend my tax return Services. How do i amend my tax return Fees or other payments. How do i amend my tax return Rights to use, acquire, or extract resources, patents, or other property the foreign country owns or controls. How do i amend my tax return Discharges of contractual obligations. How do i amend my tax return   In most cases, the right or privilege merely to engage in business is not an economic benefit. How do i amend my tax return Dual-capacity taxpayers. How do i amend my tax return   If you are subject to a foreign country's levy and you also receive a specific economic benefit from that foreign country, you are a “dual-capacity taxpayer. How do i amend my tax return ” As a dual-capacity taxpayer, you cannot claim a credit for any part of the foreign levy, unless you establish that the amount paid under a distinct element of the foreign levy is a tax, rather than a compulsory payment for a direct or indirect specific economic benefit. How do i amend my tax return    For more information on how to establish amounts paid under separate elements of a levy, write to: Internal Revenue Service International Section Philadelphia, PA 19255-0725 Pension, unemployment, and disability fund payments. How do i amend my tax return   A foreign tax imposed on an individual to pay for retirement, old-age, death, survivor, unemployment, illness, or disability benefits, or for substantially similar purposes, is not payment for a specific economic benefit if the amount of the tax does not depend on the age, life expectancy, or similar characteristics of that individual. How do i amend my tax return    No deduction or credit is allowed, however, for social security taxes paid or accrued to a foreign country with which the United States has a social security agreement. How do i amend my tax return For more information about these agreements, see Publication 54. How do i amend my tax return Soak-up taxes. How do i amend my tax return   A foreign tax is not predominantly an income tax and does not qualify for credit to the extent it is a soak-up tax. How do i amend my tax return A tax is a soak-up tax to the extent that liability for it depends on the availability of a credit for it against income tax imposed by another country. How do i amend my tax return This rule applies only if and to the extent that the foreign tax would not be imposed if the credit were not available. How do i amend my tax return Penalties and interest. How do i amend my tax return   Amounts paid to a foreign government to satisfy a liability for interest, fines, penalties, or any similar obligation are not taxes and do not qualify for the credit. How do i amend my tax return Taxes not based on income. How do i amend my tax return   Foreign taxes based on gross receipts or the number of units produced, rather than on realized net income, do not qualify unless they are imposed in lieu of an income tax, as discussed next. How do i amend my tax return Taxes based on assets, such as property taxes, do not qualify for the credit. How do i amend my tax return Taxes in Lieu of Income Taxes A tax paid or accrued to a foreign country qualifies for the credit if it is imposed in lieu of an income tax otherwise generally imposed. How do i amend my tax return A foreign levy is a tax in lieu of an income tax only if: It is not payment for a specific economic benefit as discussed earlier, and The tax is imposed in place of, and not in addition to, an income tax otherwise generally imposed. How do i amend my tax return A tax in lieu of an income tax does not have to be based on realized net income. How do i amend my tax return A foreign tax imposed on gross income, gross receipts or sales, or the number of units produced or exported can qualify for the credit. How do i amend my tax return In most cases, a soak-up tax (discussed earlier) does not qualify as a tax in lieu of an income tax. How do i amend my tax return However, if the foreign country imposes a soak-up tax in lieu of an income tax, the amount that does not qualify for foreign tax credit is the lesser of the following amounts. How do i amend my tax return The soak-up tax. How do i amend my tax return The foreign tax you paid that is more than the amount you would have paid if you had been subject to the generally imposed income tax. How do i amend my tax return Foreign Taxes for Which You Cannot Take a Credit This part discusses the foreign taxes for which you cannot take a credit. How do i amend my tax return These are: Taxes on excluded income, Taxes for which you can only take an itemized deduction, Taxes on foreign mineral income, Taxes from international boycott operations, A portion of taxes on combined foreign oil and gas income, Taxes of U. How do i amend my tax return S. How do i amend my tax return persons controlling foreign corporations and partnerships who fail to file required information returns, and