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Tax Filing

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Tax Filing

Tax filing Publication 1544 - Main Content Table of Contents Why Report These Payments? Who Must File Form 8300?What Payments Must Be Reported? What Is Cash? Taxpayer Identification Number (TIN) What Is a Related Transaction? What About Suspicious Transactions? When, Where, and What To File Examples Penalties How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Tax filing Why Report These Payments? Drug dealers and smugglers often use large cash payments to “launder” money from illegal activities. Tax filing Laundering means converting “dirty” or illegally-gained money to “clean” money. Tax filing The government can often trace this laundered money through the payments you report. Tax filing Laws passed by Congress require you to report these payments. Tax filing Your compliance with these laws provides valuable information that can stop those who evade taxes and those who profit from the drug trade and other criminal activities. Tax filing The USA PATRIOT Act of 2001 increased the scope of these laws to help trace funds used for terrorism. Tax filing Who Must File Form 8300? Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300. Tax filing For example, you may have to file Form 8300 if you are a dealer in jewelry, furniture, boats, aircraft, or automobiles; a pawnbroker; an attorney; a real estate broker; an insurance company; or a travel agency. Tax filing Special rules for clerks of federal or state courts are discussed later under Bail received by court clerks. Tax filing However, you do not have to file Form 8300 if the transaction is not related to your trade or business. Tax filing For example, if you own a jewelry store and sell your personal automobile for more than $10,000 in cash, you would not submit a Form 8300 for that transaction. Tax filing Transaction defined. Tax filing    A “transaction” occurs when: Goods, services, or property are sold; Property is rented; Cash is exchanged for other cash; A contribution is made to a trust or escrow account; A loan is made or repaid; or Cash is converted to a negotiable instrument, such as a check or a bond. Tax filing Person defined. Tax filing   A “person” includes an individual, a company, a corporation, a partnership, an association, a trust, or an estate. Tax filing   Exempt organizations, including employee plans, are also “persons. Tax filing ” However, exempt organizations do not have to file Form 8300 for a more-than-$10,000 charitable cash contribution they receive since it is not received in the course of a trade or business. Tax filing Foreign transactions. Tax filing   You do not have to file Form 8300 if the entire transaction (including the receipt of cash) takes place outside of: The 50 states, The District of Columbia, Puerto Rico, or A possession or territory of the United States. Tax filing However, you must file Form 8300 if any part of the transaction (including the receipt of cash) occurs in Puerto Rico or a possession or territory of the United States and you are subject to the Internal Revenue Code. Tax filing Bail received by court clerks. Tax filing   Any clerk of a federal or state court who receives more than $10,000 in cash as bail for an individual charged with any of the following criminal offenses must file Form 8300: Any federal offense involving a controlled substance, Racketeering, Money laundering, and Any state offense substantially similar to (1), (2), or (3) above. Tax filing For more information about the rules that apply to court clerks, see Section 1. Tax filing 6050I-2 of the Income Tax Regulations. Tax filing What Payments Must Be Reported? You must file Form 8300 to report cash paid to you if it is: Over $10,000, Received as: One lump sum of over $10,000, Installment payments that cause the total cash received within 1 year of the initial payment to total more than $10,000, or Other previously unreportable payments that cause the total cash received within a 12-month period to total more than $10,000, Received in the course of your trade or business, Received from the same buyer (or agent), and Received in a single transaction or in related transactions (defined later). Tax filing What Is Cash? Cash is: The coins and currency of the United States (and any other country), and A cashier's check, bank draft, traveler's check, or money order you receive, if it has a face amount of $10,000 or less and you receive it in: A designated reporting transaction (defined later), or Any transaction in which you know the payer is trying to avoid the reporting of the transaction on Form 8300. Tax filing Cash may include a cashier's check even if it is called a “treasurer's check” or “bank check. Tax filing ” Cash does not include a check drawn on an individual's personal account. Tax filing A cashier's check, bank draft, traveler's check, or money order with a face amount of more than $10,000 is not treated as cash. Tax filing These items are not defined as cash and you do not have to file Form 8300 when you receive them because, if they were bought with currency, the bank or other financial institution that issued them must file a report on FinCEN Form 104. Tax filing Example 1. Tax filing You are a coin dealer. Tax filing Bob Green buys gold coins from you for $13,200. Tax filing He pays for them with $6,200 in U. Tax filing S. Tax filing currency and a cashier's check having a face amount of $7,000. Tax filing The cashier's check is treated as cash. Tax filing You have received more than $10,000 cash and must file Form 8300 for this transaction. Tax filing Example 2. Tax filing You are a retail jeweler. Tax filing Mary North buys an item of jewelry from you for $12,000. Tax filing She pays for it with a personal check payable to you in the amount of $9,600 and traveler's