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Taxact 2012 Return User

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Taxact 2012 Return User

Taxact 2012 return user 26. Taxact 2012 return user   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Taxact 2012 return user Parking fees. Taxact 2012 return user Advertising display on car. Taxact 2012 return user Car pools. Taxact 2012 return user Hauling tools or instruments. Taxact 2012 return user Union members' trips from a union hall. Taxact 2012 return user Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Taxact 2012 return user Statutory employees. Taxact 2012 return user Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. Taxact 2012 return user  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Taxact 2012 return user Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. Taxact 2012 return user Depreciation limits on cars, trucks, and vans. Taxact 2012 return user  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Taxact 2012 return user For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Taxact 2012 return user For more information, see Depreciation limits in Publication 463. Taxact 2012 return user Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Taxact 2012 return user An ordinary expense is one that is common and accepted in your trade or business. Taxact 2012 return user A necessary expense is one that is helpful and appropriate for your business. Taxact 2012 return user An expense does not have to be required to be considered necessary. Taxact 2012 return user This chapter explains the following. Taxact 2012 return user What expenses are deductible. Taxact 2012 return user How to report your expenses on your return. Taxact 2012 return user What records you need to prove your expenses. Taxact 2012 return user How to treat any expense reimbursements you may receive. Taxact 2012 return user Who does not need to use this chapter. Taxact 2012 return user   If you are an employee, you will not need to read this chapter if all of the following are true. Taxact 2012 return user You fully accounted to your employer for your work-related expenses. Taxact 2012 return user You received full reimbursement for your expenses. Taxact 2012 return user Your employer required you to return any excess reimbursement and you did so. Taxact 2012 return user There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Taxact 2012 return user If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Taxact 2012 return user See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. Taxact 2012 return user    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Taxact 2012 return user Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. Taxact 2012 return user This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. Taxact 2012 return user It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. Taxact 2012 return user Travel expenses defined. Taxact 2012 return user   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. Taxact 2012 return user   You will find examples of deductible travel expenses in Table 26-1 . Taxact 2012 return user Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. Taxact 2012 return user This rest requirement is not satisfied by merely napping in your car. Taxact 2012 return user You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Taxact 2012 return user Example 1. Taxact 2012 return user You are a railroad conductor. Taxact 2012 return user You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Taxact 2012 return user During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. Taxact 2012 return user You are considered to be away from home. Taxact 2012 return user Example 2. Taxact 2012 return user You are a truck driver. Taxact 2012 return user You leave your terminal and return to it later the same day. Taxact 2012 return user You get an hour off at your turnaround point to eat. Taxact 2012 return user Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. Taxact 2012 return user Members of the Armed Forces. Taxact 2012 return user   If you are a member of the U. Taxact 2012 return user S. Taxact 2012 return user Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Taxact 2012 return user You cannot deduct your expenses for meals and lodging. Taxact 2012 return user You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Taxact 2012 return user If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. Taxact 2012 return user    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. Taxact 2012 return user Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Taxact 2012 return user Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Taxact 2012 return user It includes the entire city or general area in which your business or work is located. Taxact 2012 return user If you have more than one regular place of business, your tax home is your main place of business. Taxact 2012 return user See Main place of business or work , later. Taxact 2012 return user If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. Taxact 2012 return user See No main place of business or work , later. Taxact 2012 return user If you do not have a regular or a main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. Taxact 2012 return user As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Taxact 2012 return user Main place of business or work. Taxact 2012 return user   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. Taxact 2012 return user The total time you ordinarily spend in each place. Taxact 2012 return user The level of your business activity in each place. Taxact 2012 return user Whether your income from each place is significant or insignificant. Taxact 2012 return user Example. Taxact 2012 return user You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Taxact 2012 return user You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Taxact 2012 return user Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Taxact 2012 return user No main place of business or work. Taxact 2012 return user   You may have a tax home even if you do not have a regular or main place of business or work. Taxact 2012 return user Your tax home may be the home where you regularly live. Taxact 2012 return user Factors used to determine tax home. Taxact 2012 return user   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. Taxact 2012 return user You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. Taxact 2012 return user You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Taxact 2012 return user You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. Taxact 2012 return user   If you satisfy all three factors, your tax home is the home where you regularly live. Taxact 2012 return user If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Taxact 2012 return user If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Taxact 2012 return user Example. Taxact 2012 return user You are single and live in Boston in an apartment you rent. Taxact 2012 return user You have worked for your employer in Boston for a number of years. Taxact 2012 return user Your employer enrolls you in a 12-month executive training program. Taxact 2012 return user You do not expect to return to work in Boston after you complete your training. Taxact 2012 return user During your training, you do not do any work in Boston. Taxact 2012 return user Instead, you receive classroom and on-the-job training throughout the United States. Taxact 2012 return user You keep your apartment in Boston and return to it frequently. Taxact 2012 return user You use your apartment to conduct your personal business. Taxact 2012 return user You also keep up your community contacts in Boston. Taxact 2012 return user When you complete your training, you are transferred to Los Angeles. Taxact 2012 return user You do not satisfy factor (1) because you did not work in Boston. Taxact 2012 return user You satisfy factor (2) because you had duplicate living expenses. Taxact 2012 return user You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Taxact 2012 return user Therefore, you have a tax home in Boston. Taxact 2012 return user Tax home different from family home. Taxact 2012 return user   If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. Taxact 2012 return user You also cannot deduct the cost of meals and lodging while at your tax home. Taxact 2012 return user See Example 1 . Taxact 2012 return user   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Taxact 2012 return user See Example 2 . Taxact 2012 return user Example 1. Taxact 2012 return user You are a truck driver and you and your family live in Tucson. Taxact 2012 return user You are employed by a trucking firm that has its terminal in Phoenix. Taxact 2012 return user At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Taxact 2012 return user You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Taxact 2012 return user This is because Phoenix is your tax home. Taxact 2012 return user Example 2. Taxact 2012 return user Your family home is in Pittsburgh, where you work 12 weeks a year. Taxact 2012 return user The rest of the year you work for the same employer in Baltimore. Taxact 2012 return user In Baltimore, you eat in restaurants and sleep in a rooming house. Taxact 2012 return user Your salary is the same whether you are in Pittsburgh or Baltimore. Taxact 2012 return user Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Taxact 2012 return user You cannot deduct any expenses you have for meals and lodging there. Taxact 2012 return user However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Taxact 2012 return user You can deduct the cost of your round trip between Baltimore and Pittsburgh. Taxact 2012 return user You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Taxact 2012 return user Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Taxact 2012 return user It may not be practical to return to your tax home from this other location at the end of each work day. Taxact 2012 return user Temporary assignment vs. Taxact 2012 return user indefinite assignment. Taxact 2012 return user   If your assignment or job away from your main place of work is temporary, your tax home does not change. Taxact 2012 return user You are considered to be away from home for the whole period you are away from your main place of work. Taxact 2012 return user You can deduct your travel expenses if they otherwise qualify for deduction. Taxact 2012 return user Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Taxact 2012 return user   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Taxact 2012 return user An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. Taxact 2012 return user   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. Taxact 2012 return user You may be able to deduct the cost of relocating to your new tax home as a moving expense. Taxact 2012 return user See Publication 521 for more information. Taxact 2012 return user Exception for federal crime investigations or prosecutions. Taxact 2012 return user   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Taxact 2012 return user This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year, provided you meet the other requirements for deductibility. Taxact 2012 return user   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate or prosecute, or provide support services for the investigation or prosecution of a federal crime. Taxact 2012 return user Determining temporary or indefinite. Taxact 2012 return user   You must determine whether your assignment is temporary or indefinite when you start work. Taxact 2012 return user If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Taxact 2012 return user An assignment or job that is initially temporary may become indefinite due to changed circumstances. Taxact 2012 return user A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Taxact 2012 return user Going home on days off. Taxact 2012 return user   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. Taxact 2012 return user You cannot deduct the cost of your meals and lodging there. Taxact 2012 return user However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Taxact 2012 return user You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Taxact 2012 return user   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Taxact 2012 return user In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. Taxact 2012 return user Probationary work period. Taxact 2012 return user   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. Taxact 2012 return user You cannot deduct any of your expenses for meals and lodging during the probationary period. Taxact 2012 return user What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Taxact 2012 return user You can deduct ordinary and necessary expenses you have when you travel away from home on business. Taxact 2012 return user The type of expense you can deduct depends on the facts and your circumstances. Taxact 2012 return user Table 26-1 summarizes travel expenses you may be able to deduct. Taxact 2012 return user You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Taxact 2012 return user When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. Taxact 2012 return user You can use a log, diary, notebook, or any other written record to keep track of your expenses. Taxact 2012 return user The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. Taxact 2012 return user Separating costs. Taxact 2012 return user   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. Taxact 2012 return user You must have a reasonable basis for making this allocation. Taxact 2012 return user For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Taxact 2012 return user Travel expenses for another individual. Taxact 2012 return user   If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. Taxact 2012 return user Employee. Taxact 2012 return user   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. Taxact 2012 return user Business associate. Taxact 2012 return user   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. Taxact 2012 return user A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. Taxact 2012 return user A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Taxact 