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Income Tax 1040ez

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Income Tax 1040ez

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

Offshore Tax-Avoidance and IRS Compliance Efforts
The IRS continues to uncover abusive tax-avoidance schemes involving offshore activity. Find information here pertaining to Union Bank of Switzerland (UBS).

Fiscal Year 2013 Enforcement and Service Results
The Fiscal Year 2013 Enforcement and Service Results provide the dollars collected from the examination (audit) and collection functions of the IRS. The results also tally various taxpayer assistance program results.

FY 2011 Enforcement Results
FY 2011 IRS Enforcement and Service Results.

FY 2009 Enforcement Results
The IRS FY 2009 Enforcement and Service Results detail the agency's audit, collection and taxpayer service efforts.

Tips for Choosing a Tax Return Preparer
FS-2012-5, January 2012 — If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely.

IRS Releases New Tax Gap Estimates; Compliance Rates Remain Statistically Unchanged From Previous Study
IR-2012-4, Jan. 6, 2012 — The Internal Revenue Service today released a new set of tax gap estimates for tax year 2006. The tax gap is defined as the amount of tax liability faced by taxpayers that is not paid on time.

IRS Office of Professional Responsibility Prevails on Appeal Against CPA
IR-2011-48, April 25, 2011 — IRS Office of Professional Responsibility prevailed in an agency appeal against a Florida certified public accountant, according to the published Decision on Appeal.

IRS Begins Enforcement of New Return Preparer Rules
IR-2011-47, April 25, 2011 — The IRS is taking steps to stop tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns.

How to Choose a Tax Return Preparer and Avoid Preparer Fraud
FS-2010-03, January 2010 — IRS fact sheet on how to choose a tax return preparer and avoid preparer fraud.

How to Choose a Tax Preparer and Avoid Preparer Fraud
FS-2009-7, January 2009 — Taxpayers should put as much care in choosing a preparer as they would a doctor or lawyer.

Tax Return Preparer Fraud
FS-2008-10, January 2008 — Get hints from IRS on how to choose a reputable tax preparer.

Fraudulent Telephone Tax Refunds, Abusive Roth IRAs Top Off 2007 “Dirty Dozen” Tax Scams
IR-2007-37, Feb. 20, 2007 –– Also new to the "Dirty Dozen" are abuses involving the American Indian Employment Credit, domestic shell companies and structured entities.

IRS Moves to Prevent Telephone Tax Refund Abuse; Help Taxpayers Make Accurate Requests
IR-2007-27, Feb. 7, 2007 — The Internal Revenue Service announced today it is taking additional steps to prevent abuse by tax preparers and help taxpayers make accurate requests for the one-time telephone excise tax refund.

Statement of IRS Commissioner Mark W. Everson on the FY 2008 Budget
Feb. 5, 2007 — The president’s 2008 budget request for the IRS, together with the accompanying legislative proposals concerning tax administration... will do much to promote compliance with our tax law.

Tax Return Preparer Fraud
FS-2007-12, January 2007 — Taxpayers should use caution when engaging professional tax return preparers and learn the warning signs of potential fraud.

IRS Accepts Settlement Offer in Largest Transfer Pricing Dispute
IR-2006-142, Sept. 11, 2006 — IRS has reached a satisfactory settlement in a transfer pricing dispute with Glaxo SmithKline in the largest tax dispute in the IRS's history.

IRS and States Join Forces to Combat Money Laundering
IR-2006-70, April 27, 2006 — Thirty-three states and Puerto Rico have signed agreements with the IRS to share Bank Secrecy Act information on money services businesses.

IRS Debunks Frivolous Arguments on Paying Taxes
IR-2006-45, March 16, 2006 — The IRS today issued updated guidance describing and rebutting frivolous arguments taxpayers should avoid when filing their tax returns

IRS Updates Tax Gap Estimates
IR-2006-28, Feb. 14, 2006 — The revised tax gap estimate is $345 billion for tax year 2001. The tax gap is the difference between what taxpayers timely and voluntarily should have paid and what they did pay.

IRS Improves Enforcement and Services in 2005
Prepared remarks by IRS Commissioner Mark W. Everson reqarding new Fiscal Year 2005 data that show improvements in enforcement and services to taxpayers.

IRS Launches Abusive Transaction Settlement Initiative
IR-2005-129, Oct. 27, 2005 — Internal Revenue Service officials today announced a broad-based, limited-in-time opportunity for taxpayers to come forward and settle an array of transactions the IRS considers abusive.

KPMG to Pay $456 Million for Criminal Violations
IR-2005-83, Aug. 29, 2005 — KPMG LLP (KPMG) has admitted to criminal wrongdoing and agreed to pay $456 million in fines, restitution and penalties as part of an agreement to defer prosecution of the firm, the Justice Department and the Internal Revenue Service announced today.

Robust Response for Executive Stock Option Initiative; Son of Boss Settlement Heading for $4 Billion
IR-2005-72, July 11, 2005 — IRS officials announced today that they received a strong turnout for the executive stock option settlement initiative launched in February.

IRS Collects $3.2 Billion from Son of Boss; Final Figure Should Top $3.5 Billion
IR-2005-37 — Abusive transaction aggressively marketed to wealthy individuals. Settlement required taxpayers to concede 100 percent of claimed tax losses.

IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters
FS-2005-15 — Many of the injunctions order promoters to turn over client lists and to cease preparing federal income tax returns for others.

States See Son of Boss Benefits; Tax Administrators Praise Efforts
FS-2005-13 –– States are beginning to see results from the IRS Son of Boss settlement initiative. California and New York have also conducted compliance initiatives.

Understanding the Tax Gap
FS-2005-14 — The tax gap measures the extent to which taxpayers do not file their tax returns and pay the correct tax on time.

Report on IRS Review of Alleged Political Campaign Intervention 2005
The Treasury Inspector General reports that IRS properly ran its program for investigating claims of inappropriate political campaign actions by tax-exempt organizations.

Page Last Reviewed or Updated: 28-Mar-2014

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