checks totaling $2,400. Tax filing Because the personal check is not treated as cash, you have not received more than $10,000 cash in the transaction. Tax filing You do not have to file Form 8300. Tax filing Example 3. Tax filing You are a boat dealer. Tax filing Emily Jones buys a boat from you for $16,500. Tax filing She pays for it with a cashier's check payable to you in the amount of $16,500. Tax filing The cashier's check is not treated as cash because its face amount is more than $10,000. Tax filing You do not have to file Form 8300 for this transaction. Tax filing Designated Reporting Transaction A designated reporting transaction is the retail sale of any of the following: A consumer durable, such as an automobile or boat. Tax filing A consumer durable is property, other than land or buildings, that: Is suitable for personal use, Can reasonably be expected to last at least 1 year under ordinary use, Has a sales price of more than $10,000, and Can be seen or touched (tangible property). Tax filing For example, a $20,000 car is a consumer durable, but a $20,000 dump truck or factory machine is not. Tax filing The car is a consumer durable even if you sell it to a buyer who will use it in a business. Tax filing A collectible (for example, a work of art, rug, antique, metal, gem, stamp, or coin). Tax filing Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction (or related transactions) is more than $10,000. Tax filing To figure the total sales price of all items sold for a trip or entertainment event, you include the sales price of items such as airfare, hotel rooms, and admission tickets. Tax filing Example. Tax filing You are a travel agent. Tax filing Ed Johnson asks you to charter a passenger airplane to take a group to a sports event in another city. Tax filing He also asks you to book hotel rooms and admission tickets for the group. Tax filing In payment, he gives you two money orders, each for $6,000. Tax filing You have received more than $10,000 cash in this designated reporting transaction. Tax filing You must file Form 8300. Tax filing Retail sale. Tax filing   The term “retail sale” means any sale made in the course of a trade or business that consists mainly of making sales to ultimate consumers. Tax filing   Thus, if your business consists mainly of making sales to ultimate consumers, all sales you make in the course of that business are retail sales. Tax filing This includes any sales of items that will be resold. Tax filing Broker or intermediary. Tax filing   A designated reporting transaction includes the retail sale of items (1), (2), or (3) of the preceding list, even if the funds are received by a broker or other intermediary, rather than directly by the seller. Tax filing Exceptions to Definition of Cash A cashier's check, bank draft, traveler's check, or money order you received in a designated reporting transaction is not treated as cash if one of the following exceptions applies. Tax filing Exception for certain bank loans. Tax filing   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is the proceeds from a bank loan. Tax filing As proof that it is from a bank loan, you may rely on a copy of the loan document, a written statement or lien instruction from the bank, or similar proof. Tax filing Example. Tax filing You are a car dealer. Tax filing Mandy White buys a new car from you for $11,500. Tax filing She pays you with $2,000 of U. Tax filing S. Tax filing currency and a cashier's check for $9,500 payable to you and her. Tax filing You can tell that the cashier's check is the proceeds of a bank loan because it includes instructions to you to have a lien put on the car as security for the loan. Tax filing For this reason, the cashier's check is not treated as cash. Tax filing You do not have to file Form 8300 for the transaction. Tax filing Exception for certain installment sales. Tax filing   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if it is received in payment on a promissory note or an installment sales contract (including a lease that is considered a sale for federal tax purposes). Tax filing However, this exception applies only if: You use similar notes or contracts in other sales to ultimate consumers in the ordinary course of your trade or business, and The total payments for the sale that you receive on or before the 60th day after the sale are 50% or less of the purchase price. Tax filing Exception for certain down payment plans. Tax filing   A cashier's check, bank draft, traveler's check, or money order is not treated as cash if you received it in payment for a consumer durable or collectible, and all three of the following statements are true. Tax filing You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the date of sale. Tax filing You receive it more than 60 days before the date of sale. Tax filing You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Tax filing Exception for travel and entertainment. Tax filing   A cashier's check, bank draft, traveler's check, or money order received for travel or entertainment is not treated as cash if all three of the following statements are true. Tax filing You receive it under a payment plan requiring: One or more down payments, and Payment of the rest of the purchase price by the earliest date that any travel or entertainment item (such as airfare) is furnished for the trip or entertainment event. Tax filing You receive it more than 60 days before the date on which the final payment is due. Tax filing You use payment plans with the same or substantially similar terms when selling to ultimate consumers in the ordinary course of your trade or business. Tax filing Taxpayer Identification Number (TIN) You must furnish the correct TIN of the person or persons from whom you receive the cash. Tax filing If the transaction is conducted on the behalf of another person or persons, you