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Unemployed File Taxes

Unemployed file taxes 12. Unemployed file taxes   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Unemployed file taxes Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Unemployed file taxes  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Unemployed file taxes 5 cents per mile. Unemployed file taxes For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Unemployed file taxes Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Unemployed file taxes To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Unemployed file taxes What is the tax benefit of taking a business deduction for work-related education. Unemployed file taxes   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Unemployed file taxes Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Unemployed file taxes An itemized deduction reduces the amount of your income subject to tax. Unemployed file taxes   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Unemployed file taxes This reduces the amount of your income subject to both income tax and self-employment tax. Unemployed file taxes   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Unemployed file taxes You may qualify for these other benefits even if you do not meet the requirements listed above. Unemployed file taxes   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Unemployed file taxes Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Unemployed file taxes Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Unemployed file taxes This is education that meets at least one of the following two tests. Unemployed file taxes The education is required by your employer or the law to keep your present salary, status, or job. Unemployed file taxes The required education must serve a bona fide business purpose of your employer. Unemployed file taxes The education maintains or improves skills needed in your present work. Unemployed file taxes However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Unemployed file taxes You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Unemployed file taxes Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Unemployed file taxes Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Unemployed file taxes This additional education is qualifying work-related education if all three of the following requirements are met. Unemployed file taxes It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Unemployed file taxes When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Unemployed file taxes See Education To Maintain or Improve Skills , later. Unemployed file taxes Example. Unemployed file taxes You are a teacher who has satisfied the minimum requirements for teaching. Unemployed file taxes Your employer requires you to take an additional college course each year to keep your teaching job. Unemployed file taxes If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Unemployed file taxes This image is too large to be displayed in the current screen. Unemployed file taxes Please click the link to view the image. Unemployed file taxes Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Unemployed file taxes This could include refresher courses, courses on current developments, and academic or vocational courses. Unemployed file taxes Example. Unemployed file taxes You repair televisions, radios, and stereo systems for XYZ Store. Unemployed file taxes To keep up with the latest changes, you take special courses in radio and stereo service. Unemployed file taxes These courses maintain and improve skills required in your work. Unemployed file taxes Maintaining skills vs. Unemployed file taxes qualifying for new job. Unemployed file taxes   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Unemployed file taxes Education during temporary absence. Unemployed file taxes   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Unemployed file taxes Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Unemployed file taxes Example. Unemployed file taxes You quit your biology research job to become a full-time biology graduate student for 1 year. Unemployed file taxes If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Unemployed file taxes Education during indefinite absence. Unemployed file taxes   If you stop work for more than a year, your absence from your job is considered indefinite. Unemployed file taxes Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Unemployed file taxes Therefore, it is not qualifying work-related education. Unemployed file taxes Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Unemployed file taxes The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Unemployed file taxes Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Unemployed file taxes This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Unemployed file taxes You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Unemployed file taxes Example 1. Unemployed file taxes You are a full-time engineering student. Unemployed file taxes Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Unemployed file taxes Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Unemployed file taxes The education is not qualifying work-related education. Unemployed file taxes Example 2. Unemployed file taxes You are an accountant and you have met the minimum educational requirements of your employer. Unemployed file taxes Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Unemployed file taxes These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Unemployed file taxes Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Unemployed file taxes The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Unemployed file taxes If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Unemployed file taxes The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Unemployed file taxes You generally will be considered a faculty member when one or more of the following occurs. Unemployed file taxes You have tenure. Unemployed file taxes Your years of service count toward obtaining tenure. Unemployed file taxes You have a vote in faculty decisions. Unemployed file taxes Your school makes contributions for you to a retirement plan other than social security or a similar program. Unemployed file taxes Example 1. Unemployed file taxes The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Unemployed file taxes In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Unemployed file taxes If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Unemployed file taxes However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Unemployed file taxes Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Unemployed file taxes If you have all the required education except the fifth year, you have met the minimum educational requirements. Unemployed file taxes The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Unemployed file taxes Example 2. Unemployed file taxes Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Unemployed file taxes The additional four education courses can be qualifying work-related education. Unemployed file taxes Although you do not have all the required courses, you have already met the minimum educational requirements. Unemployed