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Where To File 1040x 2010

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Where To File 1040x 2010

Where to file 1040x 2010 6. Where to file 1040x 2010   How To Report Table of Contents Where To ReportGifts. Where to file 1040x 2010 Statutory employees. Where to file 1040x 2010 Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Where to file 1040x 2010 Standard mileage rate. Where to file 1040x 2010 Actual expenses. Where to file 1040x 2010 Car rentals. Where to file 1040x 2010 Hours of service limits. Where to file 1040x 2010 Allocating your reimbursement. Where to file 1040x 2010 1. Where to file 1040x 2010 Limit on meals and entertainment. Where to file 1040x 2010 2. Where to file 1040x 2010 Limit on miscellaneous itemized deductions. Where to file 1040x 2010 3. Where to file 1040x 2010 Limit on total itemized deductions. Where to file 1040x 2010 Special Rules This chapter explains where and how to report the expenses discussed in this publication. Where to file 1040x 2010 It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Where to file 1040x 2010 It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Where to file 1040x 2010 The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Where to file 1040x 2010 Where To Report This section provides general information on where to report the expenses discussed in this publication. Where to file 1040x 2010 Self-employed. Where to file 1040x 2010   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Where to file 1040x 2010 You do not use Form 2106 or 2106-EZ. Where to file 1040x 2010    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Where to file 1040x 2010 You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Where to file 1040x 2010   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Where to file 1040x 2010 Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Where to file 1040x 2010   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Where to file 1040x 2010 You can only include 50% of your meals and entertainment in that total. Where to file 1040x 2010 If you include car expenses, you must also complete Part III of the form. Where to file 1040x 2010    If you file Schedule F (Form 1040): Report your car expenses on line 10. Where to file 1040x 2010 Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Where to file 1040x 2010 Report all other business expenses discussed in this publication on line 32. Where to file 1040x 2010 You can only include 50% of your meals and entertainment on that line. Where to file 1040x 2010 See your form instructions for more information on how to complete your tax return. Where to file 1040x 2010 Both self-employed and an employee. Where to file 1040x 2010   If you are both self-employed and an employee, you must keep separate records for each business activity. Where to file 1040x 2010 Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Where to file 1040x 2010 Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Where to file 1040x 2010 Employees. Where to file 1040x 2010    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Where to file 1040x 2010 However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Where to file 1040x 2010 You are an employee deducting expenses attributable to your job. Where to file 1040x 2010 You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Where to file 1040x 2010 If you claim car expenses, you use the standard mileage rate. Where to file 1040x 2010   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Where to file 1040x 2010 Gifts. Where to file 1040x 2010   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Where to file 1040x 2010 Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Where to file 1040x 2010 Statutory employees. Where to file 1040x 2010    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Where to file 1040x 2010 Do not complete Form 2106 or 2106-EZ. Where to file 1040x 2010   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Where to file 1040x 2010 If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Where to file 1040x 2010 Reimbursement for personal expenses. Where to file 1040x 2010    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Where to file 1040x 2010 You cannot deduct personal expenses. Where to file 1040x 2010 Income-producing property. Where to file 1040x 2010   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Where to file 1040x 2010   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Where to file 1040x 2010 See Publication 527, Residential Rental Property, for more information on the rental of real estate. Where to file 1040x 2010 If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Where to file 1040x 2010 Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Where to file 1040x 2010 The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Where to file 1040x 2010 You cannot use the standard mileage rate. Where to file 1040x 2010 Value reported on Form W-2. Where to file 1040x 2010   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Where to file 1040x 2010 Your employer must separately state the amount if 100% of the annual lease value was included in your income. Where to file 1040x 2010 If you are unsure of the amount included on your Form W-2, ask your employer. Where to file 1040x 2010 Full value included in your income. Where to file 1040x 2010   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Where to file 1040x 2010 On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Where to file 1040x 2010    To claim your expenses, complete Form 2106, Part II, Sections A and C. Where to file 1040x 2010 Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Where to file 1040x 2010 Complete the rest of the form. Where to file 1040x 2010 Less than full value included in your income. Where to file 1040x 2010   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Where to file 1040x 2010 Do not enter this value on your Form 2106 because it is not deductible. Where to file 1040x 2010   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Where to file 1040x 2010 Examples of costs that you may have are gas, oil, and repairs. Where to file 1040x 2010 Complete Form 2106, Part II, Sections A and C. Where to file 1040x 2010 Enter your actual costs on line 23 of Section C and leave line 25 blank. Where to file 1040x 2010 Complete the rest of the form. Where to file 1040x 2010 Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Where to file 1040x 2010 If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Where to file 1040x 2010 This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Where to file 1040x 2010 It also covers rules for independent contractors. Where to file 1040x 2010 No reimbursement. Where to file 1040x 2010   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Where to file 1040x 2010 In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Where to file 1040x 2010 Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Where to file 1040x 2010 Reimbursement, allowance, or advance. Where to file 1040x 2010   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Where to file 1040x 2010 Arrangements include per diem and car allowances. Where to file 1040x 2010    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Where to file 1040x 2010 (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Where to file 1040x 2010 ) A car allowance is an amount your employer gives you for the business use of your car. Where to file 1040x 2010   Your employer should tell you what method of reimbursement is used and what records you must provide. Where to file 1040x 2010 Employers. Where to file 1040x 2010   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Where to file 1040x 2010 Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Where to file 1040x 2010 Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Where to file 1040x 2010 See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Where to file 1040x 2010 Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Where to file 1040x 2010 You must adequately account to your employer for these expenses within a reasonable period of time. Where to file 1040x 2010 You must return any excess reimbursement or allowance within a reasonable period of time. Where to file 1040x 2010 “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Where to file 1040x 2010 