must furnish the TIN of that person or persons. Tax filing If you do not know a person's TIN, you have to ask for it. Tax filing You may be subject to penalties for an incorrect or missing TIN. Tax filing There are three types of TINs. Tax filing The TIN for an individual, including a sole proprietor, is the individual's social security number (SSN). Tax filing The TIN for a nonresident alien individual who needs a TIN but is not eligible to get an SSN is an IRS individual taxpayer identification number (ITIN). Tax filing An ITIN has nine digits, similar to an SSN. Tax filing The TIN for other persons, including corporations, partnerships, and estates, is the employer identification number (EIN). Tax filing Exception. Tax filing   You are not required to provide the TIN of a person who is a nonresident alien individual or a foreign organization if that person or foreign organization: Does not have income effectively connected with the conduct of a U. Tax filing S. Tax filing trade or business; Does not have an office or place of business, or a fiscal or paying agent in the United States; Does not file a federal tax return; Does not furnish a withholding certificate described in §1. Tax filing 1441-1(e)(2) or (3) or 1. Tax filing 1441-5(c)(2)(iv) or (3)(iii) to the extent required under 1. Tax filing 1441-1(e)(4)(vii); Does not have to furnish a TIN on any return, statement, or other document as required by the income tax regulations under section 897 or 1445; or In the case of a nonresident alien individual, the individual has not chosen to file a joint federal income tax return with a spouse who is a U. Tax filing S. Tax filing citizen or resident. Tax filing What Is a Related Transaction? Any transactions between a buyer (or an agent of the buyer) and a seller that occur within a 24-hour period are related transactions. Tax filing If you receive over $10,000 in cash during two or more transactions with one buyer in a 24-hour period, you must treat the transactions as one transaction and report the payments on Form 8300. Tax filing For example, if you sell two products for $6,000 each to the same customer in 1 day and the customer pays you in cash, these are related transactions. Tax filing Because they total $12,000 (more than $10,000), you must file Form 8300. Tax filing More than 24 hours between transactions. Tax filing   Transactions are related even if they are more than 24 hours apart if you know, or have reason to know, that each is one of a series of connected transactions. Tax filing   For example, you are a travel agent. Tax filing A client pays you $8,000 in cash for a trip. Tax filing Two days later, the same client pays you $3,000 more in cash to include another person on the trip. Tax filing These are related transactions, and you must file Form 8300 to report them. Tax filing What About Suspicious Transactions? If you receive $10,000 or less in cash, you may voluntarily file Form 8300 if the transaction appears to be suspicious. Tax filing A transaction is suspicious if it appears that a person is trying to cause you not to file Form 8300 or is trying to cause you to file a false or incomplete Form 8300, or if there is a sign of possible illegal activity. Tax filing If you are suspicious, you are encouraged to call the local IRS Criminal Investigation Division as soon as possible. Tax filing Or, you can call the FinCEN Financial Institution Hotline toll free at 1-866-556-3974. Tax filing When, Where, and What To File The amount you receive and when you receive it determine when you must file. Tax filing Generally, you must file Form 8300 within 15 days after receiving a payment. Tax filing If the Form 8300 due date (the 15th or last day you can timely file the form) falls on a Saturday, Sunday, or legal holiday, it is delayed until the next day that is not a Saturday, Sunday, or legal holiday. Tax filing More than one payment. Tax filing   In some transactions, the buyer may arrange to pay you in cash installment payments. Tax filing If the first payment is more than $10,000, you must file Form 8300 within 15 days. Tax filing If the first payment is not more than $10,000, you must add the first payment and any later payments made within 1 year of the first payment. Tax filing When the total cash payments are more than $10,000, you must file Form 8300 within 15 days. Tax filing   After you file Form 8300, you must start a new count of cash payments received from that buyer. Tax filing If you receive more than $10,000 in additional cash payments from that buyer within a 12-month period, you must file another Form 8300. Tax filing You must file the form within 15 days of the payment that causes the additional payments to total more than $10,000. Tax filing   If you are already required to file Form 8300 and you receive additional payments within the 15 days before you must file, you can report all the payments on one form. Tax filing Example. Tax filing On January 10, you receive a cash payment of $11,000. Tax filing You receive additional cash payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. Tax filing By January 25, you must file a Form 8300 for the $11,000 payment. Tax filing By May 27, you must file an additional Form 8300 for the additional payments that total $15,000. Tax filing Amending a Report?   