Taxes related to a foreign tax splitting event. How do i amend my tax return Taxes on Excluded Income You cannot take a credit for foreign taxes paid or accrued on certain income that is excluded from U. How do i amend my tax return S. How do i amend my tax return gross income. How do i amend my tax return Foreign Earned Income and Housing Exclusions You must reduce your foreign taxes available for the credit by the amount of those taxes paid or accrued on income that is excluded from U. How do i amend my tax return S. How do i amend my tax return income under the foreign earned income exclusion or the foreign housing exclusion. How do i amend my tax return See Publication 54 for more information on the foreign earned income and housing exclusions. How do i amend my tax return Wages completely excluded. How do i amend my tax return   If your wages are completely excluded, you cannot take a credit for any of the foreign taxes paid or accrued on these wages. How do i amend my tax return Wages partly excluded. How do i amend my tax return   If only part of your wages is excluded, you cannot take a credit for the foreign income taxes allocable to the excluded part. How do i amend my tax return You find the amount allocable to your excluded wages by multiplying the foreign tax paid or accrued on foreign earned income received or accrued during the tax year by a fraction. How do i amend my tax return   The numerator of the fraction is your foreign earned income and housing amounts excluded under the foreign earned income and housing exclusions for the tax year minus otherwise deductible expenses definitely related and properly apportioned to that income. How do i amend my tax return Deductible expenses do not include the foreign housing deduction. How do i amend my tax return   The denominator is your total foreign earned income received or accrued during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). How do i amend my tax return If the foreign law taxes foreign earned income and some other income (for example, earned income from U. How do i amend my tax return S. How do i amend my tax return sources or a type of income not subject to U. How do i amend my tax return S. How do i amend my tax return tax), and the taxes on the other income cannot be segregated, the denominator of the fraction is the total amount of income subject to the foreign tax minus deductible expenses allocable to that income. How do i amend my tax return Example. How do i amend my tax return You are a U. How do i amend my tax return S. How do i amend my tax return citizen and a cash basis taxpayer, employed by Company X and living in Country A. How do i amend my tax return Your records show the following: Foreign earned income received $125,000 Unreimbursed business travel expenses 20,000 Income tax paid to Country A 30,000 Exclusion of foreign earned  income and housing allowance 97,600     Because you can exclude part of your wages, you cannot claim a credit for part of the foreign taxes. How do i amend my tax return To find that part, do the following. How do i amend my tax return First, find the amount of business expenses allocable to excluded wages and therefore not deductible. How do i amend my tax return To do this, multiply the otherwise deductible expenses by a fraction. How do i amend my tax return That fraction is the excluded wages over your foreign earned income. How do i amend my tax return   $20,000 × $97,600 $125,000 = $15,616             Next, find the numerator of the fraction by which you will multiply the foreign taxes paid. How do i amend my tax return To do this, subtract business expenses allocable to excluded wages ($15,616) from excluded wages ($97,600). How do i amend my tax return The result is $81,984. How do i amend my tax return Then, find the denominator of the fraction by subtracting all your deductible expenses from all your foreign earned income ($125,000 − $20,000 = $105,000). How do i amend my tax return Finally, multiply the foreign tax you paid by the resulting fraction. How do i amend my tax return   $30,000 × $81,984  $105,000 = $23,424 The amount of Country A tax you cannot take a credit for is $23,424. How do i amend my tax return Taxes on Income From Puerto Rico Exempt From U. How do i amend my tax return S. How do i amend my tax return Tax If you have income from Puerto Rican sources that is not taxable, you must reduce your foreign taxes paid or accrued by the taxes allocable to the exempt income. How do i amend my tax return For information on figuring the reduction, see Publication 570. How do i amend my tax return Possession Exclusion If you are a bona fide resident of American Samoa and exclude income from sources in American Samoa, you cannot take a credit for the taxes you pay or accrue on the excluded income. How do i amend my tax return For more information on this exclusion, see Publication 