An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Where to file 1040x 2010 Reasonable period of time. Where to file 1040x 2010   The definition of reasonable period of time depends on the facts and circumstances of your situation. Where to file 1040x 2010 However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Where to file 1040x 2010 You receive an advance within 30 days of the time you have an expense. Where to file 1040x 2010 You adequately account for your expenses within 60 days after they were paid or incurred. Where to file 1040x 2010 You return any excess reimbursement within 120 days after the expense was paid or incurred. Where to file 1040x 2010 You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Where to file 1040x 2010 Employee meets accountable plan rules. Where to file 1040x 2010   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Where to file 1040x 2010 If your expenses equal your reimbursements, you do not complete Form 2106. Where to file 1040x 2010 You have no deduction since your expenses and reimbursement are equal. Where to file 1040x 2010    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Where to file 1040x 2010 Accountable plan rules not met. Where to file 1040x 2010   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Where to file 1040x 2010 All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Where to file 1040x 2010 Failure to return excess reimbursements. Where to file 1040x 2010   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Where to file 1040x 2010 See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Where to file 1040x 2010 Reimbursement of nondeductible expenses. Where to file 1040x 2010   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Where to file 1040x 2010 The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Where to file 1040x 2010 Example. Where to file 1040x 2010 Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Where to file 1040x 2010 The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Where to file 1040x 2010 The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Where to file 1040x 2010 If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Where to file 1040x 2010 Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Where to file 1040x 2010 You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Where to file 1040x 2010 (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Where to file 1040x 2010 ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Where to file 1040x 2010 See Per Diem and Car Allowances , later. Where to file 1040x 2010 You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Where to file 1040x 2010 This includes amounts you charged to your employer by credit card or other method. Where to file 1040x 2010 You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Where to file 1040x 2010 You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Where to file 1040x 2010 Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Where to file 1040x 2010 A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Where to file 1040x 2010 Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Where to file 1040x 2010 The allowance is similar in form to and not more than the federal rate (defined later). Where to file 1040x 2010 You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Where to file 1040x 2010 You are not related to your employer (as defined next). Where to file 1040x 2010 If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Where to file 1040x 2010 If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Where to file 1040x 2010 In this case, you must be able to prove your expenses to the IRS. Where to file 1040x 2010 Related to employer. Where to file 1040x 2010   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Where to file 1040x 2010 You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Where to file 1040x 2010 The federal rate. Where to file 1040x 2010   The federal rate can be figured using any one of the following methods. Where to file 1040x 2010 For per diem amounts: The regular federal per diem rate. Where to file 1040x 2010 The standard meal allowance. Where to file 1040x 2010 The high-low rate. Where to file 1040x 2010 For car expenses: The standard mileage rate. Where to file 1040x 2010 A fixed and variable rate (FAVR). Where to file 1040x 2010    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Where to file 1040x 2010 Regular federal per diem rate. Where to file 1040x 2010   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Where to file 1040x 2010 The rates are different for different locations. Where to file 1040x 2010 Your employer should have these rates available. Where to file 1040x 2010 You can also find federal per diem rates at www. Where to file 1040x 2010 gsa. Where to file 1040x 2010 gov/perdiem. Where to file 1040x 2010 The standard meal allowance. Where to file 1040x 2010   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Where to file 1040x 2010 The rate for most small localities in the United States is $46 a day. Where to file 1040x 2010 Most major cities and many other localities qualify for higher rates. Where to file 1040x 2010 You can find this information on the Internet at www. Where to file 1040x 2010 gsa. Where to file 1040x 2010 gov/perdiem. Where to file 1040x 2010   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Where to file 1040x 2010 Provides you with lodging (furnishes it in kind). Where to file 1040x 2010 Reimburses you, based on your receipts, for the actual cost of your lodging. Where to file 1040x 2010 Pays the hotel, motel, etc. Where to file 1040x 2010 , directly for your lodging. Where to file 1040x 2010 Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Where to file 1040x 2010 Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Where to file 1040x 2010 High-low rate. Where to file 1040x 2010   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Where to file 1040x 2010 It eliminates the need to keep a current list of the per diem rates for each city. Where to file 1040x 2010   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Where to file 1040x 2010 All other areas have a per diem amount of $163 (including $52 for M&IE). Where to file 1040x 2010 For more information, see Notice 2012-63, which can be found on the Internet at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/irb/2012-42_IRB/ar12. Where to file 1040x 2010 html. Where to file 1040x 2010    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Where to file 1040x 2010 The rate for all other locations increased to $170 (including $52 for M&IE). Where to file 1040x 2010 Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Where to file 1040x 2010 For more information, see Notice 2013-65, which can be found on the Internet at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/pub/irs-drop/n-13–65. Where to file 1040x 2010 pdf and Revenue Procedure 2011-47 at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/irb/2011-42_IRB/ar12. Where to file 1040x 2010 html. Where to file 1040x 2010 Prorating the standard meal allowance on partial days of travel. Where to file 1040x 2010   The standard meal allowance is for a full 24-hour day of travel. Where to file 1040x 2010 If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Where to file 1040x 2010 This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Where to file 1040x 2010   You can use either of the following methods to figure the federal M&IE for that day. Where to file 1040x 2010 Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Where to file 1040x 2010 For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Where to file 1040x 2010 Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Where to file 1040x 2010 For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Where to file 1040x 2010 m. Where to file 1040x 2010 of one day to 5 p. Where to file 1040x 2010 m. Where to file 1040x 2010 of the next day as being no more than the federal rate. Where to file 1040x 2010 This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Where to file 1040x 2010 The standard mileage rate. Where to file 1040x 2010   This is a set rate per mile that you can use to compute your deductible car expenses. Where to file 1040x 2010 For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Where to file 1040x 2010 Fixed and variable rate (FAVR). Where to file 1040x 2010   This is an allowance