If you are amending a report, check box 1a at the top of Form 8300. Tax filing Complete the form in its entirety (Parts I-IV) and include the amended information. Tax filing Do not attach a copy of the original report. Tax filing Where to file. Tax filing   Mail the form to the address given in the Form 8300 instructions. Tax filing Required statement to buyer. Tax filing   You must give a written or electronic statement to each person named on any Form 8300 you must file. Tax filing You can give the statement electronically only if the recipient agrees to receive it in that format. Tax filing The statement must show the name and address of your business, the name and phone number of a contact person, and the total amount of reportable cash you received from the person during the year. Tax filing It must state that you are also reporting this information to the IRS. Tax filing   You must send this statement to the buyer by January 31 of the year after the year in which you received the cash that caused you to file the form. Tax filing    You must keep a copy of every Form 8300 you file for 5 years. Tax filing Examples Example 1. Tax filing Pat Brown is the sales manager for Small Town Cars. Tax filing On January 6, 2009, Jane Smith buys a new car from Pat and pays $18,000 in cash. Tax filing Pat asks for identification from Jane to get the necessary information to complete Form 8300. Tax filing A filled-in form is shown in this publication. Tax filing Pat must mail the form to the address shown in the form's instructions by January 21, 2009. Tax filing He must also send a statement to Jane by January 31, 2010. Tax filing Example 2. Tax filing Using the same facts given in Example 1, suppose Jane had arranged to make cash payments of $6,000 each on January 6, February 6, and March 6. Tax filing Pat would have to file a Form 8300 by February 26 (17 days after receiving total cash payments within 1 year over $10,000 because February 21, 2009, is a Saturday). Tax filing Pat would not have to report the remaining $6,000 cash payment because it is not more than $10,000. Tax filing However, he could report it if he felt it was a suspicious transaction. Tax filing Penalties There are civil penalties for failure to: File a correct Form 8300 by the date it is due, and Provide the required statement to those named in the Form 8300. Tax filing If you intentionally disregard the requirement to file a correct Form 8300 by the date it is due, the penalty is the greater of: $25,000, or The amount of cash you received and were required to report (up to $100,000). Tax filing There are criminal penalties for: Willful failure to file Form 8300, Willfully filing a false or fraudulent Form 8300, Stopping or trying to stop Form 8300 from being filed, and Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300. Tax filing If you willfully fail to file Form 8300, you can be fined up to $250,000 for individuals ($500,000 for corporations) or sentenced to up to 5 years in prison, or both. Tax filing These dollar amounts are based on Section 3571 of Title 18 of the U. Tax filing S. Tax filing Code. Tax filing The penalties for failure to file may also apply to any person (including a payer) who attempts to interfere with or prevent the seller (or business) from filing a correct Form 8300. Tax filing This includes any attempt to structure the transaction in a way that would make it seem unnecessary to file Form 8300. Tax filing Structuring means breaking up a large cash transaction into small cash transactions. Tax filing How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Tax filing By selecting the method that is best for you, you will have quick and easy access to tax help. Tax filing Free help with your return. Tax filing   Free help in preparing your return is available nationwide from IRS-certified volunteers. Tax filing The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Tax filing Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Tax filing To find the nearest VITA or TCE site, visit IRS. Tax filing gov or call 1-800-906-9887 or 1-800-829-1040. Tax filing   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax filing To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Tax filing aarp. Tax filing org/money/taxaide. Tax filing   For more information on these programs, go to IRS. Tax filing gov and enter keyword “VITA” in the upper right-hand corner. Tax filing Internet. Tax filing You can access the IRS website at IRS. Tax filing gov 24 hours a day, 7 days a week to: Check the status of your 2011 refund. Tax filing Go to IRS. Tax filing gov and click on Where's My Refund. Tax filing Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Tax filing If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax filing Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax filing E-file your return. Tax filing Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Tax filing Download forms, including talking tax forms, instructions, and publications. Tax filing Order IRS products online. Tax filing Research your tax questions online. Tax filing Search publications online by topic or keyword. Tax filing Use the online Internal Revenue Code, regulations, or other official guidance. Tax filing View Internal Revenue Bulletins (IRBs) published in the last few years. Tax filing Figure your withholding allowances using the withholding calculator online at  www. Tax filing irs. Tax filing gov/individuals. Tax filing Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at  www. Tax filing irs. Tax filing gov/individuals. Tax filing Sign up to receive local and national tax news by email. Tax filing Get information on starting and operating a small business. Tax filing Phone. Tax filing Many services are available by phone. Tax filing   Ordering forms, instructions, and publications. Tax filing Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Tax filing You should receive your order within 10 days. Tax filing Asking tax questions. Tax filing Call the IRS with your tax questions at 1-800-829-1040. Tax filing Solving problems. Tax filing You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Tax filing An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Tax filing Call your local Taxpayer Assistance Center for an appointment. Tax filing To find the number, go to www. Tax filing irs. Tax filing gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax filing TTY/TDD equipment. Tax