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Amended Irs Return

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Amended Irs Return

Amended irs return 1. Amended irs return   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. Amended irs return Business associate. Amended irs return Bona fide business purpose. Amended irs return Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. Amended irs return This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. Amended irs return It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. Amended irs return Travel expenses defined. Amended irs return   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Amended irs return   An ordinary expense is one that is common and accepted in your trade or business. Amended irs return A necessary expense is one that is helpful and appropriate for your business. Amended irs return An expense does not have to be required to be considered necessary. Amended irs return   You will find examples of deductible travel expenses in Table 1-1 , later. Amended irs return Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. Amended irs return This rest requirement is not satisfied by merely napping in your car. Amended irs return You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Amended irs return Example 1. Amended irs return You are a railroad conductor. Amended irs return You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Amended irs return During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. Amended irs return You are considered to be away from home. Amended irs return Example 2. Amended irs return You are a truck driver. Amended irs return You leave your terminal and return to it later the same day. Amended irs return You get an hour off at your turnaround point to eat. Amended irs return Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. Amended irs return Members of the Armed Forces. Amended irs return   If you are a member of the U. Amended irs return S. Amended irs return Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Amended irs return You cannot deduct your expenses for meals and lodging. Amended irs return You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Amended irs return If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. Amended irs return   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. Amended irs return Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Amended irs return Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Amended irs return It includes the entire city or general area in which your business or work is located. Amended irs return If you have more than one regular place of business, your tax home is your main place of business. Amended irs return See Main place of business or work , later. Amended irs return If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. Amended irs return See No main place of business or work , later. Amended irs return If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. Amended irs return As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Amended irs return Main place of business or work. Amended irs return   If you have more than one place of work, consider the following when determining which one is your main place of business or work. Amended irs return The total time you ordinarily spend in each place. Amended irs return The level of your business activity in each place. Amended irs return Whether your income from each place is significant or insignificant. Amended irs return Example. Amended irs return You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Amended irs return You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Amended irs return Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Amended irs return No main place of business or work. Amended irs return   You may have a tax home even if you do not have a regular or main place of work. Amended irs return Your tax home may be the home where you regularly live. Amended irs return Factors used to determine tax home. Amended irs return   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. Amended irs return You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. Amended irs return You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Amended irs return You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. Amended irs return   If you satisfy all three factors, your tax home is the home where you regularly live. Amended irs return If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Amended irs return If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Amended irs return Example 1. Amended irs return You are single and live in Boston in an apartment you rent. Amended irs return You have worked for your employer in Boston for a number of years. Amended irs return Your employer enrolls you in a 12-month executive training program. Amended irs return You do not expect to return to work in Boston after you complete your training. Amended irs return During your training, you do not do any work in Boston. Amended irs return Instead, you receive classroom and on-the-job training throughout the United States. Amended irs return You keep your apartment in Boston and return to it frequently. Amended irs return You use your apartment to conduct your personal business. Amended irs return You also keep up your community contacts in Boston. Amended irs return When you complete your training, you are transferred to Los Angeles. Amended irs return You do not satisfy factor (1) because you did not work in Boston. Amended irs return You satisfy factor (2) because you had duplicate living expenses. Amended irs return You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Amended irs return Therefore, you have a tax home in Boston. Amended irs return Example 2. Amended irs return You are an outside salesperson with a sales territory covering several states. Amended irs return Your employer's main office is in Newark, but you do not conduct any business there. Amended irs return Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. Amended irs return You have a room in your married sister's house in Dayton. Amended irs return You stay there for one or two weekends a year, but you do no work in the area. Amended irs return You do not pay your sister for the use of the room. Amended irs return You do not satisfy any of the three factors listed earlier. Amended irs return You are an itinerant and have no tax home. Amended irs return Tax Home Different From Family Home If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. Amended irs return You also cannot deduct the cost of meals and lodging while at your tax home. Amended irs return See Example 1 , later. Amended irs return If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Amended irs return See Example 2 , later. Amended irs