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State Income Tax Returns

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State Income Tax Returns

State income tax returns Publication 501 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. State income tax returns Tax questions. State income tax returns Useful Items - You may want to see: What's New Who must file. State income tax returns   In some cases, the amount of income you can receive before you must file a tax return has increased. State income tax returns Table 1 shows the filing requirements for most taxpayers. State income tax returns Exemption amount. State income tax returns  The amount you can deduct for each exemption has increased. State income tax returns It was $3,800 for 2012. State income tax returns It is $3,900 for 2013. State income tax returns Exemption phaseout. State income tax returns  You lose at least part of the benefit of your exemptions if your adjusted gross income is above a certain amount. State income tax returns For 2013, the phaseout begins at $150,000 for married individuals filing separate returns; $250,000 for single individuals; $275,000 for heads of household; and $300,000 for married individuals filing joint returns or qualifying widow(er)s. State income tax returns See Phaseout of Exemptions , later. State income tax returns Standard deduction increased. State income tax returns   The standard deduction for some taxpayers who do not itemize their deductions on Schedule A of Form 1040 is higher for 2013 than it was for 2012. State income tax returns The amount depends on your filing status. State income tax returns You can use the 2013 Standard Deduction Tables near the end of this publication to figure your standard deduction. State income tax returns Same-sex marriages. State income tax returns . State income tax returns  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. State income tax returns See Same-sex marriage under Marital Status, later. State income tax returns If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. State income tax returns For details on filing amended returns, see Joint Return After Separate Returns . State income tax returns Reminders Future developments. State income tax returns  Information about any future developments affecting Publication 501 (such as legislation enacted after we release it) will be posted at www. State income tax returns irs. State income tax returns gov/pub501. State income tax returns Taxpayer identification number for aliens. State income tax returns   If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an individual taxpayer identification number (ITIN). State income tax returns Your spouse also may need an ITIN if he or she does not have and is not eligible to get an SSN. State income tax returns See Form W-7, Application for IRS Individual Taxpayer Identification Number. State income tax returns Also, see Social Security Numbers for Dependents , later. State income tax returns Photographs of missing children. State income tax returns   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. State income tax returns Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. State income tax returns You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. State income tax returns Introduction This publication discusses some tax rules that affect every person who may have to file a federal income tax return. State income tax returns It answers some basic questions: who must file; who should file; what filing status to use; how many exemptions to claim; and the amount of the standard deduction. State income tax returns Who Must File explains who must file an income tax return. State income tax returns If you have little or no gross income, reading this section will help you decide if you have to file a return. State income tax returns Who Should File helps you decide if you should file a return, even if you are not required to do so. State income tax returns Filing Status helps you determine which filing status to use. State income tax returns Filing status is important in determining whether you must file a return and whether you may claim certain deductions and credits. State income tax returns It also helps determine your standard deduction and tax rate. State income tax returns Exemptions, which reduce your taxable income, are discussed in Exemptions . State income tax returns Exemptions for Dependents explains the difference between a qualifying child and a qualifying relative. State income tax returns Other topics include the social security number requirement for dependents, the rules for multiple support agreements, and the rules for divorced or separated parents. State income tax returns Phaseout of Exemptions explains how to determine whether you must reduce the dollar amount of exemptions you claim and, if so, the amount of the reduction. State income tax returns Standard Deduction gives the rules and dollar amounts for the standard deduction — a benefit for taxpayers who do not itemize their deductions. State income tax returns This section also discusses the standard deduction for taxpayers who are blind or age 65 or older, as well as special rules that limit the standard deduction available to dependents. State income tax returns In addition, this section helps you decide whether you would be better off taking the standard deduction or itemizing your deductions. State income tax returns How To Get Tax Help explains how to get tax help from the IRS. State income tax returns This publication is for U. State income tax returns S. State income tax returns citizens and resident aliens only. State income tax returns If you are a resident alien for the entire year, you must follow the same tax rules that apply to U. State income tax returns S. State income tax returns citizens. State income tax returns The rules to determine if you are a resident or nonresident alien are discussed in chapter 1 of Publication 519, U. State income tax returns S. State income tax returns Tax Guide for Aliens. State income tax returns Nonresident aliens. State income tax returns    If you were a nonresident alien at any time during the year, the rules and tax forms that apply to you may be different from those that apply to U. State income tax returns S. State income tax returns citizens. State income tax returns See Publication 519. State income tax returns Comments and suggestions. State income tax returns    We welcome your comments about this publication and your suggestions for future editions. State income tax returns   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. State income tax returns NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. State income tax returns Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. State income tax returns   You can send your comments from www. State income tax returns irs. State income tax returns gov/formspubs. State income tax returns Click on “More Information” and then on “Comment on Tax Forms and Publications. State income tax returns ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. State income tax returns Ordering forms and publications. State income tax returns    Visit www. State income tax returns irs. State income tax returns gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. State income tax returns Internal Revenue Service 1201 N. State income tax returns Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. State income tax returns    If you have a tax question, check the information available on IRS. State income tax returns gov or call 1-800-829-1040. State income tax returns We cannot answer tax questions sent to either of the above addresses. State income tax returns Useful Items - You may want to see: Publication 559 Survivors, Executors, and Administrators 929 Tax Rules for Children and Dependents Form (and Instructions) 1040X Amended U. State income tax returns S. State income tax returns Individual Income Tax Return 2848 Power of Attorney and Declaration of Representative 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent 8814 Parents' Election To Report Child's Interest and Dividends Prev  Up  Next   Home   More Online Publications