your employer may use to reimburse your car expenses. Where to file 1040x 2010 Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Where to file 1040x 2010 ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Where to file 1040x 2010 ). Where to file 1040x 2010 If your employer chooses to use this method, your employer will request the necessary records from you. Where to file 1040x 2010 Reporting your expenses with a per diem or car allowance. Where to file 1040x 2010   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Where to file 1040x 2010 The federal rate. Where to file 1040x 2010 Whether the allowance or your actual expenses were more than the federal rate. Where to file 1040x 2010 The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Where to file 1040x 2010 Allowance less than or equal to the federal rate. Where to file 1040x 2010   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Where to file 1040x 2010 You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Where to file 1040x 2010   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Where to file 1040x 2010 If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Where to file 1040x 2010 If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Where to file 1040x 2010 Example 1. Where to file 1040x 2010 In April, Jeremy takes a 2-day business trip to Denver. Where to file 1040x 2010 The federal rate for Denver is $215 per day. Where to file 1040x 2010 As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Where to file 1040x 2010 His employer reimburses him $215 a day ($430 total) for living expenses. Where to file 1040x 2010 Jeremy's living expenses in Denver are not more than $215 a day. Where to file 1040x 2010 Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Where to file 1040x 2010 Example 2. Where to file 1040x 2010 In June, Matt takes a 2-day business trip to Boston. Where to file 1040x 2010 Matt's employer uses the high-low method to reimburse employees. Where to file 1040x 2010 Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Where to file 1040x 2010 Matt's actual expenses totaled $700. Where to file 1040x 2010 Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Where to file 1040x 2010 Matt completes Form 2106 (showing all of his expenses and reimbursements). Where to file 1040x 2010 He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Where to file 1040x 2010 Example 3. Where to file 1040x 2010 Nicole drives 10,000 miles in 2013 for business. Where to file 1040x 2010 Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Where to file 1040x 2010 Her employer pays her a mileage allowance of 40 cents a mile. Where to file 1040x 2010 Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Where to file 1040x 2010 Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Where to file 1040x 2010 Allowance more than the federal rate. Where to file 1040x 2010   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Where to file 1040x 2010 This amount is not taxable. Where to file 1040x 2010 However, the excess allowance will be included in box 1 of your Form W-2. Where to file 1040x 2010 You must report this part of your allowance as if it were wage income. Where to file 1040x 2010   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Where to file 1040x 2010   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Where to file 1040x 2010 You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Where to file 1040x 2010 You should be able to prove these amounts to the IRS. Where to file 1040x 2010 Example 1. Where to file 1040x 2010 Laura lives and works in Austin. Where to file 1040x 2010 In July her employer sent her to Albuquerque for 4 days on business. Where to file 1040x 2010 Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Where to file 1040x 2010 Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Where to file 1040x 2010 Table 6-1. Where to file 1040x 2010 Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Where to file 1040x 2010 No amount. Where to file 1040x 2010 No amount. Where to file 1040x 2010 Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Where to file 1040x 2010 The excess amount as wages in box 1. Where to file 1040x 2010 No amount. Where to file 1040x 2010 Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Where to file 1040x 2010 No amount. Where to file 1040x 2010 All expenses and reimbursements only if excess expenses are claimed. Where to file 1040x 2010 Otherwise, form is not filed. Where to file 1040x 2010 Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Where to file 1040x 2010 The excess amount as wages in box 1. Where to file 1040x 2010 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Where to file 1040x 2010 No amount. Where to file 1040x 2010 Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Where to file 1040x 2010 The excess amount as wages in box 1. Where to file 1040x 2010 The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Where to file 1040x 2010 All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Where to file 1040x 2010 Otherwise, form is not filed. Where to file 1040x 2010 A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Where to file 1040x 2010 The entire amount as wages in box 1. Where to file 1040x 2010 All expenses. Where to file 1040x 2010 No reimbursement plan: The entire amount as wages in box 1. Where to file 1040x 2010 All expenses. Where to file 1040x 2010 * You may be able to use Form 2106-EZ. Where to file 1040x 2010 See Completing Forms 2106 and 2106-EZ . Where to file 1040x 2010 Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Where to file 1040x 2010 Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Where to file 1040x 2010 This amount is not included in Laura's income. Where to file 1040x 2010 Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Where to file 1040x 2010 Example 2. Where to file 1040x 2010 Joe also lives in Austin and works for the same employer as Laura. Where to file 1040x 2010 In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Where to file 1040x 2010 The employer reimbursed Joe $75 a day for his meals and incidental expenses. Where to file 1040x 2010 The federal rate for San Diego is $71 a day. Where to file 1040x 2010 Joe can prove that his actual meal expenses totaled $380. Where to file 1040x 2010 His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Where to file 1040x 2010 However, he does account for the time, place, and business purpose of the trip. Where to file 1040x 2010 This is Joe's only business trip this year. Where to file 1040x 2010 Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Where to file 1040x 2010 The employer includes the $16 as income on Joe's Form W-2 in box 1. Where to file 1040x 2010 The employer also enters $284 in box 12 of Joe's Form W-2. Where to file 1040x 2010 Joe completes Form 2106 to figure his deductible expenses. Where to file 1040x 2010 He enters the total of his actual expenses for the year ($380) on Form 2106. Where to file 1040x 2010 He also enters the reimbursements that were not included in his income ($284). Where to file 1040x 2010 His total deductible expense, before the 50% limit, is $96. Where to file 1040x 2010 After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Where to file 1040x 2010 Example 3. Where to file 1040x 2010 Debbie drives 10,000 miles in 2013 for business. Where to file 1040x 2010 Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Where to file 1040x 2010 Her total reimbursement is $6,000. Where to file 1040x 2010 Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Where to file 1040x 2010 That amount is not taxable. Where to file 1040x 2010 Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Where to file 1040x 2010 This is the reimbursement that is more than the standard mileage rate. Where to file 1040x 2010 If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Where to file 1040x 2010 If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Where to file 1040x 2010 She would then claim the excess expenses as an itemized deduction. Where to file 1040x 2010 Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Where to file 1040x 2010 Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Where to file 1040x 2010 For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Where to file 1040x 2010 “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Where to file 1040x 2010 Travel advance. Where