return Example 1. Amended irs return You are a truck driver and you and your family live in Tucson. Amended irs return You are employed by a trucking firm that has its terminal in Phoenix. Amended irs return At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Amended irs return You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Amended irs return This is because Phoenix is your tax home. Amended irs return Example 2. Amended irs return Your family home is in Pittsburgh, where you work 12 weeks a year. Amended irs return The rest of the year you work for the same employer in Baltimore. Amended irs return In Baltimore, you eat in restaurants and sleep in a rooming house. Amended irs return Your salary is the same whether you are in Pittsburgh or Baltimore. Amended irs return Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Amended irs return You cannot deduct any expenses you have for meals and lodging there. Amended irs return However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Amended irs return You can deduct the cost of your round trip between Baltimore and Pittsburgh. Amended irs return You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Amended irs return Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Amended irs return It may not be practical to return to your tax home from this other location at the end of each work day. Amended irs return Temporary assignment vs. Amended irs return indefinite assignment. Amended irs return   If your assignment or job away from your main place of work is temporary, your tax home does not change. Amended irs return You are considered to be away from home for the whole period you are away from your main place of work. Amended irs return You can deduct your travel expenses if they otherwise qualify for deduction. Amended irs return Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Amended irs return    However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Amended irs return An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. Amended irs return   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. Amended irs return You may be able to deduct the cost of relocating to your new tax home as a moving expense. Amended irs return See Publication 521 for more information. Amended irs return Exception for federal crime investigations or prosecutions. Amended irs return   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Amended irs return This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility. Amended irs return   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. Amended irs return Determining temporary or indefinite. Amended irs return   You must determine whether your assignment is temporary or indefinite when you start work. Amended irs return If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Amended irs return An assignment or job that is initially temporary may become indefinite due to changed circumstances. Amended irs return A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Amended irs return   The following examples illustrate whether an assignment or job is temporary or indefinite. Amended irs return Example 1. Amended irs return You are a construction worker. Amended irs return You live and regularly work in Los Angeles. Amended irs return You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Amended irs return Your tax home is Los Angeles. Amended irs return Because of a shortage of work, you took a job on a construction project in Fresno. Amended irs return Your job was scheduled to end in 8 months. Amended irs return The job actually lasted 10 months. Amended irs return You realistically expected the job in Fresno to last 8 months. Amended irs return The job actually did last less than 1 year. Amended irs return The job is temporary and your tax home is still in Los Angeles. Amended irs return Example 2. Amended irs return The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. Amended irs return The job actually was completed in 10 months. Amended irs return Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. Amended irs return You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. Amended irs return Example 3. Amended irs return The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. Amended irs return After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). Amended irs return Initially, you realistically expected the job in Fresno to last for only 9 months. Amended irs return However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. Amended irs return You can only deduct your travel expenses for the first 8 months. Amended irs return You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. Amended irs return Going home on days off. Amended irs return   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. Amended irs return You cannot deduct the cost of your meals and lodging there. Amended irs return However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Amended irs return You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Amended irs return   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Amended irs return In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. Amended irs return Probationary work period. Amended irs return   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. Amended irs return You cannot deduct any of your expenses for meals and lodging during the probationary period. Amended irs return What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Amended irs return You can deduct ordinary and necessary expenses you have when you travel away from home on business. Amended irs return The type of expense you can deduct depends on the facts and your circumstances. Amended irs return Table 1-1 summarizes travel expenses you may be able to deduct. Amended irs return You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Amended irs return When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. Amended irs return You can use a log, diary, notebook, or any other written record to keep track of your expenses. Amended irs return The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). Amended irs return Separating costs. Amended irs return   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. Amended irs return You must have a reasonable basis for making this allocation. Amended irs return For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Amended irs return Travel expenses for another individual. Amended irs return    If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. Amended irs return Employee. Amended irs return   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. Amended irs return Business associate. Amended irs return   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. Amended irs return A business associate is someone with whom you could reasonably expect to