file taxes Example 3. Unemployed file taxes Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Unemployed file taxes The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Unemployed file taxes They are needed to meet the minimum educational requirements for employment as a teacher. Unemployed file taxes Example 4. Unemployed file taxes You have a bachelor's degree and you work as a temporary instructor at a university. Unemployed file taxes At the same time, you take graduate courses toward an advanced degree. Unemployed file taxes The rules of the university state that you can become a faculty member only if you get a graduate degree. Unemployed file taxes Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Unemployed file taxes You have not met the minimum educational requirements to qualify you as a faculty member. Unemployed file taxes The graduate courses are not qualifying work-related education. Unemployed file taxes Certification in a new state. Unemployed file taxes   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Unemployed file taxes This is true even if you must get additional education to be certified in another state. Unemployed file taxes Any additional education you need is qualifying work-related education. Unemployed file taxes You have already met the minimum requirements for teaching. Unemployed file taxes Teaching in another state is not a new trade or business. Unemployed file taxes Example. Unemployed file taxes You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Unemployed file taxes You move to State B and are promptly hired as a teacher. Unemployed file taxes You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Unemployed file taxes These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Unemployed file taxes Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Unemployed file taxes This is true even if you do not plan to enter that trade or business. Unemployed file taxes If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Unemployed file taxes Example 1. Unemployed file taxes You are an accountant. Unemployed file taxes Your employer requires you to get a law degree at your own expense. Unemployed file taxes You register at a law school for the regular curriculum that leads to a law degree. Unemployed file taxes Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Unemployed file taxes Example 2. Unemployed file taxes You are a general practitioner of medicine. Unemployed file taxes You take a 2-week course to review developments in several specialized fields of medicine. Unemployed file taxes The course does not qualify you for a new profession. Unemployed file taxes It is qualifying work- related education because it maintains or improves skills required in your present profession. Unemployed file taxes Example 3. Unemployed file taxes While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Unemployed file taxes The program will lead to qualifying you to practice psychoanalysis. Unemployed file taxes The psychoanalytic training does not qualify you for a new profession. Unemployed file taxes It is qualifying work-related education because it maintains or improves skills required in your present profession. Unemployed file taxes Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Unemployed file taxes They are part of a program of study that can qualify you for a new profession. Unemployed file taxes Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Unemployed file taxes A change in duties in any of the following ways is not considered a change to a new business. Unemployed file taxes Elementary school teacher to secondary school teacher. Unemployed file taxes Teacher of one subject, such as biology, to teacher of another subject, such as art. Unemployed file taxes Classroom teacher to guidance counselor. Unemployed file taxes Classroom teacher to school administrator. Unemployed file taxes What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Unemployed file taxes If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Unemployed file taxes You cannot deduct expenses related to tax-exempt and excluded income. Unemployed file taxes Deductible expenses. Unemployed file taxes   The following education expenses can be deducted. Unemployed file taxes Tuition, books, supplies, lab fees, and similar items. Unemployed file taxes Certain transportation and travel costs. Unemployed file taxes Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Unemployed file taxes Nondeductible expenses. Unemployed file taxes   You cannot deduct personal or capital expenses. Unemployed file taxes For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Unemployed file taxes This amount is a personal expense. Unemployed file taxes Unclaimed reimbursement. Unemployed file taxes   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Unemployed file taxes Example. Unemployed file taxes Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Unemployed file taxes You do not file a voucher and you do not get reimbursed. Unemployed file taxes Because you did not file a voucher, you cannot deduct the expenses on your tax return. Unemployed file taxes Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Unemployed file taxes If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Unemployed file taxes Temporary basis. Unemployed file taxes   You go to school on a temporary basis if either of the following situations applies to you. Unemployed file taxes Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Unemployed file taxes Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Unemployed file taxes Your attendance is temporary up to the date you determine it will last more than 1 year. Unemployed file taxes If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Unemployed file taxes Attendance not on a temporary basis. Unemployed file taxes   You do not go to school on a temporary basis if either of the following situations apply to you. Unemployed file taxes Your attendance at school is realistically expected to last more than 1 year. Unemployed file taxes It does not matter how long you actually attend. Unemployed file taxes Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Unemployed file taxes Your attendance is not temporary after the date you determine it will last more than 1 year. Unemployed file taxes Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Unemployed file taxes This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Unemployed file taxes Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Unemployed file taxes Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Unemployed file taxes Example 1. Unemployed file taxes You regularly work in a nearby town, and go directly from work to home. Unemployed file taxes You also attend school every work night for 3 months to take a course that improves your job skills. Unemployed file taxes Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Unemployed file taxes This is true regardless of the distance traveled. Unemployed file taxes Example 2. Unemployed file taxes Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Unemployed file taxes You can deduct your transportation expenses from your regular work site to school and then home. Unemployed file taxes Example 