Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Amending 2010 Taxes

File State ReturnFile 1040 EzTurbotax 2011 SoftwareIrs Tax Form 940 For 20121040ez.comTax Act 2012 Login Return User1040 Ez TaxesE-file State Tax OnlyArmy H&r BlockH&r Block At Home Deluxe State 2012 DownloadH & R Block TaxesHow To Amend 2012 TaxesFree Tax Return Filing2010 1040ez FormsWww Irs Gov 2011freeefile1040 Tax Forms For 20112007 Tax Software1040x For 2011Turbotax 2011 Free Federal EditionFree 1040xForm 1040ez 2010Military Tax FilingH&r Block ComH And R Block2011 Tax Schedule1040a Or 1040ezFile 2010 Taxes Free OnlineIrs 1040 Ez1040 Es Payment VoucherFree Downloadable Irs Tax FormsIrs Forms For 20121040x 2011 FormIrs 2012 1040 Tax FormsFile Taxes Free1040ez For 2010Myfreetax.comHr Block For MilitaryIrs 1040 Ez OnlineTax Form 1040 EzIrs Forms 1040ez 2011

Amending 2010 Taxes

Amending 2010 taxes 12. Amending 2010 taxes   Other Income Table of Contents Introduction Useful Items - You may want to see: Bartering Canceled DebtsInterest included in canceled debt. Amending 2010 taxes Exceptions Host or Hostess Life Insurance ProceedsSurviving spouse. Amending 2010 taxes Endowment Contract Proceeds Accelerated Death Benefits Public Safety Officer Killed in the Line of Duty Partnership Income S Corporation Income RecoveriesItemized Deduction Recoveries Rents from Personal Property RepaymentsMethod 1. Amending 2010 taxes Method 2. Amending 2010 taxes RoyaltiesDepletion. Amending 2010 taxes Coal and iron ore. Amending 2010 taxes Sale of property interest. Amending 2010 taxes Part of future production sold. Amending 2010 taxes Unemployment BenefitsTypes of unemployment compensation. Amending 2010 taxes Governmental program. Amending 2010 taxes Repayment of unemployment compensation. Amending 2010 taxes Tax withholding. Amending 2010 taxes Repayment of benefits. Amending 2010 taxes Welfare and Other Public Assistance Benefits Other IncomeEmotional distress. Amending 2010 taxes Deduction for costs involved in unlawful discrimination suits. Amending 2010 taxes Energy conservation measure. Amending 2010 taxes Dwelling unit. Amending 2010 taxes Current income required to be distributed. Amending 2010 taxes Current income not required to be distributed. Amending 2010 taxes How to report. Amending 2010 taxes Losses. Amending 2010 taxes Grantor trust. Amending 2010 taxes Nonemployee compensation. Amending 2010 taxes Corporate director. Amending 2010 taxes Personal representatives. Amending 2010 taxes Manager of trade or business for bankruptcy estate. Amending 2010 taxes Notary public. Amending 2010 taxes Election precinct official. Amending 2010 taxes Difficulty-of-care payments. Amending 2010 taxes Maintaining space in home. Amending 2010 taxes Reporting taxable payments. Amending 2010 taxes Lotteries and raffles. Amending 2010 taxes Form W-2G. Amending 2010 taxes Reporting winnings and recordkeeping. Amending 2010 taxes Inherited pension or IRA. Amending 2010 taxes Employee awards or bonuses. Amending 2010 taxes Pulitzer, Nobel, and similar prizes. Amending 2010 taxes Payment for services. Amending 2010 taxes VA payments. Amending 2010 taxes Prizes. Amending 2010 taxes Strike and lockout benefits. Amending 2010 taxes Introduction You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you do not include them. Amending 2010 taxes Some items, however, are only partly excluded from income. Amending 2010 taxes This chapter discusses many kinds of income and explains whether they are taxable or nontaxable. Amending 2010 taxes Income that is taxable must be reported on your tax return and is subject to tax. Amending 2010 taxes Income that is nontaxable may have to be shown on your tax return but is not taxable. Amending 2010 taxes This chapter begins with discussions of the following income items. Amending 2010 taxes Bartering. Amending 2010 taxes Canceled debts. Amending 2010 taxes Sales parties at which you are the host or hostess. Amending 2010 taxes Life insurance proceeds. Amending 2010 taxes Partnership income. Amending 2010 taxes S Corporation income. Amending 2010 taxes Recoveries (including state income tax refunds). Amending 2010 taxes Rents from personal property. Amending 2010 taxes Repayments. Amending 2010 taxes Royalties. Amending 2010 taxes Unemployment benefits. Amending 2010 taxes Welfare and other public assistance benefits. Amending 2010 taxes These discussions are followed by brief discussions of other income items. Amending 2010 taxes Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 544 Sales and Other Dispositions of Assets 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Bartering Bartering is an exchange of property or services. Amending 2010 taxes You must include in your income, at the time received, the fair market value of property or services you receive in bartering. Amending 2010 taxes If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Amending 2010 taxes Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Amending 2010 taxes However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead. Amending 2010 taxes Example 1. Amending 2010 taxes You are a self-employed attorney who performs legal services for a client, a small corporation. Amending 2010 taxes The corporation gives you shares of its stock as payment for your services. Amending 2010 taxes You must include the fair market value of the shares in your income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) in the year you receive them. Amending 2010 taxes Example 2. Amending 2010 taxes You are self-employed and a member of a barter club. Amending 2010 taxes The club uses “credit units” as a means of exchange. Amending 2010 taxes It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. Amending 2010 taxes The club subtracts credit units from your account when you receive goods or services from other members. Amending 2010 taxes You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. Amending 2010 taxes Example 3. Amending 2010 taxes You own a small apartment building. Amending 2010 taxes In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. Amending 2010 taxes You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) the fair rental value of the apartment. Amending 2010 taxes Form 1099-B from barter exchange. Amending 2010 taxes   If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by February 18, 2014. Amending 2010 taxes It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2013. Amending 2010 taxes The IRS also will receive a copy of Form 1099-B. Amending 2010 taxes Canceled Debts In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. Amending 2010 taxes You have no income from the canceled debt if it is intended as a gift to you. Amending 2010 taxes A debt includes any indebtedness for which you are liable or which attaches to property you hold. Amending 2010 taxes If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. Amending 2010 taxes If it is a business debt, report the amount on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer). Amending 2010 taxes Form 1099-C. Amending 2010 taxes   If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Amending 2010 taxes The amount of the canceled debt is shown in box 2. Amending 2010 taxes Interest included in canceled debt. Amending 2010 taxes   If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Amending 2010 taxes Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible when you paid it. Amending 2010 taxes See Deductible debt under Exceptions, later. Amending 2010 taxes   If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. Amending 2010 taxes If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3). Amending 2010 taxes Discounted mortgage loan. Amending 2010 taxes   If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. Amending 2010 taxes You must include the canceled amount in your income. Amending 2010 taxes Mortgage relief upon sale or other disposition. Amending 2010 taxes   If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Amending 2010 taxes To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt , later. Amending 2010 taxes Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21. Amending 2010 taxes    You may be able to exclude part of the mortgage relief on your principal residence. Amending 2010 taxes See Excluded debt, later. Amending 2010 taxes   If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. Amending 2010 taxes You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Amending 2010 taxes Report any gain on nonbusiness property as a capital gain. Amending 2010 taxes   See Publication 4681 for more information. Amending 2010 taxes Stockholder debt. Amending 2010 taxes   If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. Amending 2010 taxes For more information, see Publication 542, Corporations. Amending 2010 taxes   If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. Amending 2010 taxes This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled. Amending 2010 taxes Repayment of canceled debt. Amending 2010 taxes   If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. Amending 2010 taxes You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. Amending 2010 taxes The statute of limitations generally does not end until 3 years after the due date of your original return. Amending 2010 taxes Exceptions