2012 return user Bona fide business purpose. Taxact 2012 return user   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Taxact 2012 return user Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Taxact 2012 return user Example. Taxact 2012 return user Jerry drives to Chicago on business and takes his wife, Linda, with him. Taxact 2012 return user Linda is not Jerry's employee. Taxact 2012 return user Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Taxact 2012 return user The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Taxact 2012 return user Her expenses are not deductible. Taxact 2012 return user Jerry pays $199 a day for a double room. Taxact 2012 return user A single room costs $149 a day. Taxact 2012 return user He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Taxact 2012 return user If he uses public transportation, he can deduct only his fare. Taxact 2012 return user Table 26-1. Taxact 2012 return user Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. Taxact 2012 return user IF you have expenses for. Taxact 2012 return user . Taxact 2012 return user . Taxact 2012 return user THEN you can deduct the cost of. Taxact 2012 return user . Taxact 2012 return user . Taxact 2012 return user transportation travel by airplane, train, bus, or car between your home and your business destination. Taxact 2012 return user If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Taxact 2012 return user If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. Taxact 2012 return user taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. Taxact 2012 return user baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Taxact 2012 return user car operating and maintaining your car when traveling away from home on business. Taxact 2012 return user You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. Taxact 2012 return user If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Taxact 2012 return user lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Taxact 2012 return user Meals include amounts spent for food, beverages, taxes, and related tips. Taxact 2012 return user See Meals and Incidental Expenses for additional rules and limits. Taxact 2012 return user cleaning dry cleaning and laundry. Taxact 2012 return user telephone business calls while on your business trip. Taxact 2012 return user This includes business communication by fax machine or other communication devices. Taxact 2012 return user tips tips you pay for any expenses in this chart. Taxact 2012 return user other other similar ordinary and necessary expenses related to your business travel. Taxact 2012 return user These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. Taxact 2012 return user Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. Taxact 2012 return user It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Taxact 2012 return user The meal is business-related entertainment. Taxact 2012 return user Business-related entertainment is discussed under Entertainment Expenses , later. Taxact 2012 return user The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. Taxact 2012 return user Lavish or extravagant. Taxact 2012 return user   You cannot deduct expenses for meals that are lavish or extravagant. Taxact 2012 return user An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Taxact 2012 return user Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Taxact 2012 return user 50% limit on meals. Taxact 2012 return user   You can figure your meal expenses using either of the following methods. Taxact 2012 return user Actual cost. Taxact 2012 return user The standard meal allowance. Taxact 2012 return user Both of these methods are explained below. Taxact 2012 return user But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Taxact 2012 return user   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. Taxact 2012 return user If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Taxact 2012 return user The 50% limit is explained later under Entertainment Expenses . Taxact 2012 return user Accountable and nonaccountable plans are discussed later under Reimbursements . Taxact 2012 return user Actual cost. Taxact 2012 return user   You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. Taxact 2012 return user If you use this method, you must keep records of your actual cost. Taxact 2012 return user Standard meal allowance. Taxact 2012 return user   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Taxact 2012 return user It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. Taxact 2012 return user The set amount varies depending on where and when you travel. Taxact 2012 return user In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Taxact 2012 return user If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Taxact 2012 return user See Recordkeeping , later. Taxact 2012 return user Incidental expenses. Taxact 2012 return user   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Taxact 2012 return user Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. Taxact 2012 return user Incidental expenses only method. Taxact 2012 return user   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Taxact 2012 return user The amount of the deduction is $5 a day. Taxact 2012 return user You can use this method only if you did not pay or incur any meal expenses. Taxact 2012 return user You cannot use this method on any day that you use the standard meal allowance. Taxact 2012 return user    Federal employees should refer to the Federal Travel Regulations at  www. Taxact 2012 return user gsa. Taxact 2012 return user gov. Taxact 2012 return user Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Taxact 2012 return user 50% limit may apply. Taxact 2012 return user   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. Taxact 2012 return user If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. Taxact 2012 return user The 50% limit is explained later under Entertainment Expenses . Taxact 2012 return user Accountable and nonaccountable plans are discussed later under Reimbursements . Taxact 2012 return user There is no optional standard lodging amount similar to the standard meal allowance. Taxact 2012 return user Your allowable lodging expense deduction is your actual cost. Taxact 2012 return user Who can use the standard meal allowance. Taxact 2012 return user   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. Taxact 2012 return user   Use of the standard meal allowance for other travel. Taxact 2012 return user    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Taxact 2012 return user You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Taxact 2012 return user You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Taxact 2012 return user Amount of standard meal allowance. Taxact 2012 return user   The standard meal allowance is the federal M&IE rate. Taxact 2012 return user For travel in 2013, the daily rate for most small localities in the United States is $46. Taxact 2012 return user   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Taxact 2012 return user You can find this information (organized by state) on the Internet at www. Taxact 2012 return user gsa. Taxact 2012 return user gov. Taxact 2012 return user Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. Taxact 2012 return user However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. Taxact 2012 return user You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. Taxact 2012 return user   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. Taxact 2012 return user If you work in the transportation industry, however, see Special rate for transportation workers , later. Taxact 2012 return user Standard meal allowance for areas outside the continental United States. Taxact 2012 return user    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Taxact 2012 return user The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Taxact 2012 return user S. Taxact 2012 return user Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Taxact 2012 return user The Department of State establishes per diem rates for all other foreign areas. Taxact 2012 return user    You can access per diem rates for non-foreign areas outside the continental United States at: www. Taxact 2012 return user defensetravel. Taxact 2012 return user dod. Taxact 2012 return user mil/site/perdiemCalc. Taxact 2012 return user cfm. Taxact 2012 return user You can access all other foreign per diem rates at www. Taxact 2012 return user state. Taxact 2012 return user gov/travel/. Taxact 2012 return user Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. Taxact 2012 return user Special rate for transportation workers. Taxact 2012 return user   You can use a special standard meal allowance if you work in the transportation industry. Taxact 2012 return user You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. Taxact 2012 return user If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). Taxact 2012 return user   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. Taxact 2012 return user If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. Taxact 2012 return user Travel for days you depart and return. Taxact 2012 return user   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). Taxact 2012 return user You can do so by one of two methods. Taxact 2012 return user Method 1: You can claim 3/4 of the standard meal allowance. Taxact 2012 return user Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Taxact 2012 return user Example. Taxact 2012 return user Jen is employed in New Orleans as a convention planner. Taxact 2012 return user In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Taxact 2012 return user She left her home in New Orleans at 10 a. Taxact 2012 return user m. Taxact 2012 return user on Wednesday and arrived in Washington, DC, at 5:30 p. Taxact 2012 return user m. Taxact 2012 return user After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Taxact 2012 return user m. Taxact 2012 return user Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Taxact 2012 return user Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. Taxact 2012 return user Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Taxact 2012 return user For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. Taxact 2012 return user Travel in the United States The following discussion applies to travel in the United States. Taxact 2012 return user For this purpose, the United States includes only the 50 states and the District of Columbia. Taxact 2012 return user The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. Taxact 2012 return user See Part of Trip Outside the United States , later. Taxact 2012 return user Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. Taxact 2012 return user If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses. Taxact 2012 return user These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Taxact 2012 return user Example. Taxact 2012 return user You work in Atlanta and take a business trip to New Orleans in May. Taxact 2012 return user On your way home, you stop in Mobile to visit your parents. Taxact 2012 return user You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Taxact 2012 return user If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. Taxact 2012 return user You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. Taxact 2012 return user The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Taxact 2012 return user Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Taxact 2012 return user However, you can deduct any expenses you have while at your destination that are directly related to your business. Taxact 2012 return user A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. Taxact 2012 return user The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. Taxact 2012 return user Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. Taxact 2012 return user For the part of your trip that is inside the United States, use the rules for travel in the United States. Taxact 2012 return user Travel outside the United States does not include travel from one point in the United States to another point in the United States. Taxact 2012 return user The following discussion can help you determine whether your trip was entirely within the United States. Taxact 2012 return user Public transportation. Taxact 2012 return user   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Taxact 2012 return user Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . Taxact 2012 return user Example. Taxact 2012 return user You fly from New York to Puerto Rico with a scheduled stop in Miami. Taxact 2012 return user You return to New York nonstop. Taxact 2012 return user The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Taxact 2012 return user Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Taxact 2012 return user Private car. Taxact 2012 return user   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. Taxact 2012 return user Example. Taxact 2012 return user You travel by car from Denver to Mexico City and return. Taxact 2012 return user Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. Taxact 2012 return user The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Taxact 2012 return user Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. Taxact 2012 return user For this purpose, the United States includes only the 50 states and the District of Columbia. Taxact 2012 return user How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. Taxact 2012 return user See chapter 1 of Publication 463 for information on luxury water travel. Taxact 2012 return user Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. Taxact 2012 return user Travel entirely for business. Taxact 2012 return user   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Taxact 2012 return user Travel considered entirely for business. Taxact 2012 return user   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. Taxact 2012 return user Exception 1 - No substantial control. Taxact 2012 return user   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Taxact 2012 return user The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Taxact 2012 return user   