3. Unemployed file taxes Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Unemployed file taxes Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Unemployed file taxes Example 4. Unemployed file taxes Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Unemployed file taxes Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Unemployed file taxes If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Unemployed file taxes If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Unemployed file taxes Using your car. Unemployed file taxes    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Unemployed file taxes The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Unemployed file taxes 5 cents per mile. Unemployed file taxes Whichever method you use, you can also deduct parking fees and tolls. Unemployed file taxes See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Unemployed file taxes Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Unemployed file taxes Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Unemployed file taxes For more information, see chapter 1 of Publication 463. Unemployed file taxes You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Unemployed file taxes Mainly personal travel. Unemployed file taxes   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Unemployed file taxes You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Unemployed file taxes   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Unemployed file taxes An important factor is the comparison of time spent on personal activities with time spent on educational activities. Unemployed file taxes If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Unemployed file taxes Example 1. Unemployed file taxes John works in Newark, New Jersey. Unemployed file taxes He traveled to Chicago to take a deductible 1-week course at the request of his employer. Unemployed file taxes His main reason for going to Chicago was to take the course. Unemployed file taxes While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Unemployed file taxes Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Unemployed file taxes He cannot deduct his transportation expenses of going to Pleasantville. Unemployed file taxes He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Unemployed file taxes Example 2. Unemployed file taxes Sue works in Boston. Unemployed file taxes She went to a university in Michigan to take a course for work. Unemployed file taxes The course is qualifying work-related education. Unemployed file taxes She took one course, which is one-fourth of a full course load of study. Unemployed file taxes She spent the rest of the time on personal activities. Unemployed file taxes Her reasons for taking the course in Michigan were all personal. Unemployed file taxes Sue's trip is mainly personal because three-fourths of her time is considered personal time. Unemployed file taxes She cannot deduct the cost of her round-trip train ticket to Michigan. Unemployed file taxes She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Unemployed file taxes Example 3. Unemployed file taxes Dave works in Nashville and recently traveled to California to take a 2-week seminar. Unemployed file taxes The seminar is qualifying work-related education. Unemployed file taxes While there, he spent an extra 8 weeks on personal activities. Unemployed file taxes The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Unemployed file taxes Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Unemployed file taxes He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Unemployed file taxes Cruises and conventions. Unemployed file taxes   Certain cruises and conventions offer seminars or courses as part of their itinerary. Unemployed file taxes Even if the seminars or courses are work related, your deduction for travel may be limited. Unemployed file taxes This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Unemployed file taxes   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Unemployed file taxes 50% limit on meals. Unemployed file taxes   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Unemployed file taxes If you were reimbursed for the meals, see How To Treat Reimbursements , later. Unemployed file taxes   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Unemployed file taxes Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Unemployed file taxes Example. Unemployed file taxes You are a French language teacher. Unemployed file taxes While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Unemployed file taxes You chose your itinerary and most of your activities to improve your French language skills. Unemployed file taxes You cannot deduct your travel expenses as education expenses. Unemployed file taxes This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Unemployed file taxes No Double Benefit Allowed You cannot do either of the following. Unemployed file taxes Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Unemployed file taxes Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Unemployed file taxes See Adjustments to Qualifying Work-Related Education Expenses, next. Unemployed file taxes Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Unemployed file taxes You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Unemployed file taxes Tax-free educational assistance. Unemployed file taxes   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Unemployed file taxes Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Unemployed file taxes Amounts that do not reduce qualifying work-related education expenses. Unemployed file taxes   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Unemployed file taxes Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Unemployed file taxes How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Unemployed file taxes There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Unemployed file taxes You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Unemployed file taxes Note. Unemployed file taxes The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Unemployed file taxes Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Unemployed file taxes Your expenses must have a business connection. Unemployed file taxes This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Unemployed file taxes You must adequately account to your employer for your expenses within a reasonable period of time. Unemployed file taxes You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Unemployed file taxes If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Unemployed file taxes If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Unemployed file taxes Accountable plan rules not met. Unemployed file taxes   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Unemployed file taxes Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Unemployed file taxes Expenses equal reimbursement. Unemployed file taxes   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Unemployed file taxes Because your expenses and reimbursements are equal, you do not have a deduction. Unemployed file taxes Excess expenses. Unemployed file taxes   If your expenses are more than your reimbursement, you can deduct your excess expenses. Unemployed