to file 1040x 2010   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Where to file 1040x 2010 Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Where to file 1040x 2010   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Where to file 1040x 2010 Unproved amounts. Where to file 1040x 2010   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Where to file 1040x 2010 If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Where to file 1040x 2010 Per diem allowance more than federal rate. Where to file 1040x 2010   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Where to file 1040x 2010 However, the difference will be reported as wages on your Form W-2. Where to file 1040x 2010 This excess amount is considered paid under a nonaccountable plan (discussed later). Where to file 1040x 2010 Example. Where to file 1040x 2010 Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Where to file 1040x 2010 The federal per diem for meals and incidental expenses for Phoenix is $71. Where to file 1040x 2010 Your trip lasts only 3 days. Where to file 1040x 2010 Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Where to file 1040x 2010 For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Where to file 1040x 2010 However, the $27 will be reported on your Form W-2 as wages. Where to file 1040x 2010 Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Where to file 1040x 2010 In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Where to file 1040x 2010 See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Where to file 1040x 2010 An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Where to file 1040x 2010 This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Where to file 1040x 2010 If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Where to file 1040x 2010 Reporting your expenses under a nonaccountable plan. Where to file 1040x 2010   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. Where to file 1040x 2010 Your employer will report the total in box 1 of your Form W-2. Where to file 1040x 2010    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Where to file 1040x 2010 Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Where to file 1040x 2010 Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Where to file 1040x 2010 Example 1. Where to file 1040x 2010 Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Where to file 1040x 2010 Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Where to file 1040x 2010 Kim is being reimbursed under a nonaccountable plan. Where to file 1040x 2010 Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Where to file 1040x 2010 If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Where to file 1040x 2010 Example 2. Where to file 1040x 2010 Kevin is paid $2,000 a month by his employer. Where to file 1040x 2010 On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Where to file 1040x 2010 Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Where to file 1040x 2010 No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Where to file 1040x 2010 Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Where to file 1040x 2010 The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Where to file 1040x 2010 You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Where to file 1040x 2010 Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Where to file 1040x 2010 If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Where to file 1040x 2010 You must keep adequate records of these expenses whether or not you account to your client for these expenses. Where to file 1040x 2010 If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Where to file 1040x 2010 See 50% Limit in chapter 2. Where to file 1040x 2010 Adequate accounting. Where to file 1040x 2010   As a self-employed person, you adequately account by reporting your actual expenses. Where to file 1040x 2010 You should follow the recordkeeping rules in chapter 5 . Where to file 1040x 2010 How to report. Where to file 1040x 2010   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Where to file 1040x 2010 Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Where to file 1040x 2010 However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Where to file 1040x 2010 Contractor adequately accounts. Where to file 1040x 2010   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Where to file 1040x 2010 Use your records as proof for a deduction on your tax return. Where to file 1040x 2010 If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Where to file 1040x 2010 If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Where to file 1040x 2010 Contractor does not adequately account. Where to file 1040x 2010    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Where to file 1040x 2010 You are not subject to the 50% limit on entertainment in this case. Where to file 1040x 2010 You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Where to file 1040x 2010 However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Where to file 1040x 2010 How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Where to file 1040x 2010 The Two Substantiation Methods High-low method. Where to file 1040x 2010   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Where to file 1040x 2010 Notice 2012–63, available at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/irb/2012–42_IRB/ar12. Where to file 1040x 2010 html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Where to file 1040x 2010 For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Where to file 1040x 2010   Notice 2013–65, available at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/pub/irs-drop/n-13–65. Where to file 1040x 2010 pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Where to file 1040x 2010 For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Where to file 1040x 2010 Regular federal per diem rate method. Where to file 1040x 2010   Regular federal per diem rates are published by the General Services Administration (GSA). Where to file 1040x 2010 Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Where to file 1040x 2010 The rates listed for FY2013 at www. Where to file 1040x 2010 gsa. Where to file 1040x 2010 gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Where to file 1040x 2010 The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Where to file 1040x 2010 For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Where to file 1040x 2010 Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Where to file 1040x 2010 During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Where to file 1040x 2010 High-low method. Where to file 1040x 2010   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Where to file 1040x 2010 However, you must continue using the high-low method for the rest of the calendar year (through December 31). Where to file 1040x 2010 If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Where to file 1040x 2010   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Where to file 1040x 2010 You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Where to file 1040x 2010 irs. Where to file 1040x 2010 gov/irb. Where to file 1040x 2010 Federal per diem rate method. Where to file 1040x 2010   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Where to file 1040x 2010 Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Where to file 1040x 2010 However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Where to file 1040x 2010   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Where to file 1040x 2010 Go to www. Where to file 1040x 2010 gsa. Where to file 1040x 2010 gov/perdiem. Where to file 1040x 2010 Per diem rates for localities listed for FY2014 may change at any time. Where to file 1040x 2010 To be sure you have the most current rate, check www. Where to file 1040x 2010 gsa. Where to file 1040x 2010 gov/perdiem. Where to file 1040x 2010 Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Where to file 1040x 2010 Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Where to file 1040x 2010 The instructions for the forms have more information on completing them. Where to file 1040x 2010 If you are self-employed, do not file Form 2106 or 2106-EZ. Where to file 1040x 2010 Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Where to file 1040x 2010 See the instructions for the form that you must file. Where to file 1040x 2010 Form 2106-EZ. Where to file 