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. Taxact 2012 return user    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . Taxact 2012 return user   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. Taxact 2012 return user    A self-employed person generally has substantial control over arranging business trips. Taxact 2012 return user Exception 2 - Outside United States no more than a week. Taxact 2012 return user   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Taxact 2012 return user One week means 7 consecutive days. Taxact 2012 return user In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. Taxact 2012 return user Exception 3 - Less than 25% of time on personal activities. Taxact 2012 return user   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. Taxact 2012 return user For this purpose, count both the day your trip began and the day it ended. Taxact 2012 return user Exception 4 - Vacation not a major consideration. Taxact 2012 return user   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. Taxact 2012 return user Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. Taxact 2012 return user You can only deduct the business portion of your cost of getting to and from your destination. Taxact 2012 return user You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. Taxact 2012 return user These travel allocation rules are discussed in chapter 1 of Publication 463. Taxact 2012 return user You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. Taxact 2012 return user In those cases, you can deduct the total cost of getting to and from your destination. Taxact 2012 return user Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. Taxact 2012 return user If you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. Taxact 2012 return user Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Taxact 2012 return user You cannot deduct the travel expenses for your family. Taxact 2012 return user If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Taxact 2012 return user Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Taxact 2012 return user You can deduct your travel expenses only if your attendance is connected to your own trade or business. Taxact 2012 return user Convention agenda. Taxact 2012 return user   The convention agenda or program generally shows the purpose of the convention. Taxact 2012 return user You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. Taxact 2012 return user The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. Taxact 2012 return user Conventions held outside the North American area. Taxact 2012 return user    See chapter 1 of Publication 463 for information on conventions held outside the North American area. Taxact 2012 return user Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Taxact 2012 return user You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. Taxact 2012 return user Directly-related test. Taxact 2012 return user Associated test. Taxact 2012 return user Both of these tests are explained in chapter 2 of Publication 463. Taxact 2012 return user The amount you can deduct for entertainment expenses may be limited. Taxact 2012 return user Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Taxact 2012 return user This limit is discussed next. Taxact 2012 return user 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Taxact 2012 return user (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Taxact 2012 return user See Individuals subject to “hours of service” limits , later. Taxact 2012 return user ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Taxact 2012 return user Figure 26-A summarizes the general rules explained in this section. Taxact 2012 return user The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Taxact 2012 return user Included expenses. Taxact 2012 return user   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Taxact 2012 return user However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Taxact 2012 return user Application of 50% limit. Taxact 2012 return user   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. Taxact 2012 return user   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Taxact 2012 return user It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. Taxact 2012 return user It also applies to the cost of meals included in deductible educational expenses. Taxact 2012 return user When to apply the 50% limit. Taxact 2012 return user   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Taxact 2012 return user You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. Taxact 2012 return user Example 1. Taxact 2012 return user You spend $200 for a business-related meal. Taxact 2012 return user If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Taxact 2012 return user Your deduction cannot be more than $45 (. Taxact 2012 return user 50 × $90). Taxact 2012 return user Example 2. Taxact 2012 return user You purchase two tickets to a concert and give them to a client. Taxact 2012 return user You purchased the tickets through a ticket agent. Taxact 2012 return user You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Taxact 2012 return user Your deduction cannot be more than $80 (. Taxact 2012 return user 50 × $160). Taxact 2012 return user Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Taxact 2012 return user Figure 26-A can help you determine if the 50% limit applies to you. Taxact 2012 return user Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Taxact 2012 return user Employee's reimbursed expenses. Taxact 2012 return user   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Taxact 2012 return user Accountable plans are discussed later under Reimbursements . Taxact 2012 return user Individuals subject to “hours of service” limits. Taxact 2012 return user   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Taxact 2012 return user The percentage is 80%. Taxact 2012 return user   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Taxact 2012 return user Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Taxact 2012 return user Interstate truck operators and bus drivers who are under Department of Transportation regulations. Taxact 2012 return user Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Taxact 2012 return user Certain merchant mariners who are under Coast Guard regulations. Taxact 2012 return user Other exceptions. Taxact 2012 return user   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. Taxact 2012 return user These are discussed in Publication 463. Taxact 2012 return user Figure 26-A. Taxact 2012 return user Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Taxact 2012 return user See Exceptions to the 50% Limit . Taxact 2012 return user Please click here for the text description of the image. Taxact 2012 return user Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Taxact 2012 return user Entertainment. Taxact 2012 return user    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Taxact 2012 return user Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. Taxact 2012 return user A meal as a form of entertainment. Taxact 2012 return user   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Taxact 2012 return user A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Taxact 2012 return user To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Taxact 2012 return user You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Taxact 2012 return user Separating costs. Taxact 2012 return user   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Taxact 2012 return user You must have a reasonable basis for making this allocation. Taxact 2012 return user For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Taxact 2012 return user Taking turns paying for meals or entertainment. Taxact 2012 return user   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Taxact 2012 return user Lavish or extravagant expenses. Taxact 2012 return user   You cannot deduct expenses for entertainment that are lavish or extravagant. Taxact 2012 return user An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Taxact 2012 return user Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Taxact 2012 return user Trade association meetings. Taxact 2012 return user    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Taxact 2012 return user These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Taxact 2012 return user Entertainment tickets. Taxact 2012 return user   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Taxact 2012 return user For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Taxact 2012 return user What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Taxact 2012 return user Club dues and membership fees. Taxact 2012 return user   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Taxact 2012 return user This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. Taxact 2012 return user   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Taxact 2012 return user You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Taxact 2012 return user Entertainment facilities. Taxact 2012 return user   Generally, you cannot deduct any expense for the use of an entertainment facility. Taxact 2012 return user This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Taxact 2012 return user   An entertainment facility is any property you own, rent, or use for entertainment. Taxact 2012 return user Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Taxact 2012 return user Out-of-pocket expenses. Taxact 2012 return user   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Taxact 2012 return user These are not expenses for the use of an entertainment facility. Taxact 2012 return user However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. Taxact 2012 return user Additional information. Taxact 2012 return user   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. Taxact 2012 return user Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Taxact 2012 return user This section explains the limits and rules for deducting the costs of gifts. Taxact 2012 return user $25 limit. Taxact 2012 return user   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Taxact 2012 return user A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Taxact 2012 return user   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Taxact 2012 return user This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. Taxact 2012 return user   If you and your spouse both give gifts, both of you are treated as one taxpayer. Taxact 2012 return user It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Taxact 2012 return user If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Taxact 2012 return user Incidental costs. Taxact 2012 return user   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Taxact 2012 return user   A cost is incidental only if it does not add substantial value to the gift. Taxact 2012 return user For example, the cost of customary gift wrapping is an incidental cost. Taxact 2012 return user However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Taxact 2012 return user Exceptions. Taxact 2012 return user   The following items are not considered gifts for purposes of the $25 limit. Taxact 2012 return user An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Taxact 2012 return user Examples include pens, desk sets, and plastic bags and cases. Taxact 2012 return user Signs, display racks, or other promotional material to be used on the business premises of the recipient. Taxact 2012 return user Gift or entertainment. Taxact 2012 return user   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Taxact 2012 return user However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Taxact 2012 return user    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Taxact 2012 return user You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Taxact 2012 return user    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Taxact 2012 return user You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Taxact 2012 return user Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . Taxact 2012 return user These expenses include the cost of transportation by air, rail, bus, taxi, etc. Taxact 2012 return user , and the cost of driving and maintaining your car. Taxact 2012 return user Transportation expenses include the ordinary and necessary costs of all of the following. Taxact 2012 return user Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. Taxact 2012 return user (Tax home is defined earlier under Travel Expenses . Taxact 2012 return user ) Visiting clients or customers. Taxact 2012 return user Going to a business meeting away from your regular workplace. Taxact 2012 return user Getting from your home to a temporary workplace when you have one or more regular places of work. Taxact 2012 return user These temporary workplaces can be either within the area of your tax home or outside that area. Taxact 2012 return user Transportation expenses do not include expenses you have while traveling away from home overnight. Taxact 2012 return user Those expenses are travel expenses, discussed earlier. Taxact 2012 return user However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Taxact 2012 return user See Car Expenses , later. Taxact 2012 return user Illustration of transportation expenses. Taxact 2012 return user    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. Taxact 2012 return user You may want to refer to it when deciding whether you can deduct your transportation expenses. Taxact 2012 return user Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Taxact 2012 return user However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. Taxact 2012 return user Temporary work location. Taxact 2012 return user   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Taxact 2012 return user   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Taxact 2012 return user   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Taxact 2012 return user   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Taxact 2012 return user It will not be treated as temporary after the date you determine it will last more than 1 year. Taxact 2012 return user   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Taxact 2012 return