570. How do i amend my tax return Extraterritorial Income Exclusion You cannot take a credit for taxes you pay on qualifying foreign trade income excluded on Form 8873, Extraterritorial Income Exclusion. How do i amend my tax return However, see Internal Revenue Code section 943(d) for an exception for certain withholding taxes. How do i amend my tax return Taxes for Which You Can Only Take an Itemized Deduction You cannot claim a foreign tax credit for foreign income taxes paid or accrued under the following circumstances. How do i amend my tax return However, you can claim an itemized deduction for these taxes. How do i amend my tax return See Choosing To Take Credit or Deduction , earlier. How do i amend my tax return Taxes Imposed By Sanctioned Countries (Section 901(j) Income) You cannot claim a foreign tax credit for income taxes paid or accrued to any country if the income giving rise to the tax is for a period (the sanction period) during which: The Secretary of State has designated the country as one that repeatedly provides support for acts of international terrorism, The United States has severed or does not conduct diplomatic relations with the country, or The United States does not recognize the country's government, and that government is not otherwise eligible to purchase defense articles or services under the Arms Export Control Act. How do i amend my tax return The following countries meet this description for 2013. How do i amend my tax return Income taxes paid or accrued to these countries in 2013 do not qualify for the credit. How do i amend my tax return Cuba. How do i amend my tax return Iran. How do i amend my tax return Libya (but see Note later). How do i amend my tax return North Korea. How do i amend my tax return Sudan. How do i amend my tax return Syria. How do i amend my tax return Waiver of denial of the credit. How do i amend my tax return   A waiver can be granted to a sanctioned country if the President of the United States determines that granting the waiver is in the national interest of the United States and will expand trade and investment opportunities for U. How do i amend my tax return S. How do i amend my tax return companies in the sanctioned country. How do i amend my tax return The President must report to Congress his intentions to grant the waiver and his reasons for granting the waiver not less than 30 days before the date on which the waiver is granted. How do i amend my tax return Note. How do i amend my tax return Effective December 10, 2004, the President granted a waiver to Libya. How do i amend my tax return Income taxes arising on or after this date qualify for the credit if they meet the other requirements in this publication. How do i amend my tax return Limit on credit. How do i amend my tax return   In figuring the foreign tax credit limit, discussed later, income from a sanctioned country is a separate category of foreign income unless a Presidential waiver is granted. How do i amend my tax return You must fill out a separate Form 1116 for this income. How do i amend my tax return This will prevent you from claiming a credit for foreign taxes paid or accrued to the sanctioned country. How do i amend my tax return Example. How do i amend my tax return You lived and worked in Iran until August, when you were transferred to Italy. How do i amend my tax return You paid taxes to each country on the income earned in that country. How do i amend my tax return You cannot claim a foreign tax credit for the foreign taxes paid on the income earned in Iran. How do i amend my tax return Because the income earned in Iran is a separate category of foreign income, you must fill out a separate Form 1116 for that income. How do i amend my tax return You cannot take a credit for taxes paid on the income earned in Iran, but that income is taxable by the United States. How do i amend my tax return Figuring the credit when a sanction ends. How do i amend my tax return    Table 1 lists the countries for which sanctions have ended or for which a Presidential waiver has been granted. How do i amend my tax return For any of these countries, you can claim a foreign tax credit for the taxes paid or accrued to that country on the income for the period that begins after the end of the sanction period or the date the Presidential waiver was granted. How do i amend my tax return Example. How do i amend my tax return The sanctions against Country X ended on July 31. How do i amend my tax return On August 19, you receive a distribution from a mutual fund of Country X income. How do i amend my tax return The fund paid Country X income tax for you on the distribution. How do i amend my tax return Because the distribution was made after the sanction ended, you may include the foreign tax paid on the distribution to compute your foreign tax credit. How do i amend my tax return Amounts for the nonsanctioned