1040x 2010   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Where to file 1040x 2010 You can use this form if you meet all the following conditions. Where to file 1040x 2010 You are an employee deducting ordinary and necessary expenses attributable to your job. Where to file 1040x 2010 You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Where to file 1040x 2010 If you are claiming car expenses, you are using the standard mileage rate. Where to file 1040x 2010 Car expenses. Where to file 1040x 2010   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Where to file 1040x 2010 These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Where to file 1040x 2010 Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Where to file 1040x 2010 Information on use of cars. Where to file 1040x 2010   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Where to file 1040x 2010 The information relates to the following items. Where to file 1040x 2010 Date placed in service. Where to file 1040x 2010 Mileage (total, business, commuting, and other personal mileage). Where to file 1040x 2010 Percentage of business use. Where to file 1040x 2010 After-work use. Where to file 1040x 2010 Use of other vehicles. Where to file 1040x 2010 Whether you have evidence to support the deduction. Where to file 1040x 2010 Whether or not the evidence is written. Where to file 1040x 2010 Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Where to file 1040x 2010 Standard mileage rate. Where to file 1040x 2010   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Where to file 1040x 2010 The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Where to file 1040x 2010 In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Where to file 1040x 2010 If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Where to file 1040x 2010 See Standard Mileage Rate in chapter 4 for information on using this rate. Where to file 1040x 2010 Actual expenses. Where to file 1040x 2010   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Where to file 1040x 2010 You must complete Form 2106, Part II, Section C. Where to file 1040x 2010 In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Where to file 1040x 2010   If you are still using a car that is fully depreciated, continue to complete Section C. Where to file 1040x 2010 Since you have no depreciation deduction, enter zero on line 28. Where to file 1040x 2010 In this case, do not complete Section D. Where to file 1040x 2010 Car rentals. Where to file 1040x 2010   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Where to file 1040x 2010 If so, you can show your car expenses and any inclusion amount as follows. Where to file 1040x 2010 Compute the inclusion amount without taking into account your business use percentage for the tax year. Where to file 1040x 2010 Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Where to file 1040x 2010 Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Where to file 1040x 2010 The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Where to file 1040x 2010 Transportation expenses. Where to file 1040x 2010   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Where to file 1040x 2010 Also include on this line business expenses you have for parking fees and tolls. Where to file 1040x 2010 Do not include expenses of operating your car or expenses of commuting between your home and work. Where to file 1040x 2010 Employee business expenses other than meals and entertainment. Where to file 1040x 2010   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Where to file 1040x 2010 Do not include expenses for meals and entertainment on those lines. Where to file 1040x 2010 Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Where to file 1040x 2010    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Where to file 1040x 2010 Claim these amounts directly on Schedule A (Form 1040), line 21. Where to file 1040x 2010 List the type and amount of each expense on the dotted lines and include the total on line 21. Where to file 1040x 2010 Meal and entertainment expenses. Where to file 1040x 2010   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Where to file 1040x 2010 Include meals while away from your tax home overnight and other business meals and entertainment. Where to file 1040x 2010 Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Where to file 1040x 2010   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Where to file 1040x 2010 Enter the result on line 5. Where to file 1040x 2010 Hours of service limits. Where to file 1040x 2010   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Where to file 1040x 2010 Reimbursements. Where to file 1040x 2010   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Where to file 1040x 2010 This includes any amount reported under code L in box 12 of Form W-2. Where to file 1040x 2010 Allocating your reimbursement. Where to file 1040x 2010   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Where to file 1040x 2010 This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Where to file 1040x 2010 You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Where to file 1040x 2010 Example. Where to file 1040x 2010 Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Where to file 1040x 2010 The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Where to file 1040x 2010 The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Where to file 1040x 2010 Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Where to file 1040x 2010 Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Where to file 1040x 2010 To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Where to file 1040x 2010 His completed worksheet follows. Where to file 1040x 2010 Reimbursement Allocation Worksheet (Keep for your records)   1. Where to file 1040x 2010 Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Where to file 1040x 2010 Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Where to file 1040x 2010 Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Where to file 1040x 2010 Divide line 3 by line 2. Where to file 1040x 2010 Enter the result as a decimal (rounded to at least three places) . Where to file 1040x 2010 529   5. Where to file 1040x 2010 Multiply line 1 by line 4. Where to file 1040x 2010 Enter the result here and in Column B, line 7 3,703   6. Where to file 1040x 2010 Subtract line 5 from line 1. Where to file 1040x 2010 Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Where to file 1040x 2010 After you complete the form. Where to file 1040x 2010   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Where to file 1040x 2010 For most taxpayers, this is line 21 of Schedule A (Form 1040). Where to file 1040x 2010 However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Where to file 1040x 2010 Limits on employee business expenses. Where to file 1040x 2010   Your employee business expenses may be subject to either of the limits described next. Where to file 1040x 2010 They are figured in the following order on the specified form. Where to file 1040x 2010 1. Where to file 1040x 2010 Limit on meals and entertainment. Where to file 1040x 2010   Certain meal and entertainment expenses are subject to a 50% limit. Where to file 1040x 2010 If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Where to file 1040x 2010 (See 50% Limit in chapter 2. Where to file 1040x 2010 ) 2. Where to file 1040x 2010 Limit on miscellaneous itemized deductions. Where to file 1040x 2010   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Where to file 1040x 2010 Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Where to file 1040x 2010 This limit is figured on line 26 of Schedule A (Form 1040). Where to file 1040x 2010 3. Where to file 1040x 2010 Limit on total itemized deductions. Where to file 1040x 2010   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Where to file 1040x 2010 See your form instructions for information on how to figure this limit. Where to file 1040x 2010 Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Where to file 1040x 2010 Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Where to file 1040x 2010 The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Where to file 1040x 2010 See Per Diem and Car Allowances , earlier, for more information. Where to file 1040x 2010 Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Where to file 1040x 2010 Member of a reserve