user You may have deductible travel expenses as discussed earlier in this chapter. Taxact 2012 return user No regular place of work. Taxact 2012 return user   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Taxact 2012 return user   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Taxact 2012 return user   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Taxact 2012 return user These are nondeductible commuting expenses. Taxact 2012 return user Two places of work. Taxact 2012 return user   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Taxact 2012 return user However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Taxact 2012 return user   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Taxact 2012 return user You cannot deduct them. Taxact 2012 return user Armed Forces reservists. Taxact 2012 return user   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Taxact 2012 return user You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. Taxact 2012 return user   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Taxact 2012 return user In this case, your transportation generally is a nondeductible commuting expense. Taxact 2012 return user However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Taxact 2012 return user   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Taxact 2012 return user   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Taxact 2012 return user These expenses are discussed earlier under Travel Expenses . Taxact 2012 return user   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. Taxact 2012 return user See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. Taxact 2012 return user Commuting expenses. Taxact 2012 return user   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Taxact 2012 return user These costs are personal commuting expenses. Taxact 2012 return user You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Taxact 2012 return user You cannot deduct commuting expenses even if you work during the commuting trip. Taxact 2012 return user Example. Taxact 2012 return user You sometimes use your cell phone to make business calls while commuting to and from work. Taxact 2012 return user Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Taxact 2012 return user These activities do not change the trip from personal to business. Taxact 2012 return user You cannot deduct your commuting expenses. Taxact 2012 return user Parking fees. Taxact 2012 return user   Fees you pay to park your car at your place of business are nondeductible commuting expenses. Taxact 2012 return user You can, however, deduct business-related parking fees when visiting a customer or client. Taxact 2012 return user Advertising display on car. Taxact 2012 return user   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Taxact 2012 return user If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Taxact 2012 return user Car pools. Taxact 2012 return user   You cannot deduct the cost of using your car in a nonprofit car pool. Taxact 2012 return user Do not include payments you receive from the passengers in your income. Taxact 2012 return user These payments are considered reimbursements of your expenses. Taxact 2012 return user However, if you operate a car pool for a profit, you must include payments from passengers in your income. Taxact 2012 return user You can then deduct your car expenses (using the rules in this chapter). Taxact 2012 return user Hauling tools or instruments. Taxact 2012 return user   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Taxact 2012 return user However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Taxact 2012 return user Union members' trips from a union hall. Taxact 2012 return user   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Taxact 2012 return user Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Taxact 2012 return user Office in the home. Taxact 2012 return user   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Taxact 2012 return user (See chapter 28 for information on determining if your home office qualifies as a principal place of business. Taxact 2012 return user ) Figure 26-B. Taxact 2012 return user When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Taxact 2012 return user (Do not use this chart if your home is your principal place of business. Taxact 2012 return user See Office in the home . Taxact 2012 return user ) Please click here for the text description of the image. Taxact 2012 return user Figure 26-B. Taxact 2012 return user Local Transportation Examples of deductible transportation. Taxact 2012 return user   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Taxact 2012 return user Example 1. Taxact 2012 return user You regularly work in an office in the city where you live. Taxact 2012 return user Your employer sends you to a 1-week training session at a different office in the same city. Taxact 2012 return user You travel directly from your home to the training location and return each day. Taxact 2012 return user You can deduct the cost of your daily round-trip transportation between your home and the training location. Taxact 2012 return user Example 2. Taxact 2012 return user Your principal place of business is in your home. Taxact 2012 return user You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Taxact 2012 return user Example 3. Taxact 2012 return user You have no regular office, and you do not have an office in your home. Taxact 2012 return user In this case, the location of your first business contact inside the metropolitan area is considered your office. Taxact 2012 return user Transportation expenses between your home and this first contact are nondeductible commuting expenses. Taxact 2012 return user Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Taxact 2012 return user While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. Taxact 2012 return user With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. Taxact 2012 return user Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. Taxact 2012 return user You generally can use one of the two following methods to figure your deductible expenses. Taxact 2012 return user Standard mileage rate. Taxact 2012 return user Actual car expenses. Taxact 2012 return user If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Taxact 2012 return user See Leasing a car under Actual Car Expenses, later. Taxact 2012 return user In this chapter, “car” includes a van, pickup, or panel truck. Taxact 2012 return user Rural mail carriers. Taxact 2012 return user   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Taxact 2012 return user Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. Taxact 2012 return user   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Taxact 2012 return user You must complete Form 2106 and attach it to your Form 1040. Taxact 2012 return user   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Taxact 2012 return user It is given as an equipment maintenance allowance (EMA) to employees of the U. Taxact 2012 return user S. Taxact 2012 return user Postal Service. Taxact 2012 return user It is at the rate contained in the 1991 collective bargaining agreement. Taxact 2012 return user Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Taxact 2012 return user See your employer for information on your reimbursement. Taxact 2012 return user If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Taxact 2012 return user Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Taxact 2012 return user For 2013, the standard mileage rate for business use is 56½ cents per mile. Taxact 2012 return user If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. Taxact 2012 return user You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Taxact 2012 return user See Reimbursements under How To Report, later. Taxact 2012 return user Choosing the standard mileage rate. Taxact 2012 return user   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Taxact 2012 return user Then in later years, you can choose to use either the standard mileage rate or actual expenses. Taxact 2012 return user   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Taxact 2012 return user   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Taxact 2012 return user You cannot revoke the choice. Taxact 2012 return user However, in a later year, you can switch from the standard mileage rate to the actual expenses method. Taxact 2012 return user If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Taxact 2012 return user Example. Taxact 2012 return user Larry is an employee who occasionally uses his own car for business purposes. Taxact 2012 return user He purchased the car in 2011, but he did not claim any unreimburse
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The Taxact 2012 Return User

Taxact 2012 return user Publication 947 - Main Content Table of Contents Practice Before the IRSWhat Is Practice Before the IRS? Who Can Practice Before the IRS? Who Cannot Practice Before the IRS? How Does an Individual Become Enrolled? What Are the Rules of Practice? Authorizing a RepresentativeWhat Is a Power of Attorney? When Is a Power of Attorney Required? When Is a Power of Attorney Not Required? How Do I Fill Out Form 2848? What Happens to the Power of Attorney When Filed? How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Taxact 2012 return user Practice Before the IRS The Office of Professional Responsibility and the Return Preparer Office generally are responsible for administering and enforcing the regulations governing practice before the IRS. Taxact 2012 return user The Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. Taxact 2012 return user The Return Preparer Office is responsible for matters related to the authority to practice, including acting on applications for enrollment and administering competency testing and continuing education. Taxact 2012 return user What Is Practice Before the IRS? Practice before the IRS covers all matters relating to any of the following. Taxact 2012 return user Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS. Taxact 2012 return user Representing a taxpayer at conferences, hearings, or meetings with the IRS. Taxact 2012 return user Preparing and filing documents, including tax returns, with the IRS for a taxpayer. Taxact 2012 return user Providing a client with written advice which has a potential for tax avoidance or evasion. Taxact 2012 return user Furnishing information at the request of the IRS or appearing as a witness for the taxpayer is not practice before the IRS. Taxact 2012 return user Who Can Practice Before the IRS? The following individuals can practice before the IRS. Taxact 2012 return user However, any individual who is recognized to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. Taxact 2012 return user Form 2848 can be used for this purpose. Taxact 2012 return user Attorneys. Taxact 2012 return user   Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Taxact 2012 return user Certified public accountants (CPAs). Taxact 2012 return user   Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Taxact 2012 return user Enrolled agents. Taxact 2012 return user   Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Taxact 2012 return user Enrolled retirement plan agents. Taxact 2012 return user   Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Taxact 2012 return user The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Taxact 2012 return user Enrolled actuaries. Taxact 2012 return user   Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Taxact 2012 return user The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Taxact 2012 return user Student. Taxact 2012 return user    Under certain circumstances, a student who is supervised by a practitioner may request permission to represent another person before the IRS. Taxact 2012 return user For more information, see Authorization for special appearances, later. Taxact 2012 return user Registered tax return preparers and unenrolled return preparers. Taxact 2012 return user   A registered tax return preparer is an individual who has passed an IRS competency test and is authorized to prepare and sign tax returns as the preparer. Taxact 2012 return user An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. Taxact 2012 return user   Registered tax return preparers and unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable year or period covered by the tax return they prepared and signed. Taxact 2012 return user Registered tax return preparers and unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of Treasury. Taxact 2012 return user Registered tax return preparers and unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer. Taxact 2012 return user   If the unenrolled return preparer does not meet the requirements for limited representation, you may file Form 8821 to allow the preparer to inspect your tax information and receive copies of notices sent to you by the IRS. Taxact 2012 return user See Form 8821. Taxact 2012 return user Practice denied. Taxact 2012 return user   Any individual engaged in limited practice before the IRS who is involved in disreputable conduct is subject to disciplinary action. Taxact 2012 return user Disreputable conduct includes, but is not limited to, the list of items under Incompetence and Disreputable Conduct shown later under What Are the Rules of Practice. Taxact 2012 return user Other individuals who may serve as representatives. Taxact 2012 return user   Because of their special relationship with a taxpayer, the following individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer. Taxact 2012 return user An individual. Taxact 2012 return user An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority. Taxact 2012 return user A family member. Taxact 2012 return user An individual can represent members of his or her immediate family. Taxact 2012 return user Immediate family includes a spouse, child, parent, brother, or sister of the individual. Taxact 2012 return user An officer. Taxact 2012 return user A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. Taxact 2012 return user An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the organization before the IRS. Taxact 2012 return user A