There are several exceptions to the inclusion of canceled debt in income. Amending 2010 taxes These are explained next. Amending 2010 taxes Student loans. Amending 2010 taxes   Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers. Amending 2010 taxes   You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. Amending 2010 taxes To qualify, the loan must have been made by: The Federal Government, a state or local government, or an instrumentality, agency, or subdivision thereof, A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employees under state law, or An educational institution: Under an agreement with an entity described in (1) or (2) that provided the funds to the institution to make the loan, or As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3). Amending 2010 taxes   A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in (3)(b) above. Amending 2010 taxes Education loan repayment assistance. Amending 2010 taxes   Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas are not taxable. Amending 2010 taxes    The provision relating to the “other state loan repayment or loan forgiveness program” was added to this exclusion for amounts received in tax years beginning after December 31, 2008. Amending 2010 taxes If you included these amounts in income in 2010, 2011, or 2012, you should file an amended tax return to exclude this income. Amending 2010 taxes See Form 1040X and its instructions for details on filing. Amending 2010 taxes Deductible debt. Amending 2010 taxes   You do not have income from the cancellation of a debt if your payment of the debt would be deductible. Amending 2010 taxes This exception applies only if you use the cash method of accounting. Amending 2010 taxes For more information, see chapter 5 of Publication 334, Tax Guide for Small Business. Amending 2010 taxes Price reduced after purchase. Amending 2010 taxes   In most cases, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. Amending 2010 taxes The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property. Amending 2010 taxes Excluded debt. Amending 2010 taxes   Do not include a canceled debt in your gross income in the following situations. Amending 2010 taxes The debt is canceled in a bankruptcy case under title 11 of the U. Amending 2010 taxes S. Amending 2010 taxes Code. Amending 2010 taxes See Publication 908, Bankruptcy Tax Guide. Amending 2010 taxes The debt is canceled when you are insolvent. Amending 2010 taxes However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. Amending 2010 taxes See Publication 908. Amending 2010 taxes The debt is qualified farm debt and is canceled by a qualified person. Amending 2010 taxes See chapter 3 of Publication 225, Farmer's Tax Guide. Amending 2010 taxes The debt is qualified real property business debt. Amending 2010 taxes See chapter 5 of Publication 334. Amending 2010 taxes The cancellation is intended as a gift. Amending 2010 taxes The debt is qualified principal residence indebtedness. Amending 2010 taxes See Publication 525 for additional information. Amending 2010 taxes Host or Hostess If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. Amending 2010 taxes You must report this item as income at its fair market value. Amending 2010 taxes Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. Amending 2010 taxes These expenses are deductible as miscellaneous itemized deductions subject to the 2%-of-AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party. Amending 2010 taxes For more information about the 50% limit for meal and entertainment expenses, see chapter 26. Amending 2010 taxes Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. Amending 2010 taxes This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. Amending 2010 taxes However, interest income received as a result of life insurance proceeds may be taxable. Amending 2010 taxes Proceeds not received in installments. Amending 2010 taxes   If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. Amending 2010 taxes If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death. Amending 2010 taxes Proceeds received in installments. Amending 2010 taxes   If you receive life insurance proceeds in installments, you can exclude part of each installment from your income. Amending 2010 taxes   To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Amending 2010 taxes Include anything over this excluded part in your income as interest. Amending 2010 taxes Surviving spouse. Amending 2010 taxes   If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. Amending 2010 taxes If you remarry, you can continue to take the exclusion. Amending 2010 taxes Surrender of policy for cash. Amending 2010 taxes   If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Amending 2010 taxes In most cases, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income. Amending 2010 taxes    You should receive a Form 1099-R showing the total proceeds and the taxable part. Amending 2010 taxes Report these amounts on lines 16a and 16b of Form 1040 or lines 12a and 12b of Form 1040A. Amending 2010 taxes More information. Amending 2010 taxes   For more information, see Life Insurance Proceeds in Publication 525. Amending 2010 taxes Endowment Contract Proceeds An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Amending 2010 taxes Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. Amending 2010 taxes To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Amending 2010 taxes Include the part of the lump sum payment that is more than your cost in your income. Amending 2010 taxes Accelerated Death Benefits Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill. Amending 2010 taxes Viatical settlement. Amending 2010 taxes   This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. Amending 2010 taxes A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code. Amending 2010 taxes Exclusion for terminal illness. Amending 2010 taxes    Accelerated death benefits are fully excludable if the insured is a terminally ill individual. Amending 2010 taxes This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification. Amending 2010 taxes Exclusion for chronic illness. Amending 2010 taxes    If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Amending 2010 taxes Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. Amending 2010 taxes This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. Amending 2010 taxes For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits in Publication 525. Amending 2010 taxes Exception. Amending 2010 taxes   The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured: Is a director, officer, or employee of the person, or Has a financial interest in the person's business. Amending 2010 taxes Form 8853. Amending 2010 taxes   To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. Amending 2010 taxes You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred. Amending 2010 taxes Public Safety Officer Killed in the Line of Duty If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. Amending 2010 taxes For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. Amending 2010 taxes For more information, see Publication 559, Survivors, Executors, and Administrators. Amending 2010 taxes Partnership Income A partnership generally is not a taxable entity. Amending 2010 taxes The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. Amending 2010 taxes Schedule K-1 (Form 1065). Amending 2010 taxes    Although a partnership generally pays no tax, it must file an information return on Form 1065, U. Amending 2010 taxes S. Amending 2010 taxes Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. Amending 2010 taxes In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items. Amending 2010 taxes Keep Schedule K-1 (Form 1065) for your records. Amending 2010 taxes Do not attach it to your Form 1040, unless you are specifically required to do so. Amending 2010 taxes For more information on partnerships, see Publication 541, Partnerships. Amending 2010 taxes Qualified joint venture. Amending 2010 taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Amending 2010 taxes To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Amending 2010 taxes For further information on how to make the election and which schedule(s) to file, see the instructions for your individual tax return. Amending 2010 taxes S Corporation Income In most cases, an S corporation does not pay tax on its income. Amending 2010 taxes Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. Amending 2010 taxes Schedule K-1 (Form 1120S). Amending 2010 taxes   An S corporation must file a return on Form 1120S, U. Amending 2010 taxes S. Amending 2010 taxes Income Tax Return for an S Corporation, and send Schedule K-1 (Form 1120S) to each shareholder. Amending 2010 taxes In addition, the S corporation will send each shareholder a copy of the Shareholder's Instructions for Schedule K-1 (Form 1120S) to help each shareholder report his or her share of the S corporation's income, losses, credits, and deductions. Amending 2010 taxes Keep Schedule K-1 (Form 1120S) for your records. Amending 2010 taxes Do not attach it to your Form 1040, unless you are specifically required to do so. Amending 2010 taxes For more information on S corporations and their shareholders, see the Instructions for Form 1120S. Amending 2010 