file taxes This is discussed later, under Deducting Business Expenses . Unemployed file taxes Allocating your reimbursements for meals. Unemployed file taxes   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Unemployed file taxes If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Unemployed file taxes Make the allocation as follows. Unemployed file taxes Divide your meal expenses by your total expenses. Unemployed file taxes Multiply your total reimbursement by the result from (1). Unemployed file taxes This is the allocated reimbursement for your meal expenses. Unemployed file taxes Subtract the amount figured in (2) from your total reimbursement. Unemployed file taxes The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Unemployed file taxes Example. Unemployed file taxes Your employer paid you an expense allowance of $2,000 under an accountable plan. Unemployed file taxes The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Unemployed file taxes There was no indication of how much of the reimbursement was for each type of expense. Unemployed file taxes Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Unemployed file taxes Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Unemployed file taxes   1. Unemployed file taxes $425 meal expenses  $2,500 total expenses = . Unemployed file taxes 17   2. Unemployed file taxes $2,000 (reimbursement)×. Unemployed file taxes 17     =$340 (allocated reimbursement for meal expenses)   3. Unemployed file taxes $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Unemployed file taxes After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Unemployed file taxes Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. Unemployed file taxes You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Unemployed file taxes This is discussed later under Deducting Business Expenses . Unemployed file taxes An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Unemployed file taxes Reimbursements for nondeductible expenses. Unemployed file taxes   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Unemployed file taxes You must include them in your income. Unemployed file taxes For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Unemployed file taxes   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Unemployed file taxes Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Unemployed file taxes The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Unemployed file taxes Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Unemployed file taxes If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Unemployed file taxes See the instructions for the form you file for information on how to complete it. Unemployed file taxes Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Unemployed file taxes If either (1) or (2) applies, you can deduct the total qualifying cost. Unemployed file taxes If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Unemployed file taxes In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Unemployed file taxes (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Unemployed file taxes ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Unemployed file taxes Form 2106 or 2106-EZ. Unemployed file taxes   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Unemployed file taxes Form not required. Unemployed file taxes   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Unemployed file taxes   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Unemployed file taxes (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Unemployed file taxes ) Using Form 2106-EZ. Unemployed file taxes   This form is shorter and easier to use than Form 2106. Unemployed file taxes Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Unemployed file taxes   If you do not meet both of these requirements, use Form 2106. Unemployed file taxes Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Unemployed file taxes Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Unemployed file taxes You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Unemployed file taxes You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Unemployed file taxes For more information on qualified performing artists, see chapter 6 of Publication 463. Unemployed file taxes Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Unemployed file taxes They are not subject to the 2%-of-adjusted-gross-income limit. Unemployed file taxes To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Unemployed file taxes For more information on impairment-related work expenses, see chapter 6 of Publication 463. Unemployed file taxes Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Unemployed file taxes Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Unemployed file taxes If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Unemployed file taxes However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Unemployed file taxes Examples of records to keep. Unemployed file taxes   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Unemployed file taxes You should keep adequate records or have sufficient evidence that will support your expenses. Unemployed file taxes Estimates or approximations do not qualify as proof of an expense. Unemployed file taxes Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Unemployed file taxes , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Unemployed file taxes Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Unemployed file taxes Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Unemployed file taxes Complete information about any scholarship or fellowship grants, including amounts you received during the year. Unemployed file taxes Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Unemployed file taxes He was selected to attend a 3-week math seminar at a university in California. Unemployed file taxes The seminar will improve his skills in his current job and is qualifying work-related education. Unemployed file taxes He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Unemployed file taxes Victor will file Form 1040. Unemployed file taxes His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Unemployed file taxes He shows his expenses for the seminar in Part I of the form. Unemployed file taxes He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Unemployed file taxes He enters $400 on line 4 for his tuition and books. Unemployed file taxes On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Unemployed file taxes He multiplies that amount by 50% and enters the result, $263, on line 5. Unemployed file taxes On line 6, Victor totals the amounts from lines 3 through 5. Unemployed file taxes He carries the total, $2,313, to Schedule A (Form 1040), line 21. Unemployed file taxes Since he does not claim any vehicle expenses, Victor leaves Part II blank. Unemployed file taxes His filled-in form is shown on the next page. Unemployed file taxes This image is too large to be displayed in the current screen. Unemployed file taxes Please click the link to view the image. Unemployed file taxes Form 2106-EZ for V. Unemployed file taxes Jones Prev  Up  Next   Home   More Online Publications
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Understanding your CP16 Notice