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The State Income Tax Returns

State income tax returns 6. State income tax returns   How To Report Table of Contents Where To ReportGifts. State income tax returns Statutory employees. State income tax returns Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. State income tax returns Standard mileage rate. State income tax returns Actual expenses. State income tax returns Car rentals. State income tax returns Hours of service limits. State income tax returns Allocating your reimbursement. State income tax returns 1. State income tax returns Limit on meals and entertainment. State income tax returns 2. State income tax returns Limit on miscellaneous itemized deductions. State income tax returns 3. State income tax returns Limit on total itemized deductions. State income tax returns Special Rules This chapter explains where and how to report the expenses discussed in this publication. State income tax returns It discusses reimbursements and how to treat them under accountable and nonaccountable plans. State income tax returns It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. State income tax returns The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. State income tax returns Where To Report This section provides general information on where to report the expenses discussed in this publication. State income tax returns Self-employed. State income tax returns   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. State income tax returns You do not use Form 2106 or 2106-EZ. State income tax returns    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. State income tax returns You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. State income tax returns   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. State income tax returns Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. State income tax returns   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. State income tax returns You can only include 50% of your meals and entertainment in that total. State income tax returns If you include car expenses, you must also complete Part III of the form. State income tax returns    If you file Schedule F (Form 1040): Report your car expenses on line 10. State income tax returns Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. State income tax returns Report all other business expenses discussed in this publication on line 32. State income tax returns You can only include 50% of your meals and entertainment on that line. State income tax returns See your form instructions for more information on how to complete your tax return. State income tax returns Both self-employed and an employee. State income tax returns   If you are both self-employed and an employee, you must keep separate records for each business activity. State income tax returns Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. State income tax returns Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. State income tax returns Employees. State income tax returns    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. State income tax returns However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. State income tax returns You are an employee deducting expenses attributable to your job. State income tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). State income tax returns If you claim car expenses, you use the standard mileage rate. State income tax returns   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. State income tax returns Gifts. State income tax returns   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. State income tax returns Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). State income tax returns Statutory employees. State income tax returns    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). State income tax returns Do not complete Form 2106 or 2106-EZ. State income tax returns   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. State income tax returns If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. State income tax returns Reimbursement for personal expenses. State income tax returns    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. State income tax returns You cannot deduct personal expenses. State income tax returns Income-producing property. State income tax returns   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. State income tax returns   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. State income tax returns See Publication 527, Residential Rental Property, for more information on the rental of real estate. State income tax returns If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. State income tax returns Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. State income tax returns The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. State income tax returns You cannot use the standard mileage rate. State income tax returns Value reported on Form W-2. State income tax returns   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). State income tax returns Your employer must separately state the amount if 100% of the annual lease value was included in your income. State income tax returns If you are unsure of the amount included on your Form W-2, ask your employer. State income tax returns Full value included in your income. State income tax returns   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. State income tax returns On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. State income tax returns    To claim your expenses, complete Form 2106, Part II, Sections A and C. State income tax returns Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. State income tax returns Complete the rest of the form. State income tax returns Less than full value included in your income. State income tax returns   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. State income tax returns Do not enter this value on your Form 2106 because it is not deductible. State income tax returns   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. State income tax returns Examples of costs that you may have are gas, oil, and repairs. State income tax returns Complete Form 2106, Part II, Sections A and C. State income tax returns Enter your actual costs on line 23 of Section C and leave line 25 blank. State income tax returns Complete the rest of the form. State income tax returns Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. State income tax returns If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. State income tax returns This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. State income tax returns It also covers rules for independent contractors. State income tax returns No reimbursement. State income tax returns   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. State income tax returns In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. State income tax returns Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. State income tax returns Reimbursement, allowance, or advance. State income tax returns   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. State income tax returns Arrangements include per diem and car allowances. State income tax returns    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. State