taxes Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. Amending 2010 taxes The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). Amending 2010 taxes You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit. Amending 2010 taxes Tax benefit rule. Amending 2010 taxes   You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. Amending 2010 taxes For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year. Amending 2010 taxes For more information, see Publication 525. Amending 2010 taxes Federal income tax refund. Amending 2010 taxes   Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income. Amending 2010 taxes State tax refund. Amending 2010 taxes   If you received a state or local income tax refund (or credit or offset) in 2013, you generally must include it in income if you deducted the tax in an earlier year. Amending 2010 taxes The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2014. Amending 2010 taxes The IRS also will receive a copy of the Form 1099-G. Amending 2010 taxes If you file Form 1040, use the State and Local Income Tax Refund Worksheet in the 2013 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. Amending 2010 taxes See Publication 525 for when you must use another worksheet. Amending 2010 taxes   If you could choose to deduct for a tax year either: State and local income taxes, or State and local general sales taxes, then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year. Amending 2010 taxes For examples, see Publication 525. Amending 2010 taxes Mortgage interest refund. Amending 2010 taxes    If you received a refund or credit in 2013 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Amending 2010 taxes Do not subtract the refund amount from the interest you paid in 2013. Amending 2010 taxes You may have to include it in your income under the rules explained in the following discussions. Amending 2010 taxes Interest on recovery. Amending 2010 taxes   Interest on any of the amounts you recover must be reported as interest income in the year received. Amending 2010 taxes For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a. Amending 2010 taxes Recovery and expense in same year. Amending 2010 taxes   If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income. Amending 2010 taxes Recovery for 2 or more years. Amending 2010 taxes   If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. Amending 2010 taxes This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year. Amending 2010 taxes For information on how to compute the allocation, see Recoveries in Publication 525. Amending 2010 taxes Itemized Deduction Recoveries If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. Amending 2010 taxes Where to report. Amending 2010 taxes   Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. Amending 2010 taxes You cannot use Form 1040A or Form 1040EZ. Amending 2010 taxes Standard deduction limit. Amending 2010 taxes   You generally are allowed to claim the standard deduction if you do not itemize your deductions. Amending 2010 taxes Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). Amending 2010 taxes If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of: Your recoveries, or The amount by which your itemized deductions exceeded the standard deduction. Amending 2010 taxes Example. Amending 2010 taxes For 2012, you filed a joint return. Amending 2010 taxes Your taxable income was $60,000 and you were not entitled to any tax credits. Amending 2010 taxes Your standard deduction was $11,900, and you had itemized deductions of $14,000. Amending 2010 taxes In 2013, you received the following recoveries for amounts deducted on your 2012 return: Medical expenses $200 State and local income tax refund 400 Refund of mortgage interest 325 Total recoveries $925 None of the recoveries were more than the deductions taken for 2012. Amending 2010 taxes The difference between the state and local income tax you deducted and your local general sales tax was more than $400. Amending 2010 taxes Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($14,000 − 11,900 = $2,100), so you must include your total recoveries in your income for 2013. Amending 2010 taxes Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21. Amending 2010 taxes Standard deduction for earlier years. Amending 2010 taxes   To determine if amounts recovered in 2013 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. Amending 2010 taxes Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year. Amending 2010 taxes Example. Amending 2010 taxes You filed a joint return on Form 1040 for 2012 with taxable income of $45,000. Amending 2010 taxes Your itemized deductions were $12,350. Amending 2010 taxes The standard deduction that you could have claimed was $11,900. Amending 2010 taxes In 2013, you recovered $2,100 of your 2012 itemized deductions. Amending 2010 taxes None of the recoveries were more than the actual deductions for 2012. Amending 2010 taxes Include $450 of the recoveries in your 2013 income. Amending 2010 taxes This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($12,350 − $11,900 = $450). Amending 2010 taxes Recovery limited to deduction. Amending 2010 taxes   You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. Amending 2010 taxes The amount you include in your income is limited to the smaller of: The amount deducted on Schedule A (Form 1040), or The amount recovered. Amending 2010 taxes Example. Amending 2010 taxes During 2012 you paid $1,700 for medical expenses. Amending 2010 taxes From this amount you subtracted $1,500, which was 7. Amending 2010 taxes 5% of your adjusted gross income. Amending 2010 taxes Your actual medical expense deduction was $200. Amending 2010 taxes In 2013, you received a $500 reimbursement from your medical insurance for your 2012 expenses. Amending 2010 taxes The only amount of the $500 reimbursement that must be included in your income for 2013 is $200—the amount actually deducted. Amending 2010 taxes Other recoveries. Amending 2010 taxes   See Recoveries in Publication 525 if: You have recoveries of items other than itemized deductions, or You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year. Amending 2010 taxes Rents from Personal Property If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by: Whether or not the rental activity is a business, and Whether or not the rental activity is conducted for profit. Amending 2010 taxes In most cases, if your primary purpose is income or profit and you are involved in the rental activity with continuity and regularity, your rental activity is a business. Amending 2010 taxes See Publication 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities. Amending 2010 taxes Reporting business income and expenses. Amending 2010 taxes    If you are in the business of renting personal property, report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes The form instructions have information on how to complete them. Amending 2010 taxes Reporting nonbusiness income. Amending 2010 taxes   If you are not in the business of renting personal property, report your rental income on Form 1040, line 21. Amending 2010 taxes List the type and amount of the income on the dotted line next to line 21. Amending 2010 taxes Reporting nonbusiness expenses. Amending 2010 taxes   If you rent personal property for profit, include your rental expenses in the total amount you enter on Form 1040, line 36. Amending 2010 taxes Also enter the amount and “PPR” on the dotted line next to line 36. Amending 2010 taxes   If you do not rent personal property for profit, your deductions are limited and you cannot report a loss to offset other income. Amending 2010 taxes See Activity not for profit , under Other Income, later. Amending 2010 taxes Repayments If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Amending 2010 taxes Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Amending 2010 taxes Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. Amending 2010 taxes Type of deduction. Amending 2010 taxes   The type of deduction you are allowed in the year of repayment depends on the type of income you included in the earlier year. Amending 2010 taxes You generally deduct the repayment on the same form or schedule on which you previously reported it as income. Amending 2010 taxes For example, if you reported it as self-employment income, deduct it as a business expense on Schedule C or Schedule C-EZ (Form 1040) or Schedule F (Form 1040). Amending 2010 taxes If you reported it as a capital gain, deduct it as a capital loss as explained in the Instructions for Schedule D (Form 1040). Amending 2010 taxes If you reported it as wages, unemployment compensation, or other nonbusiness income, deduct it as a miscellaneous itemized deduction on Schedule A (Form 1040). Amending 2010 taxes Repaid social security benefits. Amending 2010 taxes   If you repaid social security benefits or equivalent railroad retirement benefits, see Repayment of benefits in chapter 11. Amending 2010 taxes Repayment of $3,000 or less. Amending 2010 taxes   If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. Amending 2010 taxes If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23. Amending 2010 taxes Repayment over $3,000. Amending 2010 taxes   If the amount you repaid was more than $3,000, you can deduct the repayment (as