component. Where to file 1040x 2010   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Where to file 1040x 2010 How to report. Where to file 1040x 2010   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Where to file 1040x 2010 Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Where to file 1040x 2010 Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Where to file 1040x 2010   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Where to file 1040x 2010 Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Where to file 1040x 2010 Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Where to file 1040x 2010 Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Where to file 1040x 2010 They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Where to file 1040x 2010 If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Where to file 1040x 2010 Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Where to file 1040x 2010 To qualify, you must meet all of the following requirements. Where to file 1040x 2010 During the tax year, you perform services in the performing arts as an employee for at least two employers. Where to file 1040x 2010 You receive at least $200 each from any two of these employers. Where to file 1040x 2010 Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Where to file 1040x 2010 Your adjusted gross income is not more than $16,000 before deducting these business expenses. Where to file 1040x 2010 Special rules for married persons. Where to file 1040x 2010   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Where to file 1040x 2010 If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Where to file 1040x 2010 However, requirement (4) applies to your and your spouse's combined adjusted gross income. Where to file 1040x 2010 Where to report. Where to file 1040x 2010   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Where to file 1040x 2010 Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Where to file 1040x 2010   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Where to file 1040x 2010 Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Where to file 1040x 2010 Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Where to file 1040x 2010 After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Where to file 1040x 2010 Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Where to file 1040x 2010 Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Where to file 1040x 2010 You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Where to file 1040x 2010 You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Where to file 1040x 2010 Example 1. Where to file 1040x 2010 You are blind. Where to file 1040x 2010 You must use a reader to do your work. Where to file 1040x 2010 You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Where to file 1040x 2010 The reader's services are only for your work. Where to file 1040x 2010 You can deduct your expenses for the reader as business expenses. Where to file 1040x 2010 Example 2. Where to file 1040x 2010 You are deaf. Where to file 1040x 2010 You must use a sign language interpreter during meetings while you are at work. Where to file 1040x 2010 The interpreter's services are used only for your work. Where to file 1040x 2010 You can deduct your expenses for the interpreter as business expenses. Where to file 1040x 2010 Prev  Up  Next   Home   More Online Publications
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The Where To File 1040x 2010

Where to file 1040x 2010 Publication 970 - Additional Material Table of Contents AppendicesAppendix A. Where to file 1040x 2010 Illustrated Example of Education Credits Glossary Appendices The following appendices are provided to help you claim the education benefits that will give you the lowest tax. Where to file 1040x 2010 Appendix A—An illustrated example of education credits, including a filled-in Form 8863 showing how to claim both the American opportunity credit and lifetime learning credit for 2013. Where to file 1040x 2010 Appendix B—A chart summarizing some of the major differences between the education tax benefits discussed in this publication. Where to file 1040x 2010 It is intended only as a guide. Where to file 1040x 2010 Look in this publication for more complete information. Where to file 1040x 2010   Appendix A. Where to file 1040x 2010 Illustrated Example of Education Credits Dave and Valerie Jones are married and on their 2013 joint tax return they claim exemptions for their two dependent children, Sean (age 21, social security number: 000-00-0001) and Carey (age 18, social security number: 000–00–0002). Where to file 1040x 2010 Their modified adjusted gross income (MAGI) on Form 1040, line 38 is $110,000. Where to file 1040x 2010 Because Dave and Valerie have unusually high itemized deductions, their taxable income is $10,000 and their tax before credits is $1,000. Where to file 1040x 2010 Sean enrolled as a full-time graduate student in August 2013 at California State College. Where to file 1040x 2010 He graduated with his bachelor's degree in 2012 and did not attend school from January 2013 through July 2013. Where to file 1040x 2010 His parents claimed the Hope Scholarship Credit for Sean for 2008 and the American opportunity credit for Sean for 2010, 2011, and 2012. Where to file 1040x 2010 Carey enrolled full time as a freshman at the same college in January 2013 to begin working on her bachelor's degree. Where to file 1040x 2010 In 2013, Dave and Valerie paid $7,000 in tuition for Sean and $8,500 in tuition for Carey. Where to file 1040x 2010 California State College issued two Forms 1098-T, one for Sean and one for Carey, and sent them to the Joneses' residence. Where to file 1040x 2010 California State College reports amounts billed in 2013 instead of amounts paid during 2013. Where to file 1040x 2010 In completing Form 8863, the Joneses use the amounts they paid. Where to file 1040x 2010 Neither Sean nor Carey has been convicted of a felony for possession or distribution of a controlled substance before the end of 2013. Where to file 1040x 2010 Dave and Valerie figure their education credits by completing Form 8863. Where to file 1040x 2010 They begin Form 8863 on page 2 before completing Part I on page 1. Where to file 1040x 2010 Because the Joneses have two eligible students, they will complete page 2 twice, once for their son, Sean, and once for their daughter, Carey. Where to file 1040x 2010 The Joneses decide to complete Part III for Carey first, as shown later. Where to file 1040x 2010 They carry over the amount of $2,500 entered on Part III, line 30, to Part I, line 1. Where to file 1040x 2010 The Joneses complete a separate Part III for their son Sean. Where to file 1040x 2010 They check the “Yes” box on line 23, determine that Sean is not eligible for the American opportunity credit, and go to line 31 as instructed. Where to file 1040x 2010 They figure their line 31 adjusted qualified education expenses for Sean to be $7,000. Where to file 1040x 2010 Once they have completed Part III for each student, they figure their credits. Where to file 1040x 2010 The Joneses figure their refundable American opportunity credit of $1,000 by completing Form 8863, Part I, lines 1 through 8. Where to file 1040x 2010 They enter the amount from line 8, $1,000, on line 66 of their Form 1040. Where to file 1040x 2010 The Joneses enter $7,000 on Part II, line 10, of Form 8863 and figure their tentative lifetime learning credit for 2013 to be $1,400 (line 12). Where to file 1040x 2010 They cannot claim the full amount because their MAGI of $110,000 is greater than $107,000. Where to file 1040x 2010 They enter the reduced amount of $1,190 (figured on Part II, line 18) on the Credit Limit Worksheet, line 1. Where to file 1040x 2010 The $1,190 is added to their nonrefundable American opportunity credit ($1,500 on line 2 of the Credit Limit Worksheet) for a total nonrefundable credit of $2,690. Where to file 1040x 2010 The Joneses enter $1,000 on line 7 of the Credit Limit Worksheet, which is the smaller of their tax from line 46 of their Form 1040 (which is $1,000) or the $2,690 on line 3 of the Credit Limit Worksheet. Where to file 1040x 2010 They enter $1,000 on line 19, Part II of Form 8863 and on line 49 of Form 1040. Where to file 1040x 2010 This image is too large to be displayed in the current screen. Where to file 1040x 2010 