income tax returns (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. State income tax returns ) A car allowance is an amount your employer gives you for the business use of your car. State income tax returns   Your employer should tell you what method of reimbursement is used and what records you must provide. State income tax returns Employers. State income tax returns   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. State income tax returns Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. State income tax returns Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. State income tax returns See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. State income tax returns Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. State income tax returns You must adequately account to your employer for these expenses within a reasonable period of time. State income tax returns You must return any excess reimbursement or allowance within a reasonable period of time. State income tax returns “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. State income tax returns An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. State income tax returns Reasonable period of time. State income tax returns   The definition of reasonable period of time depends on the facts and circumstances of your situation. State income tax returns However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. State income tax returns You receive an advance within 30 days of the time you have an expense. State income tax returns You adequately account for your expenses within 60 days after they were paid or incurred. State income tax returns You return any excess reimbursement within 120 days after the expense was paid or incurred. State income tax returns You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. State income tax returns Employee meets accountable plan rules. State income tax returns   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. State income tax returns If your expenses equal your reimbursements, you do not complete Form 2106. State income tax returns You have no deduction since your expenses and reimbursement are equal. State income tax returns    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. State income tax returns Accountable plan rules not met. State income tax returns   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. State income tax returns All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). State income tax returns Failure to return excess reimbursements. State income tax returns   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. State income tax returns See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. State income tax returns Reimbursement of nondeductible expenses. State income tax returns   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. State income tax returns The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. State income tax returns Example. State income tax returns Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. State income tax returns The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. State income tax returns The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. State income tax returns If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. State income tax returns Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. State income tax returns You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. State income tax returns (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. State income tax returns ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. State income tax returns See Per Diem and Car Allowances , later. State income tax returns You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. State income tax returns This includes amounts you charged to your employer by credit card or other method. State income tax returns You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. State income tax returns You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. State income tax returns Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. State income tax returns A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. State income tax returns Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. State income tax returns The allowance is similar in form to and not more than the federal rate (defined later). State income tax returns You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. State income tax returns You are not related to your employer (as defined next). State income tax returns If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. State income tax returns If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. State income tax returns In this case, you must be able to prove your expenses to the IRS. State income tax returns Related to employer. State income tax returns   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. State income tax returns You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. State income tax returns The federal rate. State income tax returns   The federal rate can be figured using any one of the following methods. State income tax returns For per diem amounts: The regular federal per diem rate. State income tax returns The standard meal allowance. State income tax returns The high-low rate. State income tax returns For car expenses: The standard mileage rate. State income tax returns A fixed and variable rate (FAVR). State income tax returns    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. State income tax returns Regular federal per diem rate. State income tax returns   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. State income tax returns The rates are different for different locations. State income tax returns Your employer should have these rates available. State income tax returns You can also find federal per diem rates at www. State income tax returns gsa. State income tax returns gov/perdiem. State income tax returns The standard meal allowance. State income tax returns   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). State income tax returns The rate for most small localities in the United States is $46 a day. State income tax returns Most major cities and many other localities qualify for higher rates. State income tax returns You can find this information on the Internet at www. State income tax returns gsa. State income tax returns gov/perdiem. State income tax returns   You receive an allowance only for meals and incidental expenses when your employer does one of the following. State income tax returns Provides you with lodging (furnishes it in kind). State income tax returns Reimburses you, based on your receipts, for the actual cost of your lodging. State income tax returns Pays the hotel, motel, etc. State income tax returns , directly for your lodging. State income tax returns Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. State income tax returns Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. State income tax returns High-low rate. State income tax returns   This is a simplified method of computing the federal per diem rate for travel within the continental United States. State income tax returns It eliminates the need to keep a current list of the per diem rates for each city. State income tax returns   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. State income tax returns All other areas have a per diem amount of $163 (including $52 for M&IE). State income tax returns For more information, see Notice 2012-63, which can be found on the Internet at www. State income tax returns irs. State income tax returns gov/irb/2012-42_IRB/ar12. State income tax returns html. State income tax returns    