explained under Type of deduction , earlier). Amending 2010 taxes However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. Amending 2010 taxes This means that at the time you included the income, it appeared that you had an unrestricted right to it. Amending 2010 taxes If you qualify for this choice, figure your tax under both methods and compare the results. Amending 2010 taxes Use the method (deduction or credit) that results in less tax. Amending 2010 taxes When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Amending 2010 taxes Each instance of repayment is not considered separately. Amending 2010 taxes Method 1. Amending 2010 taxes   Figure your tax for 2013 claiming a deduction for the repaid amount. Amending 2010 taxes If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. Amending 2010 taxes Method 2. Amending 2010 taxes   Figure your tax for 2013 claiming a credit for the repaid amount. Amending 2010 taxes Follow these steps. Amending 2010 taxes Figure your tax for 2013 without deducting the repaid amount. Amending 2010 taxes Refigure your tax from the earlier year without including in income the amount you repaid in 2013. Amending 2010 taxes Subtract the tax in (2) from the tax shown on your return for the earlier year. Amending 2010 taxes This is the credit. Amending 2010 taxes Subtract the answer in (3) from the tax for 2013 figured without the deduction (Step 1). Amending 2010 taxes   If method 1 results in less tax, deduct the amount repaid. Amending 2010 taxes If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71, by adding the amount of the credit to any other credits on this line, and entering “I. Amending 2010 taxes R. Amending 2010 taxes C. Amending 2010 taxes 1341” in the column to the right of line 71. Amending 2010 taxes   An example of this computation can be found in Publication 525. Amending 2010 taxes Repaid wages subject to social security and Medicare taxes. Amending 2010 taxes   If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. Amending 2010 taxes If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. Amending 2010 taxes File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Amending 2010 taxes Repaid wages subject to Additional Medicare Tax. Amending 2010 taxes   Employers cannot make an adjustment or file a claim for refund for Additional Medicare Tax withholding when there is a repayment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the employee's income tax return for the prior year. Amending 2010 taxes If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. Amending 2010 taxes To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040X, Amended U. Amending 2010 taxes S. Amending 2010 taxes Individual Income Tax Return, for the prior year in which the wages or compensation were originally received. Amending 2010 taxes See the Instructions for Form 1040X. Amending 2010 taxes Royalties Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. Amending 2010 taxes In most cases you report royalties in Part I of Schedule E (Form 1040). Amending 2010 taxes However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc. Amending 2010 taxes , report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes Copyrights and patents. Amending 2010 taxes   Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Amending 2010 taxes Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold. Amending 2010 taxes Oil, gas, and minerals. Amending 2010 taxes   Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. Amending 2010 taxes The royalties are based on units, such as barrels, tons, etc. Amending 2010 taxes , and are paid to you by a person or company who leases the property from you. Amending 2010 taxes Depletion. Amending 2010 taxes   If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. Amending 2010 taxes For information on this subject, see chapter 9 of Publication 535. Amending 2010 taxes Coal and iron ore. Amending 2010 taxes   Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. Amending 2010 taxes For information about gain or loss from the sale of coal and iron ore, see Publication 544. Amending 2010 taxes Sale of property interest. Amending 2010 taxes   If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Amending 2010 taxes Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). Amending 2010 taxes For more information on selling section 1231 property, see chapter 3 of Publication 544. Amending 2010 taxes   If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance. Amending 2010 taxes Part of future production sold. Amending 2010 taxes   If you own mineral property but sell part of the future production, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Amending 2010 taxes Do not include it in your income or take depletion based on it. Amending 2010 taxes   When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property. Amending 2010 taxes Unemployment Benefits The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Amending 2010 taxes Unemployment compensation. Amending 2010 taxes   You must include in income all unemployment compensation you receive. Amending 2010 taxes You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. Amending 2010 taxes In most cases, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Amending 2010 taxes Types of unemployment compensation. Amending 2010 taxes   Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. Amending 2010 taxes It includes the following benefits. Amending 2010 taxes Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund. Amending 2010 taxes State unemployment insurance benefits. Amending 2010 taxes Railroad unemployment compensation benefits. Amending 2010 taxes Disability payments from a government program paid as a substitute for unemployment compensation. Amending 2010 taxes (Amounts received as workers' compensation for injuries or illness are not unemployment compensation. Amending 2010 taxes See chapter 5 for more information. Amending 2010 taxes ) Trade readjustment allowances under the Trade Act of 1974. Amending 2010 taxes Unemployment assistance under the Disaster Relief and Emergency Assistance Act. Amending 2010 taxes Unemployment assistance under the Airline Deregulation Act of 1974 Program. Amending 2010 taxes Governmental program. Amending 2010 taxes   If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions. Amending 2010 taxes If you deducted all of your contributions to the program, the entire amount you receive under the program is included in your income. Amending 2010 taxes Repayment of unemployment compensation. Amending 2010 taxes   If you repaid in 2013 unemployment compensation you received in 2013, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Amending 2010 taxes On the dotted line next to your entry enter “Repaid” and the amount you repaid. Amending 2010 taxes If you repaid unemployment compensation in 2013 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. Amending 2010 taxes If the amount is more than $3,000, see Repayments , earlier. Amending 2010 taxes Tax withholding. Amending 2010 taxes   You can choose to have federal income tax withheld from your unemployment compensation. Amending 2010 taxes To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Amending 2010 taxes Tax will be withheld at 10% of your payment. Amending 2010 taxes    If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. Amending 2010 taxes If you do not pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. Amending 2010 taxes For more information on estimated tax, see chapter 4. Amending 2010 taxes Supplemental unemployment benefits. Amending 2010 taxes   Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. Amending 2010 taxes They are taxable as wages and are subject to withholding for income tax. Amending 2010 taxes They may be subject to social security and Medicare taxes. Amending 2010 taxes For more information, see Supplemental Unemployment Benefits in section 5 of Publication 15-A, Employer's Supplemental Tax Guide. Amending 2010 taxes Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Amending 2010 taxes Repayment of benefits. Amending 2010 taxes   You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. Amending 2010 taxes If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. Amending 2010 taxes If you repay the benefits in a later year, you must include the full amount of the benefits received in your income for the year you received them. Amending 2010 taxes   Deduct the repayment in the later year as an adjustment to gross income on Form 1040. Amending 2010 taxes (You cannot use Form 1040A or Form 1040EZ. Amending 2010 taxes ) Include the repayment on Form 1040, line 36, and enter “Sub-Pay TRA” and the amount on the dotted line next to line 36. Amending 2010 taxes If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. Amending 2010 taxes For more information on this, see Repayments , earlier. Amending 2010 taxes Private unemployment fund. Amending 2010 taxes   Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Amending 2010 taxes Report the taxable amount on Form 1040, line 21. Amending 2010 taxes Payments by a union. Amending 2010 taxes   Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. Amending 2010 taxes However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions. Amending 2010 taxes Guaranteed annual