period. How do i amend my tax return   If a sanction period ends (or a Presidential waiver is granted) during your tax year and you are not able to determine the actual income and taxes for that period, you can allocate amounts to that period based on the number of days in the period that fall in your tax year. How do i amend my tax return Multiply the income or taxes for the year by the following fraction to determine the amounts allocable to that period. How do i amend my tax return   Number of nonsanctioned days in year  Number of days in year Example. How do i amend my tax return You are a calendar year filer and received $20,000 of income from Country X in 2013 on which you paid tax of $4,500. How do i amend my tax return Sanctions against Country X ended on July 11, 2013. How do i amend my tax return You are unable to determine how much of the income or tax is for the nonsanctioned period. How do i amend my tax return Because your tax year starts on January 1, and the Country X sanction ended on July 11, 2013, 173 days of your tax year are in the nonsanctioned period. How do i amend my tax return You would compute the income for the nonsanctioned period as follows. How do i amend my tax return 173 365 × $20,000 = $9,479             You would figure the tax for the nonsanctioned period as follows. How do i amend my tax return 173 365 × $4,500 = $2,133 To figure your foreign tax credit, you would use $9,479 as the income from Country X and $2,133 as the tax. How do i amend my tax return Further information. How do i amend my tax return   The rules for figuring the foreign tax credit after a country's sanction period ends are more fully explained in Revenue Ruling 92-62, Cumulative Bulletin 1992-2, page 193. How do i amend my tax return This Cumulative Bulletin can be found in many libraries and IRS offices. How do i amend my tax return Table 1. How do i amend my tax return Countries Removed From the Sanction List or Granted Presidential Waiver   Sanction Period Country Starting Date Ending Date Iraq February 1, 1991 June 27, 2004 Libya January 1, 1987 December 9, 2004* *Presidential waiver granted for qualified income taxes arising after December 9, 2004. How do i amend my tax return Taxes Imposed on Certain Dividends You cannot claim a foreign tax credit for withholding tax (defined later ) on dividends paid or accrued if either of the following applies to the dividends. How do i amend my tax return The dividends are on stock you held for less than 16 days during the 31-day period that begins 15 days before the ex-dividend date (defined later). How do i amend my tax return The dividends are for a period or periods totaling more than 366 days on preferred stock you held for less than 46 days during the 91-day period that begins 45 days before the ex-dividend date. How do i amend my tax return If the dividend is not for more than 366 days, rule (1) applies to the preferred stock. How do i amend my tax return When figuring how long you held the stock, count the day you sold it, but do not count the day you acquired it or any days on which you were protected from risk of loss. How do i amend my tax return Regardless of how long you held the stock, you cannot claim the credit to the extent you have an obligation under a short sale or otherwise to make payments related to the dividend for positions in substantially similar or related property. How do i amend my tax return Withholding tax. How do i amend my tax return   For this purpose, withholding tax includes any tax determined on a gross basis. How do i amend my tax return It does not include any tax which is in the nature of a prepayment of a tax imposed on a net basis. How do i amend my tax return Ex-dividend date. How do i amend my tax return   The ex-dividend date is the first date following the declaration of a dividend on which the purchaser of a stock is not entitled to receive the next dividend payment. How do i amend my tax return Example 1. How do i amend my tax return You bought common stock from a foreign corporation on November 3. How do i amend my tax return You sold the stock on November 19. How do i amend my tax return You received a dividend on this stock because you owned it on the ex-dividend date of November 5. How do i amend my tax return To claim the credit, you must have held the stock for at least 16 days within the 31-day period that began on October 21 (15 days before the ex-dividend date). How do i amend my tax return Because you held the stock for 16 days, from November 4 until November 19, you are entitled to the credit. How do i amend my tax return Example 2. How do i amend my tax return The facts are the same as in Example 1 except that you sold the stock on November 14. How do i amend my tax return You held the stock for only 11 days. How do i amend my tax return You are not entitled to the credit. How do i amend my tax return