filing If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Tax filing TeleTax topics. Tax filing Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Tax filing Refund information. Tax filing You can check the status of your refund on the new IRS phone app. Tax filing Download the free IRS2Go app by visiting the iTunes app store or the Android Marketplace. Tax filing IRS2Go is a new way to provide you with information and tools. Tax filing To check the status of your refund by phone, call 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Tax filing Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Tax filing If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Tax filing Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax filing If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Tax filing Other refund information. Tax filing To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Tax filing Evaluating the quality of our telephone services. Tax filing To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Tax filing One method is for a second IRS representative to listen in on or record random telephone calls. Tax filing Another is to ask some callers to complete a short survey at the end of the call. Tax filing Walk-in. Tax filing Many products and services are available on a walk-in basis. Tax filing   Products. Tax filing You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax filing Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Tax filing Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Tax filing Services. Tax filing You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Tax filing An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Tax filing If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Tax filing No appointment is necessary—just walk in. Tax filing If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Tax filing A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Tax filing If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Tax filing All other issues will be handled without an appointment. Tax filing To find the number of your local office, go to www. Tax filing irs. Tax filing gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Tax filing Mail. Tax filing You can send your order for forms, instructions, and publications to the address below. Tax filing You should receive a response within 10 days after your request is received. Tax filing  Internal Revenue Service 1201 N. Tax filing Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Tax filing   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax filing Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Tax filing We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Tax filing Remember, the worst thing you can do is nothing at all. Tax filing   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Tax filing You face (or your business is facing) an immediate threat of adverse action. Tax filing You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Tax filing   If you qualify for our help, we’ll do everything we can to get your problem resolved. Tax filing You will be assigned to one advocate who will be with you at every turn. Tax filing We have offices in every state, the District of Columbia, and Puerto Rico. Tax filing Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Tax filing And our services are always free. Tax filing   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Tax filing Our tax toolkit at www. Tax filing TaxpayerAdvocate. Tax filing irs. Tax filing gov can help you understand these rights. Tax filing   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Tax filing irs. Tax filing gov/advocate. Tax filing You can also call our toll-free number at 1-877-777-4778. Tax filing   TAS also handles large-scale or systemic problems that affect many taxpayers. Tax filing If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Tax filing irs. Tax filing gov/advocate. Tax filing Low Income Taxpayer Clinics (LITCs). Tax filing   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Tax filing Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Tax filing These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Tax filing Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Tax filing For more information and to find a clinic near you, see the LITC page on www. Tax filing irs. Tax filing gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Tax filing This publication is also available by calling 1-800-829-3676 or at your local IRS office. Tax filing Free tax services. Tax filing   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Tax filing Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Tax filing The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Tax filing The majority of the information and services listed in this publication are available to you free of charge. Tax filing If there is a fee associated with a resource or service, it is listed in the publication. Tax filing   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Tax filing DVD for tax products. Tax filing You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Tax filing Prior-year forms, instructions, and publications. Tax filing Tax Map: an electronic research tool and finding aid. Tax filing Tax law frequently asked questions. Tax filing Tax Topics from the IRS telephone response system. Tax filing Internal Revenue Code—Title 26 of the U. Tax filing S. Tax filing Code. 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Tax Relief for Victims of the Remnants of Tropical Storm Lee in New York

IRS e-File to Remain Open through Oct. 31 for Victims of Tropical Storm Lee

Updated 10/24/11 to add Herkimer and Schoharie counties.
Updated 10/11/11 to add Fulton county.
Updated 10/5/11 to add Oneida, Orange and Ulster counties.
Updated 9/20/11 to add Chemung and Schenectady counties.