We sent you this notice to tell you about changes we made to your return that affect your refund. We made these changes because we believe there was a miscalculation. Our records show you owe other tax debts and we applied all or part of your refund to them.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully — it will explain the changes we made to your tax return.
  • Correct the copy of your tax return that you kept for your records.
  • Contact us within 60 days of the date of your notice if you disagree with the changes we made.

You may want to...


Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the number listed on your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the change we made to your account. However, if you're unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case for audit your case. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don't contact us within the 60 day period, you'll lose your right to appeal our decision before paying the tax.

If you don't contact us within 60 days, the change won't be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

What if I disagree with the debt my refund was applied to?
You will need to contact us using the number provided on your notice to discuss your account information.

How can I find out if I am an injured spouse?
Review Form 8379, Injured Spouse Allocation and its instructions.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

If you have any dependent children, remember to claim the Additional Child Tax Credit the next time you file your income tax return. Complete and attach a Form 1040 Schedule 8812, Child Tax Credit to your return to claim this credit.

Page Last Reviewed or Updated: 20-Feb-2014

The Unemployed File Taxes

Unemployed file taxes 9. Unemployed file taxes   Education Exception to Additional Tax on Early IRA Distributions Table of Contents Introduction Who Is Eligible Figuring the Amount Not Subject to the 10% Tax Reporting Early Distributions Introduction Generally, if you take a distribution from your IRA before you reach age 59½, you must pay a 10% additional tax on the early distribution. Unemployed file taxes This applies to any IRA you own, whether it is a traditional IRA (including a SEP-IRA), a Roth IRA, or a SIMPLE IRA. Unemployed file taxes The additional tax on an early distribution from a SIMPLE IRA may be as high as 25%. Unemployed file taxes See Publication 560, Retirement Plans for Small Business, for information on SEP-IRAs, and Publication 590, for information about all other IRAs. Unemployed file taxes However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. Unemployed file taxes You may owe income tax on at least part of the amount distributed, but you may not have to pay the 10% additional tax. Unemployed file taxes Generally, if the taxable part of the distribution is less than or equal to the adjusted qualified education expenses (AQEE), none of the distribution is subject to the additional tax. Unemployed file taxes If the taxable part of the distribution is more than the AQEE, only the excess is subject to the additional tax. Unemployed file taxes Who Is Eligible You can take a distribution from your IRA before you reach age 59½ and not have to pay the 10% additional tax if, for the year of the distribution, you pay qualified education expenses for: yourself, your spouse, or your or your spouse's child, foster child, adopted child, or descendant of any of them. Unemployed file taxes Qualified education expenses. Unemployed file taxes   For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. Unemployed file taxes They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. Unemployed file taxes   In addition, if the student is at least a half-time student, room and board are qualified education expenses. Unemployed file taxes   The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. Unemployed file taxes The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. Unemployed file taxes The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Unemployed file taxes You will need to contact the eligible educational institution for qualified room and board costs. Unemployed file taxes Eligible educational institution. Unemployed file taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Unemployed file taxes S. Unemployed file taxes Department of Education. Unemployed file taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Unemployed file taxes The educational institution should be able to tell you if it is an eligible educational