Exception. How do i amend my tax return   If you are a securities dealer who actively conducts business in a foreign country, you may be able to claim a foreign tax credit for qualified taxes paid on dividends regardless of how long you held the stock or whether you were obligated to make payments for positions in substantially similar or related property. How do i amend my tax return See section 901(k)(4) of the Internal Revenue Code for more information. How do i amend my tax return Taxes Withheld on Income or Gain (Other Than Dividends) For income or gain (other than dividends) paid or accrued on property, you cannot claim a foreign tax credit for withholding tax (defined later): If you have not held the property for at least 16 days during the 31-day period that begins 15 days before the date on which the right to receive the payment arises, or To the extent you have to make related payments on positions in substantially similar or related property. How do i amend my tax return When figuring how long you held the property, count the day you sold it, but do not count the day you acquired it or any days on which you were protected from risk of loss. How do i amend my tax return Withholding tax. How do i amend my tax return   For this purpose, withholding tax includes any tax determined on a gross basis. How do i amend my tax return It does not include any tax which is in the nature of a prepayment of a tax imposed on a net basis. How do i amend my tax return Exception for dealers. How do i amend my tax return   If you are a dealer in property who actively conducts business in a foreign country, you may be able to claim a foreign tax credit for qualified taxes withheld on income or gain from that property regardless of how long you held it or whether you have to make related payments on positions in substantially similar or related property. How do i amend my tax return See section 901(I)(2) of the Internal Revenue Code for more information. How do i amend my tax return Covered Asset Acquisition ???You cannot take a credit for the disqualified portion of any foreign tax paid or accrued in connection with a covered asset acquisition. How do i amend my tax return A covered asset acquisition includes certain acquisitions that result in a stepped-up basis for U. How do i amend my tax return S. How do i amend my tax return tax purposes but not for foreign tax purposes. How do i amend my tax return For more information, see Internal Revenue Code section 901(m). How do i amend my tax return The IRS intends to issue guidance that will explain this provision in greater detail. How do i amend my tax return Taxes in Connection With the Purchase or Sale of Oil or Gas You cannot claim a foreign tax credit for taxes paid or accrued to a foreign country in connection with the purchase or sale of oil or gas extracted in that country if you do not have an economic interest in the oil or gas, and the purchase price or sales price is different from the fair market value of the oil or gas at the time of purchase or sale. How do i amend my tax return Taxes on Foreign Mineral Income You must reduce any taxes paid or accrued to a foreign country or possession on mineral income from that country or possession if you were allowed a deduction for percentage depletion for any part of the mineral income. How do i amend my tax return For details, see Regulations section 1. How do i amend my tax return 901-3. How do i amend my tax return Taxes From International Boycott Operations If you participate in or cooperate with an international boycott during the tax year, your foreign taxes resulting from boycott activities will reduce the total taxes available for credit. How do i amend my tax return See the instructions for line 12 in the Form 1116 instructions to figure this reduction. How do i amend my tax return In most cases, this rule does not apply to employees with wages who are working and living in boycotting countries, or to retirees with pensions who are living in these countries. How do i amend my tax return List of boycotting countries. How do i amend my tax return   A list of the countries which may require participation in or cooperation with an international boycott is published by the Department of the Treasury. How do i amend my tax return As of November 2013, the following countries are listed. How do i amend my tax return Iraq. How do i amend my tax return Kuwait. How do i amend my tax return Lebanon. How do i amend my tax return Libya. How do i amend my tax return Qatar. How do i amend my tax return Saudi Arabia. How do i amend my tax return Syria. How do i amend my tax return United Arab Emirates. How do i amend my tax return Yemen. How do i amend my tax return    For information concerning changes to the list, write to: Internal Revenue Service International Section Philadelphia, PA 19255-0725 Determinations of whether the boycott rule