wage. Amending 2010 taxes   Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Amending 2010 taxes Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Amending 2010 taxes State employees. Amending 2010 taxes   Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Amending 2010 taxes Although the payments are fully taxable, do not report them as unemployment compensation. Amending 2010 taxes Report these payments on Form 1040, line 21. Amending 2010 taxes Welfare and Other Public Assistance Benefits Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Amending 2010 taxes Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Amending 2010 taxes Do not deduct medical expenses that are reimbursed by such a fund. Amending 2010 taxes You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently. Amending 2010 taxes Reemployment Trade Adjustment Assistance (RTAA) payments. Amending 2010 taxes   RTAA payments received from a state must be included in your income. Amending 2010 taxes The state must send you Form 1099-G to advise you of the amount you should include in income. Amending 2010 taxes The amount should be reported on Form 1040, line 21. Amending 2010 taxes Persons with disabilities. Amending 2010 taxes   If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. Amending 2010 taxes However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Amending 2010 taxes Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work. Amending 2010 taxes Disaster relief grants. Amending 2010 taxes    Do not include post-disaster grants received under the Robert T. Amending 2010 taxes Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, child care, or funeral expenses. Amending 2010 taxes Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Amending 2010 taxes If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same residence, you may have to include part or all of the grant in your taxable income. Amending 2010 taxes See Recoveries , earlier. Amending 2010 taxes Unemployment assistance payments under the Act are taxable unemployment compensation. Amending 2010 taxes See Unemployment compensation under Unemployment Benefits, earlier. Amending 2010 taxes Disaster relief payments. Amending 2010 taxes   You can exclude from income any amount you receive that is a qualified disaster relief payment. Amending 2010 taxes A qualified disaster relief payment is an amount paid to you: To reimburse or pay reasonable and necessary personal, family, living, or funeral expenses that result from a qualified disaster; To reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of your home or repair or replacement of its contents to the extent it is due to a qualified disaster; By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or By a federal, state, or local government, or agency, or instrumentality in connection with a qualified disaster in order to promote the general welfare. Amending 2010 taxes You can exclude this amount only to the extent any expense it pays for is not paid for by insurance or otherwise. Amending 2010 taxes The exclusion does not apply if you were a participant or conspirator in a terrorist action or a representative of one. Amending 2010 taxes   A qualified disaster is: A disaster which results from a terrorist or military action; A federally declared disaster; or A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treasury or his or her delegate. Amending 2010 taxes   For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality. Amending 2010 taxes Disaster mitigation payments. Amending 2010 taxes   You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Amending 2010 taxes Qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. Amending 2010 taxes However, disaster mitigation payments are used to mitigate (reduce the severity of) potential damage from future natural disasters. Amending 2010 taxes They are paid to you through state and local governments based on the provisions of the Robert T. Amending 2010 taxes Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act. Amending 2010 taxes   You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments. Amending 2010 taxes Home Affordable Modification Program (HAMP). Amending 2010 taxes   If you benefit from Pay-for-Performance Success Payments under HAMP, the payments are not taxable. Amending 2010 taxes Mortgage assistance payments under section 235 of the National Housing Act. Amending 2010 taxes   Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Amending 2010 taxes Interest paid for the homeowner under the mortgage assistance program cannot be deducted. Amending 2010 taxes Medicare. Amending 2010 taxes   Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. Amending 2010 taxes This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)). Amending 2010 taxes Old-age, survivors, and disability insurance benefits (OASDI). Amending 2010 taxes   Generally, OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. Amending 2010 taxes This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment. Amending 2010 taxes Nutrition Program for the Elderly. Amending 2010 taxes    Food benefits you receive under the Nutrition Program for the Elderly are not taxable. Amending 2010 taxes If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits. Amending 2010 taxes Payments to reduce cost of winter energy. Amending 2010 taxes   Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable. Amending 2010 taxes Other Income The following brief discussions are arranged in alphabetical order. Amending 2010 taxes Other income items briefly discussed below are referenced to publications which provide more topical information. Amending 2010 taxes Activity not for profit. Amending 2010 taxes   You must include on your return income from an activity from which you do not expect to make a profit. Amending 2010 taxes An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Amending 2010 taxes Enter this income on Form 1040, line 21. Amending 2010 taxes Deductions for expenses related to the activity are limited. Amending 2010 taxes They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). Amending 2010 taxes See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit. Amending 2010 taxes Alaska Permanent Fund dividend. Amending 2010 taxes   If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. Amending 2010 taxes The state of Alaska sends each recipient a document that shows the amount of the payment with the check. Amending 2010 taxes The amount also is reported to IRS. Amending 2010 taxes Alimony. Amending 2010 taxes   Include in your income on Form 1040, line 11, any alimony payments you receive. Amending 2010 taxes Amounts you receive for child support are not income to you. Amending 2010 taxes Alimony and child support payments are discussed in chapter 18. Amending 2010 taxes Bribes. Amending 2010 taxes   If you receive a bribe, include it in your income. Amending 2010 taxes Campaign contributions. Amending 2010 taxes   These contributions are not income to a candidate unless they are diverted to his or her personal use. Amending 2010 taxes To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. Amending 2010 taxes However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U. Amending 2010 taxes S. Amending 2010 taxes Income Tax Return for Certain Political Organizations. Amending 2010 taxes Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred. Amending 2010 taxes Car pools. Amending 2010 taxes   Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. Amending 2010 taxes These amounts are considered reimbursement for your expenses. Amending 2010 taxes However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire. Amending 2010 taxes Cash rebates. Amending 2010 taxes   A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate. Amending 2010 taxes Example. Amending 2010 taxes You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. Amending 2010 taxes The $2,000 is not income to you. Amending 2010 taxes Your basis in the car is $22,000. Amending 2010 taxes This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for business. Amending 2010 taxes Casualty insurance and other reimbursements. Amending 2010 taxes   You generally should not report these reimbursements on your return unless you are figuring gain or loss from the casualty or theft. Amending 2010 taxes See chapter 25 for more information. Amending 2010 taxes Child support payments. Amending 2010 taxes   You should not report these payments on your return. Amending 2010 taxes See chapter 18 for more information. Amending 2010 taxes Court awards and damages. Amending 2010 taxes   To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Amending 2010 taxes The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Amending 2010 taxes Include the following as ordinary income. Amending 2010 taxes Interest on any award. Amending 2010 taxes Compensation for lost wages or lost profits in most cases. Amending 2010 taxes Punitive damages, in most cases. Amending 2010 taxes It does not matter if they relate to a physical injury or physical sickness. Amending 2010 taxes Amounts received in settlement of pension rights (if you did not contribute to the plan). Amending 2010 taxes Damages for: Patent or copyright infringement, Breach of contract, or Interference with business operations. Amending 2010 