NY-2011-36, Sept. 14, 2011

NEW YORK — Victims of the remnants of Tropical Storm Lee that began on Sept. 7, 2011 in parts of New York State may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Broome, Chemung, Chenango, Delaware, Fulton, Herkimer Oneida, Orange, Otsego, Schenectady, Schoharie, Tioga and Ulster. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 7, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes corporations and other businesses that previously obtained an extension until Sept. 15 to file their 2010 returns, and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter, normally due Sept. 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Sept. 7, and on or before Sept. 22, as long as the deposits are made by Sept. 22, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Sept. 7 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Sept. 7 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Sept. 7 and on or before Sept. 22 provided the taxpayer makes these deposits by Sept. 22.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “New York/Remnants of Tropical Storm Lee” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 26-Mar-2014

The Tax Filing

Tax filing 12. Tax filing   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Tax filing Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Tax filing  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Tax filing 5 cents per mile. Tax filing For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Tax filing Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Tax filing To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Tax filing What is the tax benefit of taking a business deduction for work-related education. Tax filing   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Tax filing Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Tax filing An itemized deduction reduces the amount of your income subject to tax. Tax filing   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Tax filing This reduces the amount of your income subject to both income tax and self-employment tax. Tax filing   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Tax filing You may qualify for these other benefits even if you do not meet the requirements listed above. Tax filing   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Tax filing Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Tax filing Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Tax filing This is education that meets at least one of the following two tests. Tax filing The education is required by your employer or the law to keep your present salary, status, or job. Tax filing The required education must serve a bona fide business purpose of your employer. Tax filing The education maintains or improves skills needed in your present work. Tax filing However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Tax filing You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Tax filing Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Tax filing Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Tax filing This additional education is qualifying work-related education if all three of the following requirements are met. Tax filing It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Tax filing When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Tax filing See Education To Maintain or Improve Skills , later. Tax filing Example. Tax filing You are a teacher who has satisfied the minimum requirements for teaching. Tax filing Your employer requires you to take an additional college course each year to keep your teaching job. Tax filing If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Tax filing This image is too large to be displayed in the current screen. Tax filing Please click the link to view the image. Tax filing Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Tax filing This could include refresher courses, courses on current developments, and academic or vocational courses. Tax filing Example. Tax filing You repair televisions, radios, and stereo systems for XYZ Store. Tax filing To keep up with the latest changes, you take special courses in radio and stereo service. Tax filing These courses maintain and improve skills required in your work. Tax filing Maintaining skills vs. Tax filing qualifying for new job. Tax filing   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Tax filing Education during temporary absence. Tax filing   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Tax filing Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Tax filing Example. Tax filing You quit your biology research job to become a full-time biology graduate student for 1 year. Tax filing If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Tax filing Education during indefinite absence. Tax filing   If you stop work for more than a year, your absence from your job is considered indefinite. Tax filing Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Tax filing Therefore, it is not qualifying work-related education. Tax filing Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Tax filing The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Tax filing Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Tax filing This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Tax filing You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Tax filing Example 1. Tax filing You are a full-time engineering student. Tax filing Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Tax filing Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Tax filing The education is not qualifying work-related education. Tax filing Example 2. Tax filing You are an accountant and you have met the minimum educational requirements of your employer. Tax filing Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Tax filing These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Tax filing Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Tax filing The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Tax filing If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Tax filing The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Tax filing You generally will be considered a faculty member when one or more of the following occurs. Tax filing You have tenure. Tax filing Your years of service count toward obtaining tenure. Tax filing You have a vote in faculty decisions. Tax filing Your school makes contributions for you to a retirement plan other than social security or a similar program. Tax filing Example 1. Tax filing The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Tax filing In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Tax filing If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Tax filing However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Tax filing Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Tax filing If you have all the required education except the fifth year, you have met the minimum educational requirements. Tax filing The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Tax filing Example 2. Tax filing Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Tax filing The additional four education courses can be qualifying work-related education. Tax filing Although you do not have all the required courses, you have already met the minimum educational requirements. Tax filing Example 3. Tax filing Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Tax filing The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Tax filing They are needed to meet the minimum educational requirements for employment as a teacher. Tax filing Example 4. Tax filing You have a bachelor's degree and you work as a temporary instructor at a university. Tax filing At the same time, you take graduate courses toward an advanced degree. Tax filing The rules of the university state that you can become a faculty member only if you get a graduate degree. Tax filing Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Tax filing You have not met the minimum educational requirements to qualify you as a faculty member. Tax filing The graduate courses are not qualifying work-related education. Tax filing Certification in a new state. Tax filing   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Tax filing This is true even if you must get additional education to be certified in another state. Tax filing Any additional education you need is qualifying work-related education. Tax filing You have already met the minimum requirements for teaching. Tax filing Teaching in another state is not a new trade or business. Tax filing Example. Tax filing