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). State income tax returns The rate for all other locations increased to $170 (including $52 for M&IE). State income tax returns Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. State income tax returns For more information, see Notice 2013-65, which can be found on the Internet at www. State income tax returns irs. State income tax returns gov/pub/irs-drop/n-13–65. State income tax returns pdf and Revenue Procedure 2011-47 at www. State income tax returns irs. State income tax returns gov/irb/2011-42_IRB/ar12. State income tax returns html. State income tax returns Prorating the standard meal allowance on partial days of travel. State income tax returns   The standard meal allowance is for a full 24-hour day of travel. State income tax returns If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. State income tax returns This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. State income tax returns   You can use either of the following methods to figure the federal M&IE for that day. State income tax returns Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. State income tax returns For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. State income tax returns Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. State income tax returns For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. State income tax returns m. State income tax returns of one day to 5 p. State income tax returns m. State income tax returns of the next day as being no more than the federal rate. State income tax returns This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. State income tax returns The standard mileage rate. State income tax returns   This is a set rate per mile that you can use to compute your deductible car expenses. State income tax returns For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. State income tax returns Fixed and variable rate (FAVR). State income tax returns   This is an allowance your employer may use to reimburse your car expenses. State income tax returns Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. State income tax returns ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. State income tax returns ). State income tax returns If your employer chooses to use this method, your employer will request the necessary records from you. State income tax returns Reporting your expenses with a per diem or car allowance. State income tax returns   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. State income tax returns The federal rate. State income tax returns Whether the allowance or your actual expenses were more than the federal rate. State income tax returns The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. State income tax returns Allowance less than or equal to the federal rate. State income tax returns   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. State income tax returns You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. State income tax returns   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). State income tax returns If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. State income tax returns If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. State income tax returns Example 1. State income tax returns In April, Jeremy takes a 2-day business trip to Denver. State income tax returns The federal rate for Denver is $215 per day. State income tax returns As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. State income tax returns His employer reimburses him $215 a day ($430 total) for living expenses. State income tax returns Jeremy's living expenses in Denver are not more than $215 a day. State income tax returns Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. State income tax returns Example 2. State income tax returns In June, Matt takes a 2-day business trip to Boston. State income tax returns Matt's employer uses the high-low method to reimburse employees. State income tax returns Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. State income tax returns Matt's actual expenses totaled $700. State income tax returns Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. State income tax returns Matt completes Form 2106 (showing all of his expenses and reimbursements). State income tax returns He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . State income tax returns Example 3. State income tax returns Nicole drives 10,000 miles in 2013 for business. State income tax returns Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. State income tax returns Her employer pays her a mileage allowance of 40 cents a mile. State income tax returns Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. State income tax returns Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. State income tax returns Allowance more than the federal rate. State income tax returns   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. State income tax returns This amount is not taxable. State income tax returns However, the excess allowance will be included in box 1 of your Form W-2. State income tax returns You must report this part of your allowance as if it were wage income. State income tax returns   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. State income tax returns   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. State income tax returns You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. State income tax returns You should be able to prove these amounts to the IRS. State income tax returns Example 1. State income tax returns Laura lives and works in Austin. State income tax returns In July her employer sent her to Albuquerque for 4 days on business. State income tax returns Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. State income tax returns Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. State income tax returns Table 6-1. State income tax returns Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. State income tax returns No amount. State income tax returns No amount. State income tax returns Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. State income tax returns The excess amount as wages in box 1. State income tax returns No amount. State income tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. State income tax returns No amount. State income tax returns All expenses and reimbursements only if excess expenses are claimed. State income tax returns Otherwise, form is not filed. State income tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. State income tax returns The excess amount as wages in box 1. State income tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. State income tax returns No amount. State income tax returns Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. State income tax returns The excess amount as wages in box 1. State income tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. State income tax returns All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. State income tax returns Otherwise, form is not filed. State income tax returns A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. State income tax returns The entire amount as wages in box 1. State income tax returns All expenses. State income tax returns No reimbursement plan: The entire amount as wages in box 1. State income tax returns All expenses. State income tax returns * You may be able to use Form 2106-EZ. State income tax returns See Completing Forms 2106 and 2106-EZ . State income tax returns Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. State income tax returns Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. State income tax returns This amount is not included in Laura's income. State income tax