taxes Back pay and damages for emotional distress received to satisfy a claim under title VII of the Civil Rights Act of 1964. Amending 2010 taxes Attorney fees and costs (including contingent fees) where the underlying recovery is included in gross income. Amending 2010 taxes   Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments). Amending 2010 taxes Emotional distress. Amending 2010 taxes   Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Amending 2010 taxes Do not include them in your income. Amending 2010 taxes   If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Amending 2010 taxes Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders. Amending 2010 taxes Deduction for costs involved in unlawful discrimination suits. Amending 2010 taxes   You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. Amending 2010 taxes For more information, see Publication 525. Amending 2010 taxes Credit card insurance. Amending 2010 taxes   In most cases, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. Amending 2010 taxes These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Amending 2010 taxes Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year. Amending 2010 taxes Down payment assistance. Amending 2010 taxes   If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. Amending 2010 taxes If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. Amending 2010 taxes If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis. Amending 2010 taxes Employment agency fees. Amending 2010 taxes   If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. Amending 2010 taxes However, if you pay it and your employer reimburses you for it, it is includible in your income. Amending 2010 taxes Energy conservation subsidies. Amending 2010 taxes   You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit. Amending 2010 taxes Energy conservation measure. Amending 2010 taxes   This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Amending 2010 taxes Dwelling unit. Amending 2010 taxes   This includes a house, apartment, condominium, mobile home, boat, or similar property. Amending 2010 taxes If a building or structure contains both dwelling and other units, any subsidy must be properly allocated. Amending 2010 taxes Estate and trust income. Amending 2010 taxes    An estate or trust, unlike a partnership, may have to pay federal income tax. Amending 2010 taxes If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. Amending 2010 taxes However, there is never a double tax. Amending 2010 taxes Estates and trusts file their returns on Form 1041, U. Amending 2010 taxes S. Amending 2010 taxes Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041). Amending 2010 taxes Current income required to be distributed. Amending 2010 taxes   If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it. Amending 2010 taxes Current income not required to be distributed. Amending 2010 taxes    If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report: All income that is required to be distributed to you, whether or not it is actually distributed, plus All other amounts actually paid or credited to you, up to the amount of your share of distributable net income. Amending 2010 taxes How to report. Amending 2010 taxes   Treat each item of income the same way that the estate or trust would treat it. Amending 2010 taxes For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. Amending 2010 taxes The same rule applies to distributions of tax-exempt interest and capital gains. Amending 2010 taxes   The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return. Amending 2010 taxes Losses. Amending 2010 taxes   Losses of estates and trusts generally are not deductible by the beneficiaries. Amending 2010 taxes Grantor trust. Amending 2010 taxes   Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. Amending 2010 taxes (The grantor is the one who transferred property to the trust. Amending 2010 taxes ) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse. Amending 2010 taxes   Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property. Amending 2010 taxes Expenses paid by another. Amending 2010 taxes   If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. Amending 2010 taxes But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income. Amending 2010 taxes Fees for services. Amending 2010 taxes   Include all fees for your services in your income. Amending 2010 taxes Examples of these fees are amounts you receive for services you perform as: A corporate director, An executor, administrator, or personal representative of an estate, A manager of a trade or business you operated before declaring Chapter 11 bankruptcy, A notary public, or An election precinct official. Amending 2010 taxes Nonemployee compensation. Amending 2010 taxes   If you are not an employee and the fees for your services from the same payer total $600 or more for the year, you may receive a Form 1099-MISC. Amending 2010 taxes You may need to report your fees as self-employment income. Amending 2010 taxes See Self-Employed Persons , in chapter 1, for a discussion of when you are considered self-employed. Amending 2010 taxes Corporate director. Amending 2010 taxes   Corporate director fees are self-employment income. Amending 2010 taxes Report these payments on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes Personal representatives. Amending 2010 taxes   All personal representatives must include in their gross income fees paid to them from an estate. Amending 2010 taxes If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. Amending 2010 taxes If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes The fee is not includible in income if it is waived. Amending 2010 taxes Manager of trade or business for bankruptcy estate. Amending 2010 taxes   Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Amending 2010 taxes Report this income on Form 1040, line 21. Amending 2010 taxes Notary public. Amending 2010 taxes    Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes These payments are not subject to self-employment tax. Amending 2010 taxes See the separate instructions for Schedule SE (Form 1040) for details. Amending 2010 taxes Election precinct official. Amending 2010 taxes    You should receive a Form W-2 showing payments for services performed as an election official or election worker. Amending 2010 taxes Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ. Amending 2010 taxes Foster care providers. Amending 2010 taxes   Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. Amending 2010 taxes However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments. Amending 2010 taxes   A qualified foster individual is a person who: Is living in a foster family home, and Was placed there by: An agency of a state or one of its political subdivisions, or A qualified foster care placement agency. Amending 2010 taxes Difficulty-of-care payments. Amending 2010 taxes   These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. Amending 2010 taxes A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home. Amending 2010 taxes   You must include in your income difficulty-of-care payments received for more than: 10 qualified foster individuals under age 19, or 5 qualified foster individuals age 19 or older. Amending 2010 taxes Maintaining space in home. Amending 2010 taxes   If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income. Amending 2010 taxes Reporting taxable payments. Amending 2010 taxes    If you receive payments that you must include in your income, you are in business as a foster care provider and you are self-employed. Amending 2010 taxes Report the payments on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes See Publication 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home. Amending 2010 taxes Found property. Amending 2010 taxes   If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession. Amending 2010 taxes Free tour. Amending 2010 taxes   If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Amending 2010 taxes Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. Amending 2010 taxes You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. Amending 2010 taxes If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040). Amending 2010 taxes Gambling winnings. Amending 2010 taxes   You must include your gambling winnings in income on Form 1040, line 21. Amending 2010 taxes If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. Amending 2010 taxes Lotteries and raffles. Amending 2010 taxes   Winnings from lotteries and raffles are gambling winnings. Amending 2010 taxes In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. Amending 2010 taxes    If you win a state lottery prize payable in installments, see Publication 525 for more information. Amending 2010 taxes Form W-2G. Amending 2010 taxes   You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Amending 2010 taxes Include the amount from box 1 on Form 1040, line 21. Amending 2010 taxes Include the amount shown in box 4 on Form 1040, line 62, as federal income tax withheld. Amending 2010 taxes Reporting winnings and recordkeeping. Amending 2010 taxes   For more information on reporting gam
Español

Legal Help for Consumers

What to do if you have to hire an attorney or go to Small Claims Court to resolve a consumer problem.