Please click the link to view the image. Where to file 1040x 2010 Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Where to file 1040x 2010 Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 8,500 2. Where to file 1040x 2010 Less adjustments:     a. Where to file 1040x 2010 Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Where to file 1040x 2010 Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Where to file 1040x 2010 Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Where to file 1040x 2010 Total adjustments (add lines 2a, 2b, and 2c) 0 4. Where to file 1040x 2010 Adjusted qualified education expenses. Where to file 1040x 2010 Subtract line 3 from line 1. Where to file 1040x 2010 If zero or less, enter -0- 8,500 This image is too large to be displayed in the current screen. Where to file 1040x 2010 Please click the link to view the image. Where to file 1040x 2010 Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Where to file 1040x 2010 Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 7,000 2. Where to file 1040x 2010 Less adjustments:     a. Where to file 1040x 2010 Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Where to file 1040x 2010 Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Where to file 1040x 2010 Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Where to file 1040x 2010 Total adjustments (add lines 2a, 2b, and 2c) 0 4. Where to file 1040x 2010 Adjusted qualified education expenses. Where to file 1040x 2010 Subtract line 3 from line 1. Where to file 1040x 2010 If zero or less, enter -0- 7,000 Credit Limit Worksheet (Form 8863 instructions) Nonrefundable Credit Worksheet 1. Where to file 1040x 2010 Enter the amount from Form 8863, line 18 1. Where to file 1040x 2010 1,190 2. Where to file 1040x 2010 Enter the amount from Form 8863, line 9 2. Where to file 1040x 2010 1,500 3. Where to file 1040x 2010 Add lines 1 and 2 3. Where to file 1040x 2010 2,690 4. Where to file 1040x 2010 Enter the amount from: Form 1040, line 46; or Form 1040A, line 28 4. Where to file 1040x 2010 1,000 5. Where to file 1040x 2010 Enter the amount from either: Form 1040, lines 47 and 48, and the amount from Schedule R included on Form 1040, line 53; or Form 1040A, lines 29 and 30 5. Where to file 1040x 2010 0 6. Where to file 1040x 2010 Subtract line 5 from line 4 6. Where to file 1040x 2010 1,000 7. Where to file 1040x 2010   Enter the smaller of line 3 or line 6 here and on Form 8863, line 19 7. Where to file 1040x 2010 1,000 This image is too large to be displayed in the current screen. Where to file 1040x 2010 Please click the link to view the image. Where to file 1040x 2010 Form 8863 for Dave and Valerie Jones This image is too large to be displayed in the current screen. Where to file 1040x 2010 Please click the link to view the image. Where to file 1040x 2010 Carey Jones page 2 This image is too large to be displayed in the current screen. Where to file 1040x 2010 Please click the link to view the image. Where to file 1040x 2010 Filled-in Form 8863 Jones page 2 Appendix B. Where to file 1040x 2010 Highlights of Education Tax Benefits for Tax Year 2013 This chart highlights some differences among the benefits discussed in this publication. Where to file 1040x 2010 See the text for definitions and details. Where to file 1040x 2010 Do not rely on this chart alone. Where to file 1040x 2010    Caution:You generally cannot claim more than one benefit for the same education expense. Where to file 1040x 2010   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What is your  benefit? Amounts received may not be taxable   Credits can reduce the amount of tax you have to pay. Where to file 1040x 2010    40% of the credit may be refundable (limited to $1,000 per student). Where to file 1040x 2010 Credits can reduce amount of tax you must pay Can deduct interest paid Can deduct expenses Earnings not  taxed Earnings not taxed No 10%  additional tax on early distribution Interest not taxed Employer benefits not taxed Can deduct expenses What is the annual limit? None $2,500 credit per student $2,000 credit per tax return     $2,500 deduction $4,000 deduction $2,000 contribution per beneficiary None Amount of qualified  education expenses Amount of qualified  education expenses $5,250 exclusion Amount of qualifying work-related education expenses What expenses  qualify besides  tuition and required enrollment fees? Course-related expenses such as fees, books, supplies, and equipment Course-related books, supplies, and equipment Amounts paid for required books, etc. Where to file 1040x 2010 , that must be paid to the educational institution, etc. Where to file 1040x 2010 , are required fees Books Supplies Equipment  Room & board  Transportation  Other necessary expenses  None Books Supplies Equipment  Expenses for special needs services  Payments to QTP  Higher education: Room & board if  at least half-time  student  Elem/sec (K–12) education: Tutoring Room & board Uniforms Transportation Computer  access Supplementary expenses Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Payments to Coverdell ESA  Payments to QTP Books Supplies Equipment Transportation  Travel  Other necessary expenses   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What education qualifies? Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate  Courses to acquire or improve job skills    Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Required by employer or law to keep present job, salary, status  Maintain or improve job skills What are some of the other  conditions that  apply? Must be in degree or vocational program  Payment of tuition and required fees must be allowed under the grant Can be claimed for only 4 tax years (which includes years Hope Scholarship Credit claimed)  Must be enrolled at least half-time in degree program  No felony drug conviction(s)  Must not have completed first 4 years of postsecondary education before end of preceding tax year. Where to file 1040x 2010   No other conditions Must have been at least half-time  student in degree program Cannot claim both deduction & education credit for same student in same year Assets must be distributed at age 30 unless special  needs beneficiary No other conditions No other conditions Applies only to qualified series  EE bonds issued after 1989 or series I bonds No other conditions Cannot be to  meet minimum educational requirements of present trade/business  Cannot qualify  you for new trade/business   In what income  range do benefits  phase out? No phaseout $80,000 – $90,000  $160,000 – $180,000 for joint returns $53,000 – $63,000  $107,000 – $127,000 for joint returns $60,000 – $75,000  $125,000 –  $155,000 for  joint returns  $60,000 – $80,000  $130,000 –  $160,000 for  joint returns  $95,000 – $110,000  $190,000 – $220,000 for  joint returns No phaseout No phaseout   No phaseout No phaseout † Any nontaxable distribution is limited to the amount that does not exceed qualified education expenses. Where to file 1040x 2010 Glossary The education benefits included in this publication were enacted over many years, leading to a number of common terms being defined differently from one benefit to the next. Where to file 1040x 2010 For example, an eligible educational institution means one thing when determining if earnings from a Coverdell education savings account are not taxable and something else when determining if a scholarship or fellowship is not taxable. Where to file 1040x 2010 For each term listed below that has more than one definition, the definition for each education benefit is listed. Where to file 1040x 2010 Academic period:   A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Where to file 1040x 2010 If an educational institution uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Where to file 1040x 2010 Adjusted qualified education expenses (AQEE):    Qualified education expenses (defined later) reduced by any tax-free educational assistance, such as a tax-free scholarship or employer-provided educational assistance. Where to file 1040x 2010 They must also be reduced by any qualified education expenses deducted elsewhere on your return, used to determine an education credit or other benefit, or used to determine a tax-free distribution. Where to file 1040x 2010 For information on a specific benefit, see the appropriate chapter in this publication. Where to file 1040x 2010 Candidate for a degree:   A student who meets either of the following requirements. Where to file 1040x 2010 Attends a primary or secondary school or pursues a degree at a college or university, or Attends an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Where to file 1040x 2010 Designated beneficiary:   The individual named in the document creating the account/plan who is to receive the benefit of the funds in the account/plan. Where to file 1040x 2010 Eligible educational institution:    American opportunity credit. Where to file 1040x 2010 Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Where to file 1040x 2010 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Where to file 1040x 2010 Coverdell education savings account (ESA). Where to file 1040x 2010 Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Where to file 1040x 2010 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Where to file 1040x 2010 Also included is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Where to file 1040x 2010 Education savings bond program. Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 IRA, early distributions from. Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Lifetime learning credit. Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Qualified tuition program (QTP). Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Scholarships and fellowships. Where to file 1040x 2010 An institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Where to file 1040x 2010 Student loan, cancellation of. Where to file 1040x 2010 Same as Scholarships and fellowships in this category. Where to file 1040x 2010 Student loan interest deduction. Where to file 1040x 2010 Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Where to file 1040x 2010 It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Where to file 1040x 2010 Also included is an institution that conducts an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Where to file 1040x 2010 Tuition and fees deduction. Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Eligible student:    American opportunity credit. Where to file 1040x 2010 A student who meets all of the following requirements for the tax year for which the credit is being determined. Where to file 1040x 2010 Did not have expenses that were used to figure an American opportunity or Hope Scholarship Credit in any 4 earlier tax years. Where to file 1040x 2010 Had not completed the first 4 years of postsecondary education (generally the freshman through senior years). Where to file 1040x 2010 For at least one academic period beginning in the tax year, was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Where to file 1040x 2010 Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Where to file 1040x 2010 Lifetime learning credit. Where to file 1040x 2010 A student who is enrolled in one or more courses at an eligible educational institution. Where to file 1040x 2010 Student loan interest deduction. Where to file 1040x 2010 A student who was enrolled at least half-time in a program leading to a postsecondary degree, certificate, or other recognized educational credential at an eligible educational institution. Where to file 1040x 2010 Tuition and fees deduction. Where to file 1040x 2010 A student who is enrolled in one or more courses at an eligible educational institution. Where to file 1040x 2010 Half-time student:   A student who 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. Where to file 1040x 2010 Modified adjusted gross income (MAGI):    American opportunity credit. Where to file 1040x 2010 Adjusted gross income (AGI) as figured on the federal income tax return, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Where to file 1040x 2010 Coverdell education savings account (ESA). Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Education savings bond program. Where to file 1040x 2010 Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. Where to file 1040x 2010 Lifetime learning credit. Where to file 1040x 2010 Same as American opportunity credit in this category. Where to file 1040x 2010 Student loan interest deduction. Where to file 1040x 2010 Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any student loan interest deduction, tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Where to file 1040x 2010 Tuition and fees deduction. Where to file 1040x 2010 Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Where to file 1040x 2010 Phaseout:   The amount of credit or deduction allowed is reduced when modified adjusted gross income (MAGI) is greater than a specified amount of income. Where to file 1040x 2010 Qualified education expenses:   See pertinent chapter for specific items. Where to file 1040x 2010    American opportunity credit. Where to file 1040x 2010 Tuition and certain related expenses (including student activity fees) required for enrollment or attendance at an eligible educational institution. Where to file 1040x 2010 Books, supplies, and equipment needed for a course of study are included even if not purchased from the educational institution. Where to file 1040x 2010 Does not include expenses for room and board. Where to file 1040x 2010 Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program. Where to file 1040x 2010 Coverdell education savings account (ESA). Where to file 1040x 2010 Expenses related to or required for enrollment or attendance of the designated beneficiary at an eligible elementary, secondary, or postsecondary school. Where to file 1040x 2010 Many specialized expenses included for K–12. Where to file 1040x 2010 Also includes expenses for special needs services and contribution to qualified tuition program (QTP). Where to file 1040x 2010 Education savings bond program. Where to file 1040x 2010 Tuition and fees required to enroll at or attend an eligible educational institution. Where to file 1040x 2010 Also includes contributions to a qualified tuition program (QTP) or Coverdell education savings account (ESA). Where to file 1040x 2010 Does not include expenses for room and board. Where to file 1040x 2010 Does not include expenses for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Where to file 1040x 2010 IRA, early distributions from. Where to file 1040x 2010 Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Where to file 1040x 2010 Also includes expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. Where to file 1040x 2010 Lifetime learning credit. Where to file 1040x 2010 Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Where to file 1040x 2010 Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Where to file 1040x 2010 Does not include expenses for room and board. Where to file 1040x 2010 Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program, unless taken by the student to acquire or improve job skills. Where to file 1040x 2010 Qualified tuition program (QTP). Where to file 1040x 2010 Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Where to file 1040x 2010 Includes expenses for special needs services and computer access. Where to file 1040x 2010 Scholarships and fellowships. Where to file 1040x 2010 Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Where to file 1040x 2010 Course-related items must be required of all students in the course of instruction. Where to file 1040x 2010 Student loan interest deduction. Where to file 1040x 2010 Total costs of attending an eligible educational institution, including graduate school (however, limitations may apply to the cost of room and board allowed). Where to file 1040x 2010 Tuition and fees deduction. Where to file 1040x 2010 Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Where to file 1040x 2010 Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Where to file 1040x 2010 Recapture:   To include as income on your current year's return an amount allowed as a deduction in a prior year. Where to file 1040x 2010 To include as tax on your current year's return an amount allowed as a credit in a prior year. Where to file 1040x 2010 Rollover:   A tax-free distribution to you of cash or other assets from a tax-favored plan that you contribute to another tax-favored plan. Where to file 1040x 2010 Transfer:   A movement of funds in a tax-favored plan from one trustee directly to another, either at your request or at the trustee's request. Where to file 1040x 2010 Prev  Up  Next   Home   More Online Publications