actively conduct business. Amended irs return A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Amended irs return Bona fide business purpose. Amended irs return   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Amended irs return Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Amended irs return Table 1-1. Amended irs return Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. Amended irs return IF you have expenses for. Amended irs return . Amended irs return . Amended irs return THEN you can deduct the cost of. Amended irs return . Amended irs return . Amended irs return transportation travel by airplane, train, bus, or car between your home and your business destination. Amended irs return If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Amended irs return If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. Amended irs return taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. Amended irs return baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Amended irs return car operating and maintaining your car when traveling away from home on business. Amended irs return You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. Amended irs return If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Amended irs return lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Amended irs return Meals include amounts spent for food, beverages, taxes, and related tips. Amended irs return See Meals for additional rules and limits. Amended irs return cleaning dry cleaning and laundry. Amended irs return telephone business calls while on your business trip. Amended irs return This includes business communication by fax machine or other communication devices. Amended irs return tips tips you pay for any expenses in this chart. Amended irs return other other similar ordinary and necessary expenses related to your business travel. Amended irs return These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. Amended irs return Example. Amended irs return Jerry drives to Chicago on business and takes his wife, Linda, with him. Amended irs return Linda is not Jerry's employee. Amended irs return Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Amended irs return The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Amended irs return Her expenses are not deductible. Amended irs return Jerry pays $199 a day for a double room. Amended irs return A single room costs $149 a day. Amended irs return He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Amended irs return If he uses public transportation, he can deduct only his fare. Amended irs return Meals You can deduct the cost of meals in either of the following situations. Amended irs return It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Amended irs return The meal is business-related entertainment. Amended irs return Business-related entertainment is discussed in chapter 2 . Amended irs return The following discussion deals only with meals that are not business-related entertainment. Amended irs return Lavish or extravagant. Amended irs return   You cannot deduct expenses for meals that are lavish or extravagant. Amended irs return An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Amended irs return Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Amended irs return 50% limit on meals. Amended irs return   You can figure your meals expense using either of the following methods. Amended irs return Actual cost. Amended irs return The standard meal allowance. Amended irs return Both of these methods are explained below. Amended irs return But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Amended irs return   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. Amended irs return If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Amended irs return Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. Amended irs return Actual Cost You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. Amended irs return If you use this method, you must keep records of your actual cost. Amended irs return Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Amended irs return It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. Amended irs return The set amount varies depending on where and when you travel. Amended irs return In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Amended irs return If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Amended irs return See the recordkeeping rules for travel in chapter 5 . Amended irs return Incidental expenses. Amended irs return   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Amended irs return   Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. Amended irs return Incidental-expenses-only method. Amended irs return   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Amended irs return The amount of the deduction is $5 a day. Amended irs return You can use this method only if you did not pay or incur any meal expenses. Amended irs return You cannot use this method on any day that you use the standard meal allowance. Amended irs return This method is subject to the proration rules for partial days. Amended irs return See Travel for days you depart and return , later in this chapter. Amended irs return Note. Amended irs return The incidental-expenses-only method is not subject to the 50% limit discussed below. Amended irs return Federal employees should refer to the Federal Travel Regulations at www. Amended irs return gsa. Amended irs return gov. Amended irs return Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Amended irs return 50% limit may apply. Amended irs return   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. Amended irs return If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. Amended irs return The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. Amended irs return There is no optional standard lodging amount similar to the standard meal allowance. Amended irs return Your allowable lodging expense deduction is your actual cost. Amended irs return Who can use the standard meal allowance. Amended irs return   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. Amended irs return Use of the standard meal allowance for other travel. Amended irs return   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Amended irs return You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Amended irs return You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Amended irs return Amount of standard meal allowance. Amended irs return   The standard meal allowance is the federal M&IE rate. Amended irs return For travel in 2013, the rate for most small localities in the United States is $46 a day. Amended irs return    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Amended irs return    You can find this information (organized by state) on the Internet at www. Amended irs