institution. Unemployed file taxes   Certain educational institutions located outside the United States also participate in the U. Unemployed file taxes S. Unemployed file taxes Department of Education's Federal Student Aid (FSA) programs. Unemployed file taxes Half-time student. Unemployed file taxes   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing as determined under the standards of the school where the student is enrolled. Unemployed file taxes Figuring the Amount Not Subject to the 10% Tax To determine the amount of your distribution that is not subject to the 10% additional tax, first figure your adjusted qualified education expenses. Unemployed file taxes You do this by reducing your total qualified education expenses by any tax-free educational assistance, which includes: Expenses used to figure the tax-free portion of distributions from a Coverdell education savings account (ESA) (see Distributions in chapter 7, Coverdell Education Savings Account), The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Unemployed file taxes Do not reduce the qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance given to either the student or the individual making the withdrawal, or A withdrawal from personal savings (including savings from a qualified tuition program (QTP)). Unemployed file taxes If your IRA distribution is equal to or less than your adjusted qualified education expenses, you are not subject to the 10% additional tax. Unemployed file taxes Example 1. Unemployed file taxes In 2013, Erin (age 32) took a year off from teaching to attend graduate school full-time. Unemployed file taxes She paid $5,800 of qualified education expenses from the following sources. Unemployed file taxes   Employer-provided educational assistance  (tax free) $5,000     Early distribution from IRA (includes $500 taxable earnings) 3,200           Before Erin can determine if she must pay the 10% additional tax on her IRA distribution, she must reduce her total qualified education expenses. Unemployed file taxes   Total qualified education expenses $5,800     Minus: Tax-free educational assistance −5,000     Equals: Adjusted qualified  education expenses (AQEE) $ 800   Because Erin's AQEE ($800) are more than the taxable portion of her IRA distribution ($500), she does not have to pay the 10% additional tax on any part of this distribution. Unemployed file taxes However, she must include the $500 taxable earnings in her gross income subject to income tax. Unemployed file taxes Example 2. Unemployed file taxes Assume the same facts as in Example 1 , except that Erin deducted some of the contributions to her IRA, so the taxable part of her early distribution is higher by $1,000. Unemployed file taxes This must be included in her income subject to income tax. Unemployed file taxes The taxable part of Erin's IRA distribution ($1,000) is larger than her $800 AQEE. Unemployed file taxes Therefore, she must pay the 10% additional tax on $200, the taxable part of her distribution ($1,000) that is more than her qualified education expenses ($800). Unemployed file taxes She does not have to pay the 10% additional tax on the remaining $800 of her taxable distribution. Unemployed file taxes Reporting Early Distributions By January 31, 2014, the payer of your IRA distribution should send you Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Unemployed file taxes The information on this form will help you determine how much of your distribution is taxable for income tax purposes and how much is subject to the 10% additional tax. Unemployed file taxes If you received an early distribution from your IRA, you must report the taxable earnings on Form 1040, line 15b (Form 1040NR, line 16b). Unemployed file taxes Then, if you qualify for an exception for qualified higher education expenses, you must file Form 5329 to show how much, if any, of your early distribution is subject to the 10% additional tax. Unemployed file taxes See the Instructions for Form 5329, Part I, for help in completing the form and entering the results on Form 1040 or 1040NR. Unemployed file taxes There are many other situations in which Form 5329 is required. Unemployed file taxes If, during 2013, you had other distributions from IRAs or qualified retirement plans, or have made excess contributions to certain tax-favored accounts, see the instructions for line 58 (Form 1040) or line 56 (Form 1040NR) to determine if you must file Form 5329. Unemployed file taxes Prev  Up  Next   Home   More Online Publications