returns Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). State income tax returns Example 2. State income tax returns Joe also lives in Austin and works for the same employer as Laura. State income tax returns In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. State income tax returns The employer reimbursed Joe $75 a day for his meals and incidental expenses. State income tax returns The federal rate for San Diego is $71 a day. State income tax returns Joe can prove that his actual meal expenses totaled $380. State income tax returns His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. State income tax returns However, he does account for the time, place, and business purpose of the trip. State income tax returns This is Joe's only business trip this year. State income tax returns Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). State income tax returns The employer includes the $16 as income on Joe's Form W-2 in box 1. State income tax returns The employer also enters $284 in box 12 of Joe's Form W-2. State income tax returns Joe completes Form 2106 to figure his deductible expenses. State income tax returns He enters the total of his actual expenses for the year ($380) on Form 2106. State income tax returns He also enters the reimbursements that were not included in his income ($284). State income tax returns His total deductible expense, before the 50% limit, is $96. State income tax returns After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. State income tax returns Example 3. State income tax returns Debbie drives 10,000 miles in 2013 for business. State income tax returns Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. State income tax returns Her total reimbursement is $6,000. State income tax returns Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. State income tax returns That amount is not taxable. State income tax returns Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. State income tax returns This is the reimbursement that is more than the standard mileage rate. State income tax returns If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. State income tax returns If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). State income tax returns She would then claim the excess expenses as an itemized deduction. State income tax returns Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. State income tax returns Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. State income tax returns For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. State income tax returns “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. State income tax returns Travel advance. State income tax returns   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. State income tax returns Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. State income tax returns   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). State income tax returns Unproved amounts. State income tax returns   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. State income tax returns If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). State income tax returns Per diem allowance more than federal rate. State income tax returns   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. State income tax returns However, the difference will be reported as wages on your Form W-2. State income tax returns This excess amount is considered paid under a nonaccountable plan (discussed later). State income tax returns Example. State income tax returns Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. State income tax returns The federal per diem for meals and incidental expenses for Phoenix is $71. State income tax returns Your trip lasts only 3 days. State income tax returns Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. State income tax returns For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). State income tax returns However, the $27 will be reported on your Form W-2 as wages. State income tax returns Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. State income tax returns In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. State income tax returns See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. State income tax returns An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. State income tax returns This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. State income tax returns If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. State income tax returns Reporting your expenses under a nonaccountable plan. State income tax returns   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. State income tax returns Your employer will report the total in box 1 of your Form W-2. State income tax returns    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. State income tax returns Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. State income tax returns Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. State income tax returns Example 1. State income tax returns Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. State income tax returns Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. State income tax returns Kim is being reimbursed under a nonaccountable plan. State income tax returns Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. State income tax returns If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. State income tax returns Example 2. State income tax returns Kevin is paid $2,000 a month by his employer. State income tax returns On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. State income tax returns Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. State income tax returns No part of the $50 a day designated by his employer is treated as paid under an accountable plan. State income tax returns Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. State income tax returns The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. State income tax returns You are considered an independent contractor if you are self-employed and you perform services for a customer or client. State income tax returns Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. State income tax returns If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. State income tax returns You must keep adequate records of these expenses whether or not you account to your client for these expenses. State income tax returns If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. State income tax returns See 50% Limit in chapter 2. State income tax returns Adequate accounting. State income tax returns   As a self-employed person, you adequately account by reporting your actual expenses. State income tax returns You should follow the recordkeeping rules in chapter 5 . State income tax returns How to report. State income tax returns   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. State income tax returns Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. State income tax returns However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. State income tax returns Contractor adequately accounts. State income tax returns   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . State income tax returns Use your records as proof for a deduction on your tax return. State income tax returns If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. State income tax returns If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. State income tax returns Contractor does not adequately account. State income tax returns    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. State income tax returns You are not subject to the 50% limit on entertainment in this case. State income tax returns You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. State