partner. Taxact 2012 return user A general partner may represent the partnership before the IRS. Taxact 2012 return user An employee. Taxact 2012 return user A regular full-time employee can represent his or her employer. Taxact 2012 return user An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority. Taxact 2012 return user A fiduciary. Taxact 2012 return user A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative. Taxact 2012 return user See Fiduciary under When Is a Power of Attorney Not Required, later. Taxact 2012 return user Representation Outside the United States Any individual may represent an individual or entity, who is outside the United States, before personnel of the IRS when such representation occurs outside the United States. Taxact 2012 return user See section 10. Taxact 2012 return user 7(c)(1)(vii) of Circular 230. Taxact 2012 return user Authorization for Special Appearances The Commissioner of Internal Revenue, or delegate, can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. Taxact 2012 return user The prospective representative must request this authorization in writing from the Office of Professional Responsibility. Taxact 2012 return user However, it is granted only when extremely compelling circumstances exist. Taxact 2012 return user If granted, the Commissioner, or delegate, will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted. Taxact 2012 return user The authorization letter should not be confused with a letter from an IRS center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number. Taxact 2012 return user The issuance of a CAF number does not indicate that an individual is either recognized or authorized to practice before the IRS. Taxact 2012 return user It merely confirms that a centralized file for authorizations has been established for the individual under that number. Taxact 2012 return user Students in LITCs and the STCP. Taxact 2012 return user   A student who works in a Low Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) who is supervised by a practitioner may request permission to represent another person before the IRS. Taxact 2012 return user Authorization requests must be made to the Office of Professional Responsibility. Taxact 2012 return user If granted, a letter authorizing the student's special appearance and detailing any conditions related to the appearance will be issued. Taxact 2012 return user Students receiving an authorization letter generally can represent taxpayers before any IRS function or office subject to any conditions in the authorization letter. Taxact 2012 return user If you intend to have a student represent you, review the authorization letter and ask your student, your student's supervisor, or the Office of Professional Responsibility if you have questions about the terms of the authorization. Taxact 2012 return user Who Cannot Practice Before the IRS? In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. Taxact 2012 return user If an individual loses eligibility to practice, the IRS will not recognize a power of attorney that names the individual as a representative. Taxact 2012 return user Corporations, associations, partnerships, and other persons that are not individuals. Taxact 2012 return user   These organizations (or persons) are not eligible to practice before the IRS. Taxact 2012 return user Loss of Eligibility Generally, individuals lose their eligibility to practice before the IRS in the following ways. Taxact 2012 return user Not meeting the requirements for renewal of enrollment (such as continuing professional education). Taxact 2012 return user Requesting to be placed in inactive retirement status. Taxact 2012 return user Being suspended or disbarred by the Office of Professional Responsibility for violating the regulations governing practice before the IRS. Taxact 2012 return user Failure to meet requirements. Taxact 2012 return user   Individuals who fail to comply with the requirements for eligibility for renewal of enrollment will be notified by the IRS. Taxact 2012 return user The notice will explain the reason for noncompliance and provide the individual with an opportunity to furnish information for reconsideration. Taxact 2012 return user The individual has 60 days from the date of the notice to respond. Taxact 2012 return user Inactive roster. Taxact 2012 return user   An individual will be placed on the roster of inactive individuals for a period of three years, if he or she: Fails to respond timely to the notice of noncompliance with the renewal requirements, Fails to file timely the application for renewal, or Does not satisfy the requirements of eligibility for renewal. Taxact 2012 return user The individual must file an application for renewal and satisfy all requirements for renewal after being placed in inactive status. Taxact 2012 return user Otherwise, at the conclusion of the next renewal cycle, he or she will be removed from the roster and the enrollment or registration terminated. Taxact 2012 return user Inactive retirement status. Taxact 2012 return user   Individuals who request to be placed in an inactive retirement status will be ineligible to practice before the IRS. Taxact 2012 return user They must continue to adhere to all renewal requirements. Taxact 2012 return user They can be reinstated to an active enrollment status by filing an application for renewal and providing evidence that they have completed the required continuing professional education hours for the enrollment cycle or registration year. Taxact 2012 return user Suspension and disbarment. Taxact 2012 return user   Individuals authorized to practice before the IRS are subject to disciplinary proceedings and may be suspended or disbarred for violating any regulation governing practice before the IRS. Taxact 2012 return user This includes engaging in acts of disreputable conduct. Taxact 2012 return user For more information, see Incompetence and Disreputable Conduct under What are the Rules of Practice, later. Taxact 2012 return user   Practitioners who are suspended in a disciplinary proceeding are not allowed to practice before the IRS during the period of suspension. Taxact 2012 return user See What Is Practice Before the IRS, earlier. Taxact 2012 return user   Practitioners who are disbarred in a disciplinary proceeding are not allowed to practice before the IRS. Taxact 2012 return user However, a practitioner can seek reinstatement from the Office of Professional Responsibility five years after disbarment. Taxact 2012 return user   If the practitioner seeks reinstatement, he or she may not practice before the IRS until the Office of Professional Responsibility authorizes reinstatement. Taxact 2012 return user The Office of Professional Responsibility may reinstate the practitioner if it is determined that: The practitioner's future conduct is not likely to be in violation of the regulations, and Granting the reinstatement would not be contrary to the public interest. Taxact 2012 return user How Does an Individual Become Enrolled? The Return Preparer Office can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. Taxact 2012 return user Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. Taxact 2012 return user In either case, certain application forms, discussed next, must be filed. Taxact 2012 return user Additionally, an applicant must not have engaged in any conduct that would justify suspension or disbarment from practice before the IRS. Taxact 2012 return user See Incompetence and Disreputable Conduct, later. Taxact 2012 return user Form 2587. Taxact 2012 return user   Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. Taxact 2012 return user Form 2587 can be filed online, by mail, or by fax. Taxact 2012 return user For more information, see instructions and fees listed on the form. Taxact 2012 return user To get Form 2587, see How To Get Tax Help, later. Taxact 2012 return user Form 23 and Form 23-EP. Taxact 2012 return user   Individuals who have passed the examination or are applying on the basis of past service and technical experience with the IRS can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, or Form 23-EP, Application for Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent. Taxact 2012 return user The application must include a check or money order in the amount of the fee shown on Form 23 or Form 23-EP. Taxact 2012 return user Alternatively, payment may be made electronically pursuant to instructions on the forms. Taxact 2012 return user To get Form 23 or Form 23-EP, see How To Get Tax Help, later. Taxact 2012 return user Form 5434. Taxact 2012 return user   An individual may apply as an enrolled actuary on the basis of past employment with the IRS and technical experience by filing Form 5434, Application for Enrollment, with the Joint Board for the Enrollment of Actuaries. Taxact 2012 return user The application must include a check or money order in the amount of the fee shown on Form 5434. Taxact 2012 return user To get Form 5434, see How To Get Tax Help, later. Taxact 2012 return user Period of enrollment. Taxact 2012 return user   An enrollment card will be issued to each individual whose enrollment application is approved. Taxact 2012 return user The individual is enrolled until the expiration date shown on the enrollment card or certificate. Taxact 2012 return user To continue practicing beyond the expiration date, the individual must request renewal of the enrollment by filing Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, or Form 8554-EP, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA). Taxact 2012 return user What Are the Rules of Practice? The rules governing practice before the IRS are published in the Code of Federal Regulations at 31 C. Taxact 2012 return user F. Taxact 2012 return user R. Taxact 2012 return user part 10 and reprinted in Treasury Department Circular No. Taxact 2012 return user 230 (Circular 230). Taxact 2012 return user An attorney, CPA, enrolled agent, enrolled retirement plan agent, registered tax return preparer, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. Taxact 2012 return user In addition, a practitioner cannot engage in disreputable conduct (discussed later). Taxact 2012 return user Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. Taxact 2012 return user Also, unenrolled preparers must comply with the rules of practice and conduct to exercise the privilege of limited practice before the IRS. Taxact 2012 return user See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers. Taxact 2012 return user Duties Practitioners must promptly submit records or information requested by officers or employees of the IRS, except when the practitioner believes on reasonable belief and good faith that the information is privileged. Taxact 2012 return user Communications with respect to tax advice between a federally authorized tax practitioner and a taxpayer generally are confidential to the same extent that communication would be privileged if it were between a taxpayer and an attorney if the advice relates to: Noncriminal tax matters before the IRS, or Noncriminal tax proceedings brought in federal court by or against the United States. Taxact 2012 return user Communications regarding corporate tax shelters. Taxact 2012 return user   This protection of tax advice communications does not apply to any written communications between a federally authorized tax practitioner and any person, including a director, shareholder, officer, employee, agent, or representative of a corporation if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter. Taxact 2012 return user Duty to advise. Taxact 2012 return user   A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, document, affidavit, or other required paper, has the responsibility to advise the client promptly of the noncompliance, error, or omission, and the consequences of the noncompliance, error, or omission. Taxact 2012 return user Due diligence. Taxact 2012 return user   A practitioner must exercise due diligence when performing the following duties. Taxact 2012 return user Preparing or assisting in the preparing, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters. Taxact 2012 return user Determining the correctness of oral or written representations made by him or her to the Department of the Treasury. Taxact 2012 return user Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS. Taxact 2012 return user Restrictions Practitioners are restricted from engaging in certain practices. Taxact 2012 return user The following paragraphs discuss some of these restricted practices. Taxact 2012 return user Delays. Taxact 2012 return user   A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS. Taxact 2012 return user Assistance from disbarred or suspended persons and former IRS employees. Taxact 2012 return user   A practitioner must not knowingly, directly or indirectly, do the following. Taxact 2012 return user Accept assistance from, or assist, any person who is under disbarment or suspension from practice before the IRS if the assistance relates to matters considered practice before the IRS. Taxact 2012 return user Accept assistance from any former government employee where provisions of Circular 230 or any federal law would be violated. Taxact 2012 return user Performance as a notary. Taxact 2012 return user   A practitioner who is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, cannot engage in any notary activities related to that matter. Taxact 2012 return user Negotiations of taxpayer refund checks. Taxact 2012 return user   Practitioners must not endorse or otherwise negotiate (cash) any refund check (including directing or accepting payment by any means, electronic or otherwise, in an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to the taxpayer. Taxact 2012 return user Incompetence and Disreputable Conduct Any practitioner or unenrolled return preparer may be disbarred or suspended from practice before the IRS, or censured, for incompetence or disreputable conduct. Taxact 2012 return user The following list contains examples of conduct that is considered disreputable. Taxact 2012 return user Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust. Taxact 2012 return user Knowingly giving false or misleading