You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Tax filing You move to State B and are promptly hired as a teacher. Tax filing You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Tax filing These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Tax filing Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Tax filing This is true even if you do not plan to enter that trade or business. Tax filing If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Tax filing Example 1. Tax filing You are an accountant. Tax filing Your employer requires you to get a law degree at your own expense. Tax filing You register at a law school for the regular curriculum that leads to a law degree. Tax filing Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Tax filing Example 2. Tax filing You are a general practitioner of medicine. Tax filing You take a 2-week course to review developments in several specialized fields of medicine. Tax filing The course does not qualify you for a new profession. Tax filing It is qualifying work- related education because it maintains or improves skills required in your present profession. Tax filing Example 3. Tax filing While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Tax filing The program will lead to qualifying you to practice psychoanalysis. Tax filing The psychoanalytic training does not qualify you for a new profession. Tax filing It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax filing Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Tax filing They are part of a program of study that can qualify you for a new profession. Tax filing Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Tax filing A change in duties in any of the following ways is not considered a change to a new business. Tax filing Elementary school teacher to secondary school teacher. Tax filing Teacher of one subject, such as biology, to teacher of another subject, such as art. Tax filing Classroom teacher to guidance counselor. Tax filing Classroom teacher to school administrator. Tax filing What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Tax filing If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Tax filing You cannot deduct expenses related to tax-exempt and excluded income. Tax filing Deductible expenses. Tax filing   The following education expenses can be deducted. Tax filing Tuition, books, supplies, lab fees, and similar items. Tax filing Certain transportation and travel costs. Tax filing Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Tax filing Nondeductible expenses. Tax filing   You cannot deduct personal or capital expenses. Tax filing For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Tax filing This amount is a personal expense. Tax filing Unclaimed reimbursement. Tax filing   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Tax filing Example. Tax filing Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Tax filing You do not file a voucher and you do not get reimbursed. Tax filing Because you did not file a voucher, you cannot deduct the expenses on your tax return. Tax filing Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Tax filing If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Tax filing Temporary basis. Tax filing   You go to school on a temporary basis if either of the following situations applies to you. Tax filing Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Tax filing Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax filing Your attendance is temporary up to the date you determine it will last more than 1 year. Tax filing If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Tax filing Attendance not on a temporary basis. Tax filing   You do not go to school on a temporary basis if either of the following situations apply to you. Tax filing Your attendance at school is realistically expected to last more than 1 year. Tax filing It does not matter how long you actually attend. Tax filing Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax filing Your attendance is not temporary after the date you determine it will last more than 1 year. Tax filing Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Tax filing This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Tax filing Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Tax filing Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Tax filing Example 1. Tax filing You regularly work in a nearby town, and go directly from work to home. Tax filing You also attend school every work night for 3 months to take a course that improves your job skills. Tax filing Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Tax filing This is true regardless of the distance traveled. Tax filing Example 2. Tax filing Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Tax filing You can deduct your transportation expenses from your regular work site to school and then home. Tax filing Example 3. Tax filing Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Tax filing Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Tax filing Example 4. Tax filing Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Tax filing Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Tax filing If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Tax filing If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Tax filing Using your car. Tax filing    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Tax filing The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Tax filing 5 cents per mile. Tax filing Whichever method you use, you can also deduct parking fees and tolls. Tax filing See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Tax filing Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Tax filing Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Tax filing For more information, see chapter 1 of Publication 463. Tax filing You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Tax filing Mainly personal travel. Tax filing   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Tax filing You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Tax filing   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Tax filing An important factor is the comparison of time spent on personal activities with time spent on educational activities. Tax filing If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Tax filing Example 1. Tax filing John works in Newark, New Jersey. Tax filing He traveled to Chicago to take a deductible 1-week course at the request of his employer. Tax filing His main reason for going to Chicago was to take the course. Tax filing While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Tax filing Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Tax filing He cannot deduct his transportation expenses of going to Pleasantville. Tax filing He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Tax filing Example 2. Tax filing Sue works in Boston. Tax filing She went to a university in Michigan to take a course for work. Tax filing The course is qualifying work-related education. Tax filing She took one course, which is one-fourth of a full course load of study. Tax filing She spent the rest of the time on personal activities. Tax filing Her reasons for taking the course in Michigan were all personal. Tax filing Sue's trip is mainly personal because three-fourths of her time is considered personal time. Tax filing She cannot deduct the cost of her round-trip train ticket to Michigan. Tax filing She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Tax filing Example 3. Tax filing Dave works in Nashville and recently traveled to California to take a 2-week seminar. Tax filing The seminar is qualifying work-related education. Tax filing While there, he spent an extra 8 weeks on personal activities. Tax filing The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Tax filing Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Tax filing He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Tax filing Cruises and conventions. Tax filing   Certain cruises and conventions offer seminars or courses as part of their itinerary. Tax filing Even if the seminars or courses are work related, your deduction for travel may be limited. Tax filing This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Tax filing   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Tax filing 50% limit on meals. Tax filing   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Tax filing If you were reimbursed for the meals, see How To Treat Reimbursements , later. Tax filing   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Tax filing Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Tax filing