income tax returns However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. State income tax returns How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. State income tax returns The Two Substantiation Methods High-low method. State income tax returns   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. State income tax returns Notice 2012–63, available at www. State income tax returns irs. State income tax returns gov/irb/2012–42_IRB/ar12. State income tax returns html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. State income tax returns For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. State income tax returns   Notice 2013–65, available at www. State income tax returns irs. State income tax returns gov/pub/irs-drop/n-13–65. State income tax returns pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. State income tax returns For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). State income tax returns Regular federal per diem rate method. State income tax returns   Regular federal per diem rates are published by the General Services Administration (GSA). State income tax returns Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. State income tax returns The rates listed for FY2013 at www. State income tax returns gsa. State income tax returns gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. State income tax returns The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). State income tax returns For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). State income tax returns Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. State income tax returns During this period, you generally may change to the new rates or finish out the year with the rates you had been using. State income tax returns High-low method. State income tax returns   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. State income tax returns However, you must continue using the high-low method for the rest of the calendar year (through December 31). State income tax returns If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. State income tax returns   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. State income tax returns You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. State income tax returns irs. State income tax returns gov/irb. State income tax returns Federal per diem rate method. State income tax returns   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. State income tax returns Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). State income tax returns However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. State income tax returns   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. State income tax returns Go to www. State income tax returns gsa. State income tax returns gov/perdiem. State income tax returns Per diem rates for localities listed for FY2014 may change at any time. State income tax returns To be sure you have the most current rate, check www. State income tax returns gsa. State income tax returns gov/perdiem. State income tax returns Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. State income tax returns Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. State income tax returns The instructions for the forms have more information on completing them. State income tax returns If you are self-employed, do not file Form 2106 or 2106-EZ. State income tax returns Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). State income tax returns See the instructions for the form that you must file. State income tax returns Form 2106-EZ. State income tax returns   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. State income tax returns You can use this form if you meet all the following conditions. State income tax returns You are an employee deducting ordinary and necessary expenses attributable to your job. State income tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). State income tax returns If you are claiming car expenses, you are using the standard mileage rate. State income tax returns Car expenses. State income tax returns   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. State income tax returns These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. State income tax returns Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. State income tax returns Information on use of cars. State income tax returns   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. State income tax returns The information relates to the following items. State income tax returns Date placed in service. State income tax returns Mileage (total, business, commuting, and other personal mileage). State income tax returns Percentage of business use. State income tax returns After-work use. State income tax returns Use of other vehicles. State income tax returns Whether you have evidence to support the deduction. State income tax returns Whether or not the evidence is written. State income tax returns Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. State income tax returns Standard mileage rate. State income tax returns   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. State income tax returns The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. State income tax returns In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. State income tax returns If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. State income tax returns See Standard Mileage Rate in chapter 4 for information on using this rate. State income tax returns Actual expenses. State income tax returns   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. State income tax returns You must complete Form 2106, Part II, Section C. State income tax returns In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. State income tax returns   If you are still using a car that is fully depreciated, continue to complete Section C. State income tax returns Since you have no depreciation deduction, enter zero on line 28. State income tax returns In this case, do not complete Section D. State income tax returns Car rentals. State income tax returns   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. State income tax returns If so, you can show your car expenses and any inclusion amount as follows. State income tax returns Compute the inclusion amount without taking into account your business use percentage for the tax year. State income tax returns Report the inclusion amount from (1) on Form 2106, Part II, line 24b. State income tax returns Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). State income tax returns The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. State income tax returns Transportation expenses. State income tax returns   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. State income tax returns Also include on this line business expenses you have for parking fees and tolls. State income tax returns Do not include expenses of operating your car or expenses of commuting between your home and work. State income tax returns Employee business expenses other than meals and entertainment. State income tax returns   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. State income tax returns Do not include expenses for meals and entertainment on those lines. State income tax returns Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. State income tax returns    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. State income tax returns Claim these amounts directly on Schedule A (Form 1040), line 21. State income tax returns List the type and amount of each expense on the dotted lines and include the total on line 21. State income tax returns Meal and entertainment expenses. State income tax returns   