information in connection with federal tax matters, or participating in such activity. Taxact 2012 return user Soliciting employment by prohibited means as discussed in section 10. Taxact 2012 return user 30 of Circular 230. Taxact 2012 return user Willfully failing to file a federal tax return, evading or attempting to evade any federal tax or payment, or participating in such actions. Taxact 2012 return user Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes or other obligations due the United States. Taxact 2012 return user Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements. Taxact 2012 return user Being disbarred or suspended from practice as an attorney, CPA, public accountant, or actuary, by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any federal agency, body, or board. Taxact 2012 return user Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility of that other person. Taxact 2012 return user Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. Taxact 2012 return user Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. Taxact 2012 return user Censure, Disbarments, and Suspensions The Office of Professional Responsibility may censure or institute proceedings to censure, suspend or disbar any attorney, CPA, or enrolled agent who has violated Circular 230. Taxact 2012 return user A practitioner will be given the opportunity to demonstrate compliance with the rules before any disciplinary action is taken. Taxact 2012 return user Authorizing a Representative You may either represent yourself, or you may authorize an individual to represent you before the IRS. Taxact 2012 return user If you chose to have someone represent you, your representative must be a person eligible to practice before the IRS. Taxact 2012 return user See Who Can Practice Before the IRS, earlier. Taxact 2012 return user What Is a Power of Attorney? A power of attorney is your written authorization for an individual to act on your behalf. Taxact 2012 return user If the authorization is not limited, the individual generally can perform all acts that you can perform. Taxact 2012 return user The authority granted to a registered tax return preparer or an unenrolled preparer is limited. Taxact 2012 return user For information on the limits regarding registered tax return preparers, see Circular 230 §10. Taxact 2012 return user 3(f). Taxact 2012 return user For information on the limits regarding unenrolled preparers, see Publication 470. Taxact 2012 return user Acts performed. Taxact 2012 return user   Any representative, other than a registered tax return preparer or an unenrolled return preparer, can usually perform the following acts. Taxact 2012 return user Represent you before any office of the IRS. Taxact 2012 return user Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund. Taxact 2012 return user Sign a consent to extend the statutory time period for assessment or collection of a tax. Taxact 2012 return user Sign a closing agreement. Taxact 2012 return user Signing your return. Taxact 2012 return user   The representative named under a power of attorney is not permitted to sign your income tax return unless: The signature is permitted under the Internal Revenue Code and the related regulations (see Regulations section 1. Taxact 2012 return user 6012-1(a)(5)). Taxact 2012 return user You specifically authorize this in your power of attorney. Taxact 2012 return user For example, the regulation permits a representative to sign your return if you are unable to sign the return due to: Disease or injury. Taxact 2012 return user Continuous absence from the United States (including Puerto Rico) for a period of at least 60 days prior to the date required by law for filing the return. Taxact 2012 return user Other good cause if specific permission is requested of and granted by the IRS. Taxact 2012 return user When a return is signed by a representative, it must be accompanied by a power of attorney (or copy) authorizing the representative to sign the return. Taxact 2012 return user For more information, see the Form 2848 instructions. Taxact 2012 return user Limitation on substitution or delegation. Taxact 2012 return user   A recognized representative can substitute or delegate authority under the power of attorney to another recognized representative only if the act is specifically authorized by you on the power of attorney. Taxact 2012 return user   After a substitution has been made, only the newly recognized representative will be recognized as the taxpayer's representative. Taxact 2012 return user If a delegation of power has been made, both the original and the delegated representative will be recognized by the IRS to represent you. Taxact 2012 return user Disclosure of returns to a third party. Taxact 2012 return user   Your representative cannot execute consents that will allow the IRS to disclose tax return or return information to a third party unless you specifically delegate this authority to your representative on line 5 of Form 2848. Taxact 2012 return user Incapacity or incompetency. Taxact 2012 return user   A power of attorney is generally terminated if you become incapacitated or incompetent. Taxact 2012 return user   The power of attorney can continue, however, in the case of your incapacity or incompetency if you authorize this on line 5 “Other” of the Form 2848 and if your non-IRS durable power of attorney meets all the requirements for acceptance by the IRS. Taxact 2012 return user See Non-IRS powers of attorney, later. Taxact 2012 return user When Is a Power of Attorney Required? Submit a power of attorney when you want to authorize an individual to represent you before the IRS, whether or not the representative performs any of the other acts cited earlier under What Is a Power of Attorney. Taxact 2012 return user A power of attorney is most often required when you want to authorize another individual to perform at least one of the following acts on your behalf. Taxact 2012 return user Represent you at a meeting with the IRS. Taxact 2012 return user Prepare and file a written response to the IRS. Taxact 2012 return user Form Required Use Form 2848 to appoint a recognized representative to act on your behalf before the IRS. Taxact 2012 return user Individuals recognized to practice before the IRS are listed under Part II, Declaration of Representative, of Form 2848. Taxact 2012 return user Your representative must complete that part of the form. Taxact 2012 return user Non-IRS powers of attorney. Taxact 2012 return user   The IRS will accept a non-IRS power of attorney, but a completed Form 2848 must be attached in order for the power of attorney to be entered on the Centralized Authorization File (CAF) system. Taxact 2012 return user For more information, see Processing a non-IRS power of attorney, later. Taxact 2012 return user   If you want to use a power of attorney document other than Form 2848, it must contain the following information. Taxact 2012 return user Your name and mailing address. Taxact 2012 return user Your social security number and/or employer identification number. Taxact 2012 return user Your employee plan number, if applicable. Taxact 2012 return user The name and mailing address of your representative(s). Taxact 2012 return user The types of tax involved. Taxact 2012 return user The federal tax form number. Taxact 2012 return user The specific year(s) or period(s) involved. Taxact 2012 return user For estate tax matters, the decedent's date of death. Taxact 2012 return user A clear expression of your intention concerning the scope of authority granted to your representative(s). Taxact 2012 return user Your signature and date. Taxact 2012 return user You also must attach to the non-IRS power of attorney a signed and dated statement made by your representative. Taxact 2012 return user This statement, which is referred to as the Declaration of Representative, is contained in Part II of Form 2848. Taxact 2012 return user The statement should read: I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority, I am aware of the regulations contained in Circular 230, I am authorized to represent the taxpayer(s) identified in the power of attorney, and I am an individual described in 26 CFR 601. Taxact 2012 return user 502(b). Taxact 2012 return user Required information missing. Taxact 2012 return user   The IRS will not accept your non-IRS power of attorney if it does not contain all the information listed above. Taxact 2012 return user You can sign and submit a completed Form 2848 or a new non-IRS power of attorney that contains all the information. Taxact 2012 return user If you cannot sign an acceptable replacement document, your attorney-in-fact may be able to perfect (make acceptable to the IRS) your non-IRS power of attorney by using the procedure described next. Taxact 2012 return user Procedure for perfecting a non-IRS power of attorney. Taxact 2012 return user   Under the following conditions, the attorney-in-fact named in your non-IRS power of attorney can sign a Form 2848 on your behalf. Taxact 2012 return user The original non-IRS power of attorney grants authority to handle federal tax matters (for example, general authority to perform any acts). Taxact 2012 return user The attorney-in-fact attaches a statement (signed under penalty of perjury) to the Form 2848 stating that the original non-IRS power of attorney is valid under the laws of the governing jurisdiction. Taxact 2012 return user Example. Taxact 2012 return user John Elm, a taxpayer, signs a non-IRS durable power of attorney that names his neighbor and CPA, Ed Larch, as his attorney-in-fact. Taxact 2012 return user The power of attorney grants Ed the authority to perform any and all acts on John's behalf. Taxact 2012 return user However, it does not list specific tax-related information such as types of tax or tax form numbers. Taxact 2012 return user Shortly after John signs the power of attorney, he is declared incompetent. Taxact 2012 return user Later, a federal tax matter arises concerning a prior year return filed by John. Taxact 2012 return user Ed attempts to represent John before the IRS but is rejected because the durable power of attorney does not contain required information. Taxact 2012 return user If Ed attaches a statement (signed under the penalty of perjury) that the durable power of attorney is valid under the laws of the governing jurisdiction, he can sign a completed Form 2848 and submit it on John's behalf. Taxact 2012 return user If Ed can practice before the IRS (see Who Can Practice Before the IRS, earlier), he can name himself as representative on Form 2848. Taxact 2012 return user Otherwise, he must name another individual who can practice before the IRS. Taxact 2012 return user Processing a non-IRS power of attorney. Taxact 2012 return user   The IRS has a centralized computer database system called the CAF system. Taxact 2012 return user This system contains information on the authority of taxpayer representatives. Taxact 2012 return user Generally, when you submit a power of attorney document to the IRS, it is processed for inclusion on the CAF system. Taxact 2012 return user Entry of your power of attorney on the CAF system enables IRS personnel, who do not have a copy of your power of attorney, to verify the authority of your representative by accessing the CAF. Taxact 2012 return user It also enables the IRS to automatically send copies of notices and other IRS communications to your representative if you specify that your representative should receive those communications. Taxact 2012 return user   You can have your non-IRS power of attorney entered on the CAF system by attaching it to a completed Form 2848 and submitting it to the IRS. Taxact 2012 return user Your signature is not required; however, your attorney-in-fact must sign the Declaration of Representative (see Part II of Form 2848). Taxact 2012 return user Preparation of Form — Helpful Hints The preparation of Form 2848 is illustrated by an example, later under How Do I Fill Out Form 2848. Taxact 2012 return user However, the following will also assist you in preparing the form. Taxact 2012 return user Line-by-line hints. Taxact 2012 return user   The following hints are summaries of some of the line-by-line instructions for Form 2848. Taxact 2012 return user Line 1—Taxpayer information. Taxact 2012 return user   If a joint return is involved, the husband and wife each file a separate Form 2848 if they both want to be represented. Taxact 2012 return user If only one spouse wants to be represented in the matter, that spouse files a Form 2848. Taxact 2012 return user Line 2—Representative(s). Taxact 2012 return user   Only individuals may be named as representatives. Taxact 2012 return user If your representative has not been assigned a CAF number, enter “None” on that line and the IRS will issue one to your representative. Taxact 2012 return user If the representative's address or phone number has changed since the CAF number was issued, you should check the appropriate box. Taxact 2012 return user Enter your representative's fax number if available. Taxact 2012 return user   If you want to name more than three representatives, attach additional Form(s) 2848. Taxact 2012 return user The IRS can send copies of notices and communications to two of your representatives. Taxact 2012 return user You must, however, check the boxes on line 2 of the Form 2848 if you want the IRS to routinely send copies of notices and communications to your representatives. Taxact 2012 return user If you do not check the boxes, your representatives will not routinely receive copies of notices and communications. Taxact 2012 return user Line 3—Tax matters. Taxact 2012 return user   You may list any tax years or periods that have already ended as of the date you sign the power of attorney. Taxact 2012 return user However, you may include on a power of attorney only future tax periods that end no later than 3 years after the date the power of attorney is received by the IRS. Taxact 2012 return user The 3 future periods are determined starting after December 31 of the year the power of attorney is received by the IRS. Taxact 2012 return user However, avoid general references such as “all years” or “all taxes. Taxact 2012 return user ” Any Form 2848 with general references will be returned. Taxact 2012 return user Line 4—Specific use not recorded on Centralized Authorization File (CAF). Taxact 2012 return user   Certain matters cannot be recorded on the CAF system. Taxact 2012 return user Examples of such matters include, but are not limited to, the following. Taxact 2012 return user Requests for a private letter ruling or technical advice. Taxact 2012 return user Applications for an employer identification number (EIN). Taxact 2012 return user Claims filed on Form 843, Claim for Refund and Request for Abatement. Taxact 2012 return user Corporate dissolutions. Taxact 2012 return user Requests for change of accounting method. Taxact 2012 return user Requests for change of accounting period. Taxact 2012 return user Applications for recognition of exemption under sections 501(c)(3), 501(a), or 521 (Forms 1023, 1034, or 1028). Taxact 2012 return user Request for a determination of the qualified status of an employee benefit plan (Forms 5300, 5307, or 5310). Taxact 2012 return user Application for Award for Original Information under section 7623. Taxact 2012 return user Voluntary submissions under the Employee Plans Compliance Resolution System (EPCRS). Taxact 2012 return user Freedom of Information Act requests. Taxact 2012 return user If the tax matter described on line 3 of Form 2848 concerns one of these matters specifically, check the box on line 4. Taxact 2012 return user If this box is checked, the representative should mail or fax the power of attorney to the IRS office handling the matter. Taxact 2012 return user Otherwise, the representative should bring a copy of the power of attorney to each meeting with the IRS. Taxact 2012 return user Where To File a Power of Attorney Generally, you can mail or fax a paper Form 2848 directly to the IRS. Taxact 2012 return user To determine where you should file Form 2848, see Where To File in the instructions for Form 2848. Taxact 2012 return user If Form 2848 is for a specific use, mail or fax it to the office handling that matter. Taxact 2012 return user For more information on specific use, see the Instructions for Form 2848, line 4. Taxact 2012 return user FAX copies. Taxact 2012 return user   The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (fax). Taxact 2012 return user If you choose to file a power of attorney by fax, be sure the appropriate IRS office is equipped to accept this type of transmission. Taxact 2012 return user Your representative may be able to file Form 2848 electronically via the IRS website. Taxact 2012 return user For more information, your representative can go to www. Taxact 2012 return user irs. Taxact 2012 return user gov and under the Tax Professionals tab, click on e-services–Online Tools for Tax Professionals. Taxact 2012 return user If you complete Form 2848 for electronic signature authorization, do not file Form 2848 with the IRS. Taxact 2012 return user Instead, give it to your representative, who will retain the document. Taxact 2012 return user Updating a power of attorney. Taxact 2012 return user   Submit any update or modification to an existing power of attorney in writing. Taxact 2012 return user Your signature (or the signature of the individual(s) authorized to sign on your behalf) is required. Taxact 2012 return user Do this by sending the updated Form 2848 or non-IRS power of attorney to the IRS office(s) where you previously sent the original(s), including the center where the related return was, or will be filed. Taxact 2012 return user   A recognized representative may substitute or delegate authority if you specifically authorize your representative to substitute or delegate representation in the original power of attorney. Taxact 2012 return user To make a substitution or delegation, the representative must file the following items with the IRS office(s) where the power of attorney was filed. Taxact 2012 return user A written notice of substitution or delegation signed by the recognized representative. Taxact 2012 return user A written declaration of representative made by the new representative. Taxact 2012 return user A copy of the power of attorney that specifically authorizes the substitution or delegation. Taxact 2012 return user Retention/Revocation of Prior Power(s) of Attorney A newly filed power of attorney concerning the same matter will revoke a previously filed power of attorney. Taxact 2012 return user However, the new power of attorney will not revoke the prior power of attorney if it specifically states it does not revoke such prior power of attorney and either of the following are attached to the new power of attorney. Taxact 2012 return user A copy of the unrevoked prior power of attorney, or A statement signed by the taxpayer listing the name and address of each representative authorized under the prior unrevoked power of attorney. Taxact 2012 return user Note. Taxact 2012 return user The filing of Form 2848 will not revoke any  Form 8821 that is in effect. Taxact 2012 return user Revocation of Power of Attorney/Withdrawal of Representative If you want to revoke an existing power of attorney and do not want to name a new representative, or if a representative wants to withdraw from representation, mail or fax a copy of the previously executed power of attorney to the IRS, or if the power of attorney is for a specific matter, to the IRS office handling the matter. Taxact 2012 return user If the taxpayer is revoking the power of attorney, the taxpayer must write “REVOKE” across the top of the first page with a current signature and date below this annotation. Taxact 2012 return user If the representative is withdrawing from the representation, the representative must write “WITHDRAW” across the top of the first page with a current signature and date below this annotation. Taxact 2012 return user If you do not have a copy of the power of attorney you want to revoke or withdraw, send a statement to the IRS. Taxact 2012 return user The statement of revocation or withdrawal must indicate that the authority of the power of attorney is revoked or withdrawn, list the matters and periods, and must be signed and dated by the taxpayer or representative as applicable. Taxact 2012 return user If the taxpayer is revoking, list the name and address of each recognized representative whose authority is revoked. Taxact 2012 return user When the taxpayer is completely revoking authority, the form should state “remove all years/periods” instead of listing the specific tax matter, years, or periods. Taxact 2012 return user If the representative is withdrawing, list the name, TIN, and address (if known) of the taxpayer. Taxact 2012 return user To revoke a specific use power of attorney, send the power of attorney or statement of revocation to the IRS office handling your case, using the above instructions. Taxact 2012 return user A power of attorney held by a student will be recorded on the CAF system for 130 days from the receipt date. Taxact 2012 return user If you are authorizing a student to represent you after that time, you will need to submit a current and valid Form 2848. Taxact 2012 return user When Is a Power of Attorney Not Required? A power of attorney is not required when the third party is not dealing with the IRS as your representative. Taxact 2012 return user The following situations do not require a power of attorney. Taxact 2012 return user Providing information to the IRS. Taxact 2012 return user Authorizing the disclosure of tax return information through Form 8821, Tax Information Authorization, or other written or oral disclosure consent. Taxact 2012 return user Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document. Taxact 2012 return user Allowing a tax matters partner or person (TMP) to perform acts for the partnership. Taxact 2012 return user Allowing the IRS to discuss return information with a fiduciary. Taxact 2012 return user How Do I Fill Out Form 2848? The following example illustrates how to complete Form 2848. Taxact 2012 return user The two completed forms for this example are shown on the next pages. Taxact 2012 return user Example. Taxact 2012 return user Stan and Mary Doe have been notified that their joint tax returns (Forms 1040) for 2009, 2010, and 2011 are being examined. Taxact 2012 return user They have decided to appoint Jim Smith, an enrolled agent, to represent them in this matter and any future matters concerning these returns. Taxact 2012 return user Jim, who has prepared returns at the same location for years, already has a Centralized Authorization File (CAF) number assigned to him. Taxact 2012 return user Mary does not want Jim to sign any agreements on her behalf, but Stan is willing to have Jim do so. Taxact 2012 return user They want copies of all notices and written communications sent to Jim. Taxact 2012 return user This is the first time Stan and Mary have given power of attorney to anyone. Taxact 2012 return user They should each complete a Form 2848 as follows. Taxact 2012 return user Line 1—Taxpayer information. Taxact 2012 return user   Stan and Mary must each file a separate Form 2848. Taxact 2012 return user On his separate Form 2848, Stan enters his name, street address, and social security number in the spaces provided. Taxact 2012 return user Mary does likewise on her separate Form 2848. Taxact 2012 return user Line 2—Representative(s). Taxact 2012 return user   On their separate Forms 2848, Stan and Mary each enters the name and current address of their chosen representative, Jim Smith. Taxact 2012 return user Both Stan and Mary want Jim Smith to receive notices and communications concerning the matters identified in line 3, so on their separate Forms 2848, Stan and Mary each checks the box in the first column of line 2. Taxact 2012 return user They also enter Mr. Taxact 2012 return user Smith's CAF number, his telephone number, and his fax number. Taxact 2012 return user Mr. Taxact 2012 return user Smith's address, telephone number, and fax number have not changed since the IRS issued his CAF number, so Stan and Mary do not check the boxes in the second column. Taxact 2012 return user Line 3—Tax Matters. Taxact 2012 return user   On their separate Forms 2848, Stan and Mary each enters “income” for the type of tax, “1040” for the form number, and “2009, 2010, and 2011” for the tax years. Taxact 2012 return user Line 4—Specific use not recorded on Centralized Authorization File (CAF). Taxact 2012 return user   On their separate Forms 2848, Stan and Mary make no entry on this line because they do not want to restrict the use of their powers of attorney to a specific use that is not recorded on the CAF. Taxact 2012 return user See Preparation of Form — Helpful Hints, earlier. Taxact 2012 return user Line 5—Acts authorized. Taxact 2012 return user   Mary wants to sign any agreement that reflects changes to her and Stan's joint 2009, 2010, and 2011 income tax liability, so she writes “Taxpayer must sign any agreement form” on line 5 of her Form 2848. Taxact 2012 return user Stan does not wish to restrict the authority of Jim Smith in this regard, so he leaves line 5 of his Form 2848 blank. Taxact 2012 return user If either Mary or Stan had chosen, they could have listed other restrictions on line 5 of their separate Forms 2848. Taxact 2012 return user Line 6—Retention/revocation of prior power(s) of attorney. Taxact 2012 return user   Stan and Mary are each filing their first powers of attorney, so they make no entry on this line. Taxact 2012 return user However, if they had filed prior powers of attorney, the filing of this current power would revoke any earlier ones for the same tax matter(s) unless they checked the box on line 6 and attached a copy of the prior power of attorney that they wanted to remain in effect. Taxact 2012 return user   If Mary later decides that she can handle the examination on her own, she can revoke her power of attorney even though Stan does not revoke his power of attorney. Taxact 2012 return user (See Revocation of Power of Attorney/Withdrawal of Representative, earlier, for the special rules that apply. Taxact 2012 return user ) Line 7—Signature of taxpayer. Taxact 2012 return user   Stan and Mary each signs and dates his or her Form 2848. Taxact 2012 return user If a taxpayer does not sign, the IRS cannot accept the form. Taxact 2012 return user Part II—Declaration of Representative. Taxact 2012 return user   Jim Smith must complete this part of Form 2848. Taxact 2012 return user If he does not sign this part, the IRS cannot accept the form. Taxact 2012 return user What Happens to the Power of Attorney When Filed? A power of attorney will be recognized after it is received, reviewed, and determined by the IRS to contain the required information. Taxact 2012 return user However, until a power of attorney is entered on the CAF system, IRS personnel may be unaware of the authority of the person you have named to represent you. Taxact 2012 return user Therefore, during this interim period, IRS personnel may request that you or your representative bring a copy to any meeting with the IRS. Taxact 2012 return user This image is too large to be displayed in the current screen. Taxact 2012 return user Please click the link to view the image. Taxact 2012 return user Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Taxact 2012 return user Please click the link to view the image. Taxact 2012 return user Filled-in Form 2848 - Page 2 This image is too large to be displayed in the current screen. Taxact 2012 return user Please click the link to view the image. Taxact 2012 return user Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Taxact 2012 return user Please click the link to view the image. Taxact 2012 return user Filled-in Form 2848 - Page 2 Processing and Handling How the power of attorney is processed and handled depends on whether it is a complete or incomplete document. Taxact 2012 return user Incomplete document. Taxact 2012 return user   If Form 2848 is incomplete, the IRS will attempt to secure the missing information either by writing or telephoning you or your representative. Taxact 2012 return user For example, if your signature or signature date is missing, the