return gsa. Amended irs return gov/perdiem. Amended irs return Enter a zip code or select a city and state for the per diem rates for the current fiscal year. Amended irs return Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. Amended irs return ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. Amended irs return You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. Amended irs return   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. Amended irs return If you work in the transportation industry, however, see Special rate for transportation workers , later. Amended irs return Standard meal allowance for areas outside the continental United States. Amended irs return   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Amended irs return The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Amended irs return S. Amended irs return Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Amended irs return The Department of State establishes per diem rates for all other foreign areas. Amended irs return    You can access per diem rates for non-foreign areas outside the continental United States at: www. Amended irs return defensetravel. Amended irs return dod. Amended irs return mil/site/perdiemCalc. Amended irs return cfm. Amended irs return You can access all other foreign per diem rates at: www. Amended irs return state. Amended irs return gov/travel/. Amended irs return Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. Amended irs return Special rate for transportation workers. Amended irs return   You can use a special standard meal allowance if you work in the transportation industry. Amended irs return You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. Amended irs return If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). Amended irs return   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. Amended irs return If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. Amended irs return Travel for days you depart and return. Amended irs return   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). Amended irs return You can do so by one of two methods. Amended irs return Method 1: You can claim 3/4 of the standard meal allowance. Amended irs return Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Amended irs return Example. Amended irs return Jen is employed in New Orleans as a convention planner. Amended irs return In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Amended irs return She left her home in New Orleans at 10 a. Amended irs return m. Amended irs return on Wednesday and arrived in Washington, DC, at 5:30 p. Amended irs return m. Amended irs return After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Amended irs return m. Amended irs return Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Amended irs return Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. Amended irs return Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Amended irs return For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. Amended irs return Travel in the United States The following discussion applies to travel in the United States. Amended irs return For this purpose, the United States includes the 50 states and the District of Columbia. Amended irs return The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. Amended irs return See Part of Trip Outside the United States , later. Amended irs return Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. Amended irs return If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. Amended irs return These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Amended irs return Example. Amended irs return You work in Atlanta and take a business trip to New Orleans in May. Amended irs return Your business travel totals 850 miles round trip. Amended irs return On your way, you stop in Mobile to visit your parents. Amended irs return You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Amended irs return If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. Amended irs return You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. Amended irs return The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Amended irs return Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Amended irs return However, you can deduct any expenses you have while at your destination that are directly related to your business. Amended irs return A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. Amended irs return The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. Amended irs return Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. Amended irs return For the part of your trip that is inside the United States, use the rules for travel in the United States. Amended irs return Travel outside the United States does not include travel from one point in the United States to another point in the United States. Amended irs return The following discussion can help you determine whether your trip was entirely within the United States. Amended irs return Public transportation. Amended irs return   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Amended irs return Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . Amended irs return Example. Amended irs return You fly from New York to Puerto Rico with a scheduled stop in Miami. Amended irs return You return to New York nonstop. Amended irs return The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Amended irs return Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Amended irs return Private car. Amended irs return   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. Amended irs return Example. Amended irs return You travel by car from Denver to Mexico City and return. Amended irs return Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. Amended irs return The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Amended irs return Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. Amended irs return For this purpose, the United States includes the 50 states and the District of Columbia. Amended irs return How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. Amended irs return Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. Amended irs return Travel entirely for business. Amended irs return   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Amended irs return Travel considered entirely for business. Amended irs return   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. Amended irs return Exception 1 - No substantial control. Amended irs return   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Amended irs return The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Amended irs return   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. Amended irs return    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . Amended irs return   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. Amended