Example. Tax filing You are a French language teacher. Tax filing While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Tax filing You chose your itinerary and most of your activities to improve your French language skills. Tax filing You cannot deduct your travel expenses as education expenses. Tax filing This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Tax filing No Double Benefit Allowed You cannot do either of the following. Tax filing Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Tax filing Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Tax filing See Adjustments to Qualifying Work-Related Education Expenses, next. Tax filing Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Tax filing You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Tax filing Tax-free educational assistance. Tax filing   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Tax filing Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Tax filing Amounts that do not reduce qualifying work-related education expenses. Tax filing   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax filing Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Tax filing How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Tax filing There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Tax filing You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Tax filing Note. Tax filing The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Tax filing Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Tax filing Your expenses must have a business connection. Tax filing This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Tax filing You must adequately account to your employer for your expenses within a reasonable period of time. Tax filing You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Tax filing If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Tax filing If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Tax filing Accountable plan rules not met. Tax filing   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Tax filing Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Tax filing Expenses equal reimbursement. Tax filing   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Tax filing Because your expenses and reimbursements are equal, you do not have a deduction. Tax filing Excess expenses. Tax filing   If your expenses are more than your reimbursement, you can deduct your excess expenses. Tax filing This is discussed later, under Deducting Business Expenses . Tax filing Allocating your reimbursements for meals. Tax filing   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Tax filing If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Tax filing Make the allocation as follows. Tax filing Divide your meal expenses by your total expenses. Tax filing Multiply your total reimbursement by the result from (1). Tax filing This is the allocated reimbursement for your meal expenses. Tax filing Subtract the amount figured in (2) from your total reimbursement. Tax filing The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Tax filing Example. Tax filing Your employer paid you an expense allowance of $2,000 under an accountable plan. Tax filing The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Tax filing There was no indication of how much of the reimbursement was for each type of expense. Tax filing Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Tax filing Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Tax filing   1. Tax filing $425 meal expenses  $2,500 total expenses = . Tax filing 17   2. Tax filing $2,000 (reimbursement)×. Tax filing 17     =$340 (allocated reimbursement for meal expenses)   3. Tax filing $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Tax filing After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Tax filing Nonaccountable Plans 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 and report the total in box 1 of your Form W-2. Tax filing You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Tax filing This is discussed later under Deducting Business Expenses . Tax filing An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Tax filing Reimbursements for nondeductible expenses. Tax filing   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Tax filing You must include them in your income. Tax filing For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Tax filing   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Tax filing Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Tax filing The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Tax filing Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Tax filing If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Tax filing See the instructions for the form you file for information on how to complete it. Tax filing Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Tax filing If either (1) or (2) applies, you can deduct the total qualifying cost. Tax filing If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Tax filing In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Tax filing (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax filing ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Tax filing Form 2106 or 2106-EZ. Tax filing   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Tax filing Form not required. Tax filing   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Tax filing   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Tax filing (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Tax filing ) Using Form 2106-EZ. Tax filing   This form is shorter and easier to use than Form 2106. Tax filing Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Tax filing   If you do not meet both of these requirements, use Form 2106. Tax filing Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Tax filing Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Tax filing You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Tax filing You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Tax filing For more information on qualified performing artists, see chapter 6 of Publication 463. Tax filing Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Tax filing They are not subject to the 2%-of-adjusted-gross-income limit. Tax filing To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Tax filing For more information on impairment-related work expenses, see chapter 6 of Publication 463. Tax filing Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Tax filing Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Tax filing If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Tax filing However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Tax filing Examples of records to keep. Tax filing   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Tax filing You should keep adequate records or have sufficient evidence that will support your expenses. Tax filing Estimates or approximations do not qualify as proof of an expense. Tax filing Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Tax filing , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Tax filing Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Tax filing Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Tax filing Complete information about any scholarship or fellowship grants, including amounts you received during the year. Tax filing Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Tax filing He was selected to attend a 3-week math seminar at a university in California. Tax filing The seminar will improve his skills in his current job and is qualifying work-related education. Tax filing He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Tax filing Victor will file Form 1040. Tax filing His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Tax filing He shows his expenses for the seminar in Part I of the form. Tax filing He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Tax filing He enters $400 on line 4 for his tuition and books. Tax filing On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Tax filing He multiplies that amount by 50% and enters the result, $263, on line 5. Tax filing On line 6, Victor totals the amounts from lines 3 through 5. Tax filing He carries the total, $2,313, to Schedule A (Form 1040), line 21. Tax filing Since he does not claim any vehicle expenses, Victor leaves Part II blank. Tax filing His filled-in form is shown on the next page. Tax filing This image is too large to be displayed in the current screen. Tax filing Please click the link to view the image. Tax filing Form 2106-EZ for V. Tax filing Jones Prev  Up  Next   Home   More Online Publications