IRS will contact you. Taxact 2012 return user If information concerning your representative is missing and information sufficient to make a contact (such as an address and/or a telephone number) is on the document, the IRS will try to contact your representative. Taxact 2012 return user   In either case, the power of attorney is not considered valid until all required information is entered on the document. Taxact 2012 return user The individual(s) named as representative(s) will not be recognized to practice before the IRS, on your behalf, until the document is complete and accepted by the IRS. Taxact 2012 return user Complete document. Taxact 2012 return user   If the power of attorney is complete and valid, the IRS will take action to recognize the representative. Taxact 2012 return user In most instances, this includes processing the document on the CAF system. Taxact 2012 return user Recording the data on the CAF system enables the IRS to direct copies of mailings to authorized representatives and to readily recognize the scope of authority granted. Taxact 2012 return user Documents not processed on CAF. Taxact 2012 return user   Specific-use powers of attorney are not processed on the CAF system (see Preparation of Form – Helpful Hints, earlier). Taxact 2012 return user For example, a power of attorney that is a one-time or specific-issue grant of authority is not processed on the CAF system. Taxact 2012 return user These documents remain with the related case files. Taxact 2012 return user In this situation, you should check the box on line 4 of Form 2848. Taxact 2012 return user In these situations, the representative should bring a copy of the power of attorney to each meeting with the IRS. Taxact 2012 return user Dealing With the Representative After a valid power of attorney is filed, the IRS will recognize your representative. Taxact 2012 return user However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, nonprivileged information, the IRS can contact you directly. Taxact 2012 return user For example, in most instances in which a power of attorney is recognized, the IRS will contact the representative to set up appointments and to provide lists of required items. Taxact 2012 return user However, if the representative is unavailable, does not respond to repeated requests, and does not provide required items (other than items considered privileged), the IRS can bypass your representative and contact you directly. Taxact 2012 return user If a representative engages in conduct described above, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. Taxact 2012 return user Notices and other correspondence. Taxact 2012 return user   If you have a recognized representative, you and the representative will routinely receive notices and other correspondence from the IRS (either the original or a copy) if you checked the box in the left column of line 2 of Form 2848. Taxact 2012 return user If the power of attorney is processed on the CAF system, the IRS will send your representative(s) a duplicate of all computer-generated correspondence that is sent to you. Taxact 2012 return user This includes notices and letters produced either at the Martinsburg Computing Center, or other IRS centers. Taxact 2012 return user The IRS employee handling the case is responsible for ensuring that the original and any requested copies of each manually-generated correspondence are sent to you and your representative(s) in accordance with your authorization. Taxact 2012 return user 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. Taxact 2012 return user By selecting the method that is best for you, you will have quick and easy access to tax help. Taxact 2012 return user Free help with your return. Taxact 2012 return user   Free help in preparing your return is available nationwide from IRS-certified volunteers. Taxact 2012 return user The Volunteer Income Tax Assistance (VITA) program is designed to help low and 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. Taxact 2012 return user 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. Taxact 2012 return user To find the nearest VITA or TCE site, visit IRS. Taxact 2012 return user gov or call 1-800-906-9887 or 1-800-829-1040. Taxact 2012 return user   As part of the TCE program, AARP offers the Tax-Aide counseling program. Taxact 2012 return user To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Taxact 2012 return user aarp. Taxact 2012 return user org/money/taxaide. Taxact 2012 return user   For more information on these programs, go to IRS. Taxact 2012 return user gov and enter keyword “VITA” in the upper right-hand corner. Taxact 2012 return user Internet. Taxact 2012 return user You can access the IRS website at IRS. Taxact 2012 return user gov 24 hours a day, 7 days a week to: E-file your return. Taxact 2012 return user Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Taxact 2012 return user Check the status of your refund. Taxact 2012 return user Go to IRS. Taxact 2012 return user gov and click on Where's My Refund. Taxact 2012 return user 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. Taxact 2012 return user If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Taxact 2012 return user Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Taxact 2012 return user Download forms, including talking tax forms, instructions, and publications. Taxact 2012 return user Order IRS products online. Taxact 2012 return user Research your tax questions online. Taxact 2012 return user Search publications online by topic or keyword. Taxact 2012 return user Use the online Internal Revenue Code, regulations, or other official guidance. Taxact 2012 return user View Internal Revenue Bulletins (IRBs) published in the last few years. Taxact 2012 return user Figure your withholding allowances using the withholding calculator online at www. Taxact 2012 return user irs. Taxact 2012 return user gov/individuals. Taxact 2012 return user Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Taxact 2012 return user irs. Taxact 2012 return user gov/individuals. Taxact 2012 return user Sign up to receive local and national tax news by email. Taxact 2012 return user Get information on starting and operating a small business. Taxact 2012 return user Phone. Taxact 2012 return user Many services are available by phone. Taxact 2012 return user   Ordering forms, instructions, and publications. Taxact 2012 return user Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Taxact 2012 return user You should receive your order within 10 days. Taxact 2012 return user Asking tax questions. Taxact 2012 return user Call the IRS with your tax questions at 1-800-829-1040. Taxact 2012 return user Solving problems. Taxact 2012 return user You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Taxact 2012 return user An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Taxact 2012 return user Call your local Taxpayer Assistance Center for an appointment. Taxact 2012 return user To find the number, go to www. Taxact 2012 return user irs. Taxact 2012 return user gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Taxact 2012 return user TTY/TDD equipment. Taxact 2012 return user If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Taxact 2012 return user TeleTax topics. Taxact 2012 return user Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Taxact 2012 return user Refund information. Taxact 2012 return user To check the status of your refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Taxact 2012 return user 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. Taxact 2012 return user If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Taxact 2012 return user Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Taxact 2012 return user 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. Taxact 2012 return user Other refund information. Taxact 2012 return user To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Taxact 2012 return user Evaluating the quality of our telephone services. Taxact 2012 return user To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Taxact 2012 return user One method is for a second IRS representative to listen in on or record random telephone calls. Taxact 2012 return user Another is to ask some callers to complete a short survey at the end of the call. Taxact 2012 return user Walk-in. Taxact 2012 return user Many products and services are available on a walk-in basis. Taxact 2012 return user   Products. Taxact 2012 return user You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Taxact 2012 return user 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. Taxact 2012 return user Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Taxact 2012 return user Services. Taxact 2012 return user You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Taxact 2012 return user An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Taxact 2012 return user 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. Taxact 2012 return user No appointment is necessary—just walk in. Taxact 2012 return user If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Taxact 2012 return user A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Taxact 2012 return user If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Taxact 2012 return user All other issues will be handled without an appointment. Taxact 2012 return user To find the number of your local office, go to  www. Taxact 2012 return user irs. Taxact 2012 return user gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Taxact 2012 return user Mail. Taxact 2012 return user You can send your order for forms, instructions, and publications to the address below. Taxact 2012 return user You should receive a response within 10 days after your request is received. Taxact 2012 return user  Internal Revenue Service 1201 N. Taxact 2012 return user Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Taxact 2012 return user   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Taxact 2012 return user Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Taxact 2012 return user 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. Taxact 2012 return user Remember, the worst thing you can do is nothing at all. Taxact 2012 return user   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. Taxact 2012 return user You face (or your business is facing) an immediate threat of adverse action. Taxact 2012 return user 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. Taxact 2012 return user   If you qualify for our help, we’ll do everything we can to get your problem resolved. Taxact 2012 return user You will be assigned to one advocate who will be with you at every turn. Taxact 2012 return user We have offices in every state, the District of Columbia, and Puerto Rico. Taxact 2012 return user Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Taxact 2012 return user And our services are always free. Taxact 2012 return user   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Taxact 2012 return user Our tax toolkit at www. Taxact 2012 return user TaxpayerAdvocate. Taxact 2012 return user irs. Taxact 2012 return user gov can help you understand these rights. Taxact 2012 return user   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. Taxact 2012 return user irs. Taxact 2012 return user gov/advocate. Taxact 2012 return user You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Taxact 2012 return user   TAS also handles large-scale or systemic problems that affect many taxpayers. Taxact 2012 return user If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Taxact 2012 return user irs. Taxact 2012 return user gov/advocate. Taxact 2012 return user Low Income Taxpayer Clinics (LITCs). Taxact 2012 return user   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Taxact 2012 return user Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Taxact 2012 return user 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. Taxact 2012 return user Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Taxact 2012 return user For more information and to find a clinic near you, see the LITC page on www. Taxact 2012 return user irs. Taxact 2012 return user gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Taxact 2012 return user This publication is also available by calling 1-800-829-3676 or at your local IRS office. Taxact 2012 return user Free tax services. Taxact 2012 return user   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Taxact 2012 return user Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Taxact 2012 return user The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Taxact 2012 return user The majority of the information and services listed in this publication are available to you free of charge. Taxact 2012 return user If there is a fee associated with a resource or service, it is listed in the publication. Taxact 2012 return user   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Taxact 2012 return user DVD for tax products. Taxact 2012 return user You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Taxact 2012 return user Prior-year forms, instructions, and publications. Taxact 2012 return user Tax Map: an electronic research tool and finding aid. Taxact 2012 return user Tax law frequently asked questions. Taxact 2012 return user Tax Topics from the IRS telephone response system. Taxact 2012 return user Internal Revenue Code—Title 26 of the U. Taxact 2012 return user S. Taxact 2012 return user Code. Taxact 2012 return user Links to other Internet based Tax Research Materials. Taxact 2012 return user Fill-in, print, and save features for most tax forms. Taxact 2012 return user Internal Revenue Bulletins. Taxact 2012 return user Toll-free and email technical support. Taxact 2012 return user Two releases during the year. Taxact 2012 return user  – The first release will ship the beginning of January. Taxact 2012 return user  – The final release will ship the beginning of March. Taxact 2012 return user Purchase the DVD from National Technical Information Service (NTIS) at www. Taxact 2012 return user irs. Taxact 2012 return user gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Taxact 2012 return user Prev  Up  Next   Home   More Online Publications