The Amending 2010 Taxes

Amending 2010 taxes 1. Amending 2010 taxes   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. Amending 2010 taxes Business associate. Amending 2010 taxes Bona fide business purpose. Amending 2010 taxes 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. Amending 2010 taxes This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. Amending 2010 taxes It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. Amending 2010 taxes Travel expenses defined. Amending 2010 taxes   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Amending 2010 taxes   An ordinary expense is one that is common and accepted in your trade or business. Amending 2010 taxes A necessary expense is one that is helpful and appropriate for your business. Amending 2010 taxes An expense does not have to be required to be considered necessary. Amending 2010 taxes   You will find examples of deductible travel expenses in Table 1-1 , later. Amending 2010 taxes 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. Amending 2010 taxes This rest requirement is not satisfied by merely napping in your car. Amending 2010 taxes 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. Amending 2010 taxes Example 1. Amending 2010 taxes You are a railroad conductor. Amending 2010 taxes You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Amending 2010 taxes 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. Amending 2010 taxes You are considered to be away from home. Amending 2010 taxes Example 2. Amending 2010 taxes You are a truck driver. Amending 2010 taxes You leave your terminal and return to it later the same day. Amending 2010 taxes You get an hour off at your turnaround point to eat. Amending 2010 taxes 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. Amending 2010 taxes Members of the Armed Forces. Amending 2010 taxes   If you are a member of the U. Amending 2010 taxes S. Amending 2010 taxes Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Amending 2010 taxes You cannot deduct your expenses for meals and lodging. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes   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. Amending 2010 taxes Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Amending 2010 taxes Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Amending 2010 taxes It includes the entire city or general area in which your business or work is located. Amending 2010 taxes If you have more than one regular place of business, your tax home is your main place of business. Amending 2010 taxes See Main place of business or work , later. Amending 2010 taxes 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. Amending 2010 taxes See No main place of business or work , later. Amending 2010 taxes 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. Amending 2010 taxes As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Amending 2010 taxes Main place of business or work. Amending 2010 taxes   If you have more than one place of work, consider the following when determining which one is your main place of business or work. Amending 2010 taxes The total time you ordinarily spend in each place. Amending 2010 taxes The level of your business activity in each place. Amending 2010 taxes Whether your income from each place is significant or insignificant. Amending 2010 taxes Example. Amending 2010 taxes You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Amending 2010 taxes You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Amending 2010 taxes Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Amending 2010 taxes No main place of business or work. Amending 2010 taxes   You may have a tax home even if you do not have a regular or main place of work. Amending 2010 taxes Your tax home may be the home where you regularly live. Amending 2010 taxes Factors used to determine tax home. Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Amending 2010 taxes 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. Amending 2010 taxes   If you satisfy all three factors, your tax home is the home where you regularly live. Amending 2010 taxes If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Amending 2010 taxes If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Amending 2010 taxes Example 1. Amending 2010 taxes You are single and live in Boston in an apartment you rent. Amending 2010 taxes You have worked for your employer in Boston for a number of years. Amending 2010 taxes Your employer enrolls you in a 12-month executive training program. Amending 2010 taxes You do not expect to return to work in Boston after you complete your training. Amending 2010 taxes During your training, you do not do any work in Boston. Amending 2010 taxes Instead, you receive classroom and on-the-job training throughout the United States. Amending 2010 taxes You keep your apartment in Boston and return to it frequently. Amending 2010 taxes You use your apartment to conduct your personal business. Amending 2010 taxes You also keep up your community contacts in Boston. Amending 2010 taxes When you complete your training, you are transferred to Los Angeles. Amending 2010 taxes You do not satisfy factor (1) because you did not work in Boston. Amending 2010 taxes You satisfy factor (2) because you had duplicate living expenses. Amending 2010 taxes 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. Amending 2010 taxes Therefore, you have a tax home in Boston. Amending 2010 taxes Example 2. Amending 2010 taxes You are an outside salesperson with a sales territory covering several states. Amending 2010 taxes Your employer's main office is in Newark, but you do not conduct any business there. Amending 2010 taxes Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. Amending 2010 taxes You have a room in your married sister's house in Dayton. Amending 2010 taxes You stay there for one or two weekends a year, but you do no work in the area. Amending 2010 taxes You do not pay your sister for the use of the room. Amending 2010 taxes You do not satisfy any of the three factors listed earlier. Amending 2010 taxes You are an itinerant and have no tax home. Amending 2010 taxes 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. Amending 2010 taxes You also cannot deduct the cost of meals and lodging while at your tax home. Amending 2010 taxes See Example 1 , later. Amending 2010 taxes If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Amending 2010 taxes See Example 2 , later. Amending 2010 taxes Example 1. Amending 2010 taxes You are a truck driver and you and your family live in Tucson. Amending 2010 taxes You are employed by a trucking firm that has its terminal in Phoenix. Amending 2010 taxes At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Amending 2010 taxes You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Amending 2010 taxes This is because Phoenix is your tax home. Amending 2010 taxes Example 2. Amending 2010 taxes Your family home is in Pittsburgh, where you work 12 weeks a year. Amending 2010 taxes The rest of the year you work for the same employer in Baltimore. Amending 2010 taxes In Baltimore, you eat in restaurants and sleep in a rooming house. Amending 2010 taxes Your salary is the same whether you are in Pittsburgh or Baltimore. Amending 2010 taxes Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Amending 2010 taxes You cannot deduct any expenses you have for meals and lodging there. Amending 2010 taxes However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Amending 2010 taxes You can deduct the cost of your round trip between Baltimore and Pittsburgh. Amending 2010 taxes You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Amending 2010 taxes Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Amending 2010 taxes It may not be practical to return to your tax home from this other location at the end of each work day. Amending 2010 taxes Temporary assignment vs. Amending 2010 taxes indefinite assignment. Amending 2010 taxes   If your assignment or job away from your main place of work is temporary, your tax home does not change. Amending 2010 taxes You are considered to be away from home for the whole period you are away from your main place of work. Amending 2010 taxes You can deduct your travel expenses if they otherwise qualify for deduction. Amending 2010 taxes 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. Amending 2010 taxes    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. Amending 2010 taxes 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. Amending 2010 taxes   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. Amending 2010 taxes You may be able to deduct the cost of relocating to your new tax home as a moving expense. Amending 2010 taxes See Publication 521 for more information. Amending 2010 taxes Exception for federal crime investigations or prosecutions. Amending 2010 taxes   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Amending 2010 taxes 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. Amending 2010 taxes   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. Amending 