irs return   A self-employed person generally has substantial control over arranging business trips. Amended irs return Exception 2 - Outside United States no more than a week. Amended irs return   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Amended irs return One week means 7 consecutive days. Amended irs return In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. Amended irs return Example. Amended irs return You traveled to Brussels primarily for business. Amended irs return You left Denver on Tuesday and flew to New York. Amended irs return On Wednesday, you flew from New York to Brussels, arriving the next morning. Amended irs return On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. Amended irs return You flew back to New York, arriving Wednesday afternoon. Amended irs return On Thursday, you flew back to Denver. Amended irs return Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. Amended irs return This is because the day you depart does not count as a day outside the United States. Amended irs return You can deduct your cost of the round-trip flight between Denver and Brussels. Amended irs return You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. Amended irs return However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. Amended irs return Exception 3 - Less than 25% of time on personal activities. Amended irs return   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. Amended irs return For this purpose, count both the day your trip began and the day it ended. Amended irs return Example. Amended irs return You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. Amended irs return You then flew back to Seattle. Amended irs return You spent 1 day flying in each direction. Amended irs return Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. Amended irs return The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. Amended irs return Exception 4 - Vacation not a major consideration. Amended irs return   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. Amended irs return Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. Amended irs return You can only deduct the business portion of your cost of getting to and from your destination. Amended irs return You must allocate the costs between your business and other activities to determine your deductible amount. Amended irs return See Travel allocation rules , later. Amended irs return You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . Amended irs return In those cases, you can deduct the total cost of getting to and from your destination. Amended irs return Travel allocation rules. Amended irs return   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. Amended irs return The days you depart from and return to the United States are both counted as days outside the United States. Amended irs return   To figure the deductible amount of your round-trip travel expenses, use the following fraction. Amended irs return The numerator (top number) is the total number of business days outside the United States. Amended irs return The denominator (bottom number) is the total number of business and nonbusiness days of travel. Amended irs return Counting business days. Amended irs return   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. Amended irs return Transportation day. Amended irs return   Count as a business day any day you spend traveling to or from a business destination. Amended irs return However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. Amended irs return Extra days for side trips or nonbusiness activities cannot be counted as business days. Amended irs return Presence required. Amended irs return   Count as a business day any day your presence is required at a particular place for a specific business purpose. Amended irs return Count it as a business day even if you spend most of the day on nonbusiness activities. Amended irs return Day spent on business. Amended irs return   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Amended irs return Also, count as a business day any day you are prevented from working because of circumstances beyond your control. Amended irs return Certain weekends and holidays. Amended irs return   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. Amended irs return But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. Amended irs return Example 1. Amended irs return Your tax home is New York City. Amended irs return You travel to Quebec, where you have a business appointment on Friday. Amended irs return You have another appointment on the following Monday. Amended irs return Because your presence was required on both Friday and Monday, they are business days. Amended irs return Because the weekend is between business days, Saturday and Sunday are counted as business days. Amended irs return This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. Amended irs return Example 2. Amended irs return If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. Amended irs return Nonbusiness activity on the way to or from your business destination. Amended irs return   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Amended irs return   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. Amended irs return   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Amended irs return The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Amended irs return Example. Amended irs return You live in New York. Amended irs return On May 4 you flew to Paris to attend a business conference that began on May 5. Amended irs return The conference ended at noon on May 14. Amended irs return That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. Amended irs return The primary purpose for the trip was to attend the conference. Amended irs return If you had not stopped in Dublin, you would have arrived home the evening of May 14. Amended irs return You do not meet any of the exceptions that would allow you to consider your travel entirely for business. Amended irs return May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. Amended irs return You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. Amended irs return You cannot deduct your expenses while in Dublin. Amended irs return You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. Amended irs return You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. Amended irs return Round-trip airfare from New York to Dublin would have been $1,250. Amended irs return You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). Amended irs return Your deductible air travel expense is $1,364 ($1,850 − $486). Amended irs return Nonbusiness activity at, near, or beyond business destination. Amended irs return   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Amended irs return   