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. State income tax returns Include meals while away from your tax home overnight and other business meals and entertainment. State income tax returns Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. State income tax returns   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. State income tax returns Enter the result on line 5. State income tax returns Hours of service limits. State income tax returns   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. State income tax returns Reimbursements. State income tax returns   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. State income tax returns This includes any amount reported under code L in box 12 of Form W-2. State income tax returns Allocating your reimbursement. State income tax returns   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. State income tax returns This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. State income tax returns You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. State income tax returns Example. State income tax returns Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. State income tax returns The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. State income tax returns The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. State income tax returns Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). State income tax returns Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. State income tax returns To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. State income tax returns His completed worksheet follows. State income tax returns Reimbursement Allocation Worksheet (Keep for your records)   1. State income tax returns Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. State income tax returns Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. State income tax returns Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. State income tax returns Divide line 3 by line 2. State income tax returns Enter the result as a decimal (rounded to at least three places) . State income tax returns 529   5. State income tax returns Multiply line 1 by line 4. State income tax returns Enter the result here and in Column B, line 7 3,703   6. State income tax returns Subtract line 5 from line 1. State income tax returns Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. State income tax returns After you complete the form. State income tax returns   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. State income tax returns For most taxpayers, this is line 21 of Schedule A (Form 1040). State income tax returns However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. State income tax returns Limits on employee business expenses. State income tax returns   Your employee business expenses may be subject to either of the limits described next. State income tax returns They are figured in the following order on the specified form. State income tax returns 1. State income tax returns Limit on meals and entertainment. State income tax returns   Certain meal and entertainment expenses are subject to a 50% limit. State income tax returns If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. State income tax returns (See 50% Limit in chapter 2. State income tax returns ) 2. State income tax returns Limit on miscellaneous itemized deductions. State income tax returns   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). State income tax returns Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. State income tax returns This limit is figured on line 26 of Schedule A (Form 1040). State income tax returns 3. State income tax returns Limit on total itemized deductions. State income tax returns   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. State income tax returns See your form instructions for information on how to figure this limit. State income tax returns Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. State income tax returns Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. State income tax returns The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. State income tax returns See Per Diem and Car Allowances , earlier, for more information. State income tax returns Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. State income tax returns Member of a reserve component. State income tax returns   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. State income tax returns How to report. State income tax returns   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. State income tax returns Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. State income tax returns Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. State income tax returns   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. State income tax returns Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. State income tax returns Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). State income tax returns Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. State income tax returns They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. State income tax returns If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. State income tax returns Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. State income tax returns To qualify, you must meet all of the following requirements. State income tax returns During the tax year, you perform services in the performing arts as an employee for at least two employers. State income tax returns You receive at least $200 each from any two of these employers. State income tax returns Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. State income tax returns Your adjusted gross income is not more than $16,000 before deducting these business expenses. State income tax returns Special rules for married persons. State income tax returns   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. State income tax returns If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. State income tax returns However, requirement (4) applies to your and your spouse's combined adjusted gross income. State income tax returns Where to report. State income tax returns   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. State income tax returns Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. State income tax returns   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. State income tax returns Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. State income tax returns Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. State income tax returns After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. State income tax returns Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. State income tax returns Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. State income tax returns You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. State income tax returns You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. State income tax returns Example 1. State income tax returns You are blind. State income tax returns You must use a reader to do your work. State income tax returns You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. State income tax returns The reader's services are only for your work. State income tax returns You can deduct your expenses for the reader as business expenses. State income tax returns Example 2. State income tax returns You are deaf. State income tax returns You must use a sign language interpreter during meetings while you are at work. State income tax returns The interpreter's services are used only for your work. State income tax returns You can deduct your expenses for the interpreter as business expenses. State income tax returns Prev  Up  Next   Home   More Online Publications