applies. How do i amend my tax return   You may request a determination from the Internal Revenue Service as to whether a particular operation constitutes participation in or cooperation with an international boycott. How do i amend my tax return The procedures for obtaining a determination from the Service are outlined in Revenue Procedure 77-9 in Cumulative Bulletin 1977-1. How do i amend my tax return Cumulative Bulletins are available in most IRS offices and you are welcome to read them there. How do i amend my tax return Public inspection. How do i amend my tax return   A determination and any related background file is open to public inspection. How do i amend my tax return However, your identity and certain other information will remain confidential. How do i amend my tax return Reporting requirements. How do i amend my tax return   You must file a report with the IRS if you or any of the following persons have operations in or related to a boycotting country or with the government, a company, or a national of a boycotting country. How do i amend my tax return A foreign corporation in which you own 10% or more of the voting power of all voting stock but only if you own the stock of the foreign corporation directly or through foreign entities. How do i amend my tax return A partnership in which you are a partner. How do i amend my tax return A trust you are treated as owning. How do i amend my tax return Form 5713 required. How do i amend my tax return   If you have to file a report, you must use Form 5713, International Boycott Report, and attach all supporting schedules. How do i amend my tax return See the Instructions for Form 5713 for information on when and where to file the form. How do i amend my tax return Penalty for failure to file. How do i amend my tax return   If you willfully fail to make a report, in addition to other penalties, you may be fined $25,000 or imprisoned for no more than one year, or both. How do i amend my tax return Taxes on Combined Foreign Oil and Gas Income You must reduce your foreign taxes by a portion of any foreign taxes imposed on combined foreign oil and gas income. How do i amend my tax return The amount of the reduction is the amount by which your foreign oil and gas taxes exceed the amount of your combined foreign oil and gas income multiplied by a fraction equal to your pre-credit U. How do i amend my tax return S. How do i amend my tax return tax liability (Form 1040, line 44) divided by your worldwide taxable income. How do i amend my tax return You may be entitled to carry over to other years taxes reduced under this rule. How do i amend my tax return See Internal Revenue Code section 907(f). How do i amend my tax return Combined foreign oil and gas income means the sum of foreign oil related income and foreign oil and gas extraction income. How do i amend my tax return Foreign oil and gas taxes are the sum of foreign oil and gas extraction taxes and foreign oil related taxes. How do i amend my tax return Taxes of U. How do i amend my tax return S. How do i amend my tax return Persons Controlling Foreign Corporations and Partnerships If you had control of a foreign corporation or a foreign partnership for the annual accounting period of that corporation or partnership that ended with or within your tax year, you may have to file an annual information return. How do i amend my tax return If you do not file the required information return, you may have to reduce the foreign taxes that may be used for the foreign tax credit. How do i amend my tax return See Penalty for not filing Form 5471 or Form 8865 , later. How do i amend my tax return U. How do i amend my tax return S. How do i amend my tax return persons controlling foreign corporations. How do i amend my tax return   If you are a U. How do i amend my tax return S. How do i amend my tax return citizen or resident who had control of a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period of that corporation, you may have to file an annual information return on Form 5471, Information Return of U. How do i amend my tax return S. How do i amend my tax return Persons With Respect To Certain Foreign Corporations. How do i amend my tax return Under this rule, you generally had control of a foreign corporation if at any time during your tax year you owned: Stock possessing more than 50% of the total combined voting power of all classes of stock entitled to vote, or More than 50% of the total value of shares of all classes of stock of the foreign corporation. How do i amend my tax return U. How do i amend my tax return S. How do i amend my tax return persons controlling foreign partnerships. How do i amend my tax return   If you are a U. How do i amend my tax return S. How do i amend my tax return citizen or resident who had control of a foreign partnership at any time during the partnership's tax year, you may have to file