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. Amended irs return   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Amended irs return The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Amended irs return   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. Amended irs return Example. Amended irs return Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. Amended irs return You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. Amended irs return In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. Amended irs return You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. Amended irs return (Assume these expenses total $4,939. Amended irs return ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. Amended irs return Other methods. Amended irs return   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. Amended irs return Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. Amended irs return However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. Amended irs return Example. Amended irs return The university from which you graduated has a continuing education program for members of its alumni association. Amended irs return This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. Amended irs return However, none of the conferences are directed toward specific occupations or professions. Amended irs return It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. Amended irs return Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. Amended irs return These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Amended irs return Professional conference directors schedule and conduct the sessions. Amended irs return Participants can choose those sessions they wish to attend. Amended irs return You can participate in this program since you are a member of the alumni association. Amended irs return You and your family take one of the trips. Amended irs return You spend about 2 hours at each of the planned sessions. Amended irs return The rest of the time you go touring and sightseeing with your family. Amended irs return The trip lasts less than 1 week. Amended irs return Your travel expenses for the trip are not deductible since the trip was primarily a vacation. Amended irs return However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. Amended irs return These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. Amended irs return Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. Amended irs return The limit is twice the highest federal per diem rate allowable at the time of your travel. Amended irs return (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. Amended irs return ) Daily limit on luxury water travel. Amended irs return   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. Amended irs return   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. Amended irs return 1 – Mar. Amended irs return 31 $367 $734   Apr. Amended irs return 1 – June 30 312 624   July 1 – Aug. Amended irs return 31 310 620   Sept. Amended irs return 1 – Sept. Amended irs return 30 366 732   Oct. Amended irs return 1 – Dec. Amended irs return 31 374 748 Example. Amended irs return Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Amended irs return Her expense for the 6-day cruise was $5,200. Amended irs return Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). Amended irs return Meals and entertainment. Amended irs return   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. Amended irs return For a discussion of the 50% Limit , see chapter 2. Amended irs return Example. Amended irs return In the previous example, Caroline's luxury water travel had a total cost of $5,200. Amended irs return Of that amount, $3,700 was separately stated as meals and entertainment. Amended irs return Caroline, who is self-employed, is not reimbursed for any of her travel expenses. Amended irs return Caroline figures her deductible travel expenses as follows. Amended irs return Meals and entertainment $3,700   50% limit × . Amended irs return 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. Amended irs return Not separately stated. Amended irs return   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. Amended irs return Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. Amended irs return See Cruise Ships under Conventions. Amended irs return Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Amended irs return You cannot deduct the travel expenses for your family. Amended irs return If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Amended irs return Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Amended irs return You can deduct your travel expenses only if your attendance is connected to your own trade or business. Amended irs return Convention agenda. Amended irs return   The convention agenda or program generally shows the purpose of the convention. Amended irs return You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. Amended irs return The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. Amended irs return Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. Amended irs return See Reasonableness test , later. Amended irs return If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . Amended irs return North American area. Amended irs return   The North American area includes the following locations. Amended irs return American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. Amended irs return S. Amended irs return Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. Amended irs return S. Amended irs return islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. Amended irs return Reasonableness test. Amended irs return   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. Amended irs return The purpose of the meeting and the activities taking place at the meeting. Amended irs return The purposes and activities of the sponsoring organizations or groups. Amended irs return The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. Amended irs return Other relevant factors you may present. Amended irs return Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. Amended irs return All ships that sail are considered cruise ships. Amended irs return You can deduct these expenses only if all of the following requirements are met. Amended irs return The convention, seminar, or meeting is directly related to your trade or business. Amended irs return The cruise ship is a vessel registered in the United States. Amended irs return All of the cruise ship's ports of call are in the United States or in possessions of the United States. Amended irs return You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. Amended irs return You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. Amended irs return Prev  Up  Next   Home   More Online Publications
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