2010 taxes Determining temporary or indefinite. Amending 2010 taxes   You must determine whether your assignment is temporary or indefinite when you start work. Amending 2010 taxes 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. Amending 2010 taxes An assignment or job that is initially temporary may become indefinite due to changed circumstances. Amending 2010 taxes 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. Amending 2010 taxes   The following examples illustrate whether an assignment or job is temporary or indefinite. Amending 2010 taxes Example 1. Amending 2010 taxes You are a construction worker. Amending 2010 taxes You live and regularly work in Los Angeles. Amending 2010 taxes You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Amending 2010 taxes Your tax home is Los Angeles. Amending 2010 taxes Because of a shortage of work, you took a job on a construction project in Fresno. Amending 2010 taxes Your job was scheduled to end in 8 months. Amending 2010 taxes The job actually lasted 10 months. Amending 2010 taxes You realistically expected the job in Fresno to last 8 months. Amending 2010 taxes The job actually did last less than 1 year. Amending 2010 taxes The job is temporary and your tax home is still in Los Angeles. Amending 2010 taxes Example 2. Amending 2010 taxes The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. Amending 2010 taxes The job actually was completed in 10 months. Amending 2010 taxes 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. Amending 2010 taxes You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. Amending 2010 taxes Example 3. Amending 2010 taxes The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. Amending 2010 taxes After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). Amending 2010 taxes Initially, you realistically expected the job in Fresno to last for only 9 months. Amending 2010 taxes 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. Amending 2010 taxes You can only deduct your travel expenses for the first 8 months. Amending 2010 taxes You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. Amending 2010 taxes Going home on days off. Amending 2010 taxes   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. Amending 2010 taxes You cannot deduct the cost of your meals and lodging there. Amending 2010 taxes However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Amending 2010 taxes You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Amending 2010 taxes   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Amending 2010 taxes 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. Amending 2010 taxes Probationary work period. Amending 2010 taxes   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. Amending 2010 taxes You cannot deduct any of your expenses for meals and lodging during the probationary period. Amending 2010 taxes 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. Amending 2010 taxes You can deduct ordinary and necessary expenses you have when you travel away from home on business. Amending 2010 taxes The type of expense you can deduct depends on the facts and your circumstances. Amending 2010 taxes Table 1-1 summarizes travel expenses you may be able to deduct. Amending 2010 taxes You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Amending 2010 taxes 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. Amending 2010 taxes You can use a log, diary, notebook, or any other written record to keep track of your expenses. Amending 2010 taxes The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). Amending 2010 taxes Separating costs. Amending 2010 taxes   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. Amending 2010 taxes You must have a reasonable basis for making this allocation. Amending 2010 taxes For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Amending 2010 taxes Travel expenses for another individual. Amending 2010 taxes    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. Amending 2010 taxes Employee. Amending 2010 taxes   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. Amending 2010 taxes Business associate. Amending 2010 taxes   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. Amending 2010 taxes A business associate is someone with whom you could reasonably expect to actively conduct business. Amending 2010 taxes A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Amending 2010 taxes Bona fide business purpose. Amending 2010 taxes   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Amending 2010 taxes Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Amending 2010 taxes Table 1-1. Amending 2010 taxes Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. Amending 2010 taxes IF you have expenses for. Amending 2010 taxes . Amending 2010 taxes . Amending 2010 taxes THEN you can deduct the cost of. Amending 2010 taxes . Amending 2010 taxes . Amending 2010 taxes transportation travel by airplane, train, bus, or car between your home and your business destination. Amending 2010 taxes 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. Amending 2010 taxes If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. Amending 2010 taxes 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. Amending 2010 taxes baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Amending 2010 taxes car operating and maintaining your car when traveling away from home on business. Amending 2010 taxes You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. Amending 2010 taxes If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Amending 2010 taxes 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. Amending 2010 taxes Meals include amounts spent for food, beverages, taxes, and related tips. Amending 2010 taxes See Meals for additional rules and limits. Amending 2010 taxes cleaning dry cleaning and laundry. Amending 2010 taxes telephone business calls while on your business trip. Amending 2010 taxes This includes business communication by fax machine or other communication devices. Amending 2010 taxes tips tips you pay for any expenses in this chart. Amending 2010 taxes other other similar ordinary and necessary expenses related to your business travel. Amending 2010 taxes 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. Amending 2010 taxes Example. Amending 2010 taxes Jerry drives to Chicago on business and takes his wife, Linda, with him. Amending 2010 taxes Linda is not Jerry's employee. Amending 2010 taxes Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Amending 2010 taxes The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Amending 2010 taxes Her expenses are not deductible. Amending 2010 taxes Jerry pays $199 a day for a double room. Amending 2010 taxes A single room costs $149 a day. Amending 2010 taxes He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Amending 2010 taxes If he uses public transportation, he can deduct only his fare. Amending 2010 taxes Meals You can deduct the cost of meals in either of the following situations. Amending 2010 taxes It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Amending 2010 taxes The meal is business-related entertainment. Amending 2010 taxes Business-related entertainment is discussed in chapter 2 . Amending 2010 taxes The following discussion deals only with meals that are not business-related entertainment. Amending 2010 taxes Lavish or extravagant. Amending 2010 taxes   You cannot deduct expenses for meals that are lavish or extravagant. Amending 2010 taxes An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Amending 2010 taxes 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. Amending 2010 taxes 50% limit on meals. Amending 2010 taxes   You can figure your meals expense using either of the following methods. Amending 2010 taxes Actual cost. Amending 2010 taxes The standard meal allowance. Amending 2010 taxes Both of these methods are explained below. Amending 2010 taxes But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Amending 2010 taxes   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. Amending 2010 taxes If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Amending 2010 taxes Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. Amending 2010 taxes 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. Amending 2010 taxes If you use this method, you must keep records of your actual cost. Amending 2010 taxes Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Amending 2010 taxes 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. Amending 2010 taxes The set amount varies depending on where and when you travel. Amending 2010 taxes In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Amending 2010 taxes If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Amending 2010 taxes See the recordkeeping rules for travel in chapter 5 . Amending 2010 taxes Incidental expenses. Amending 2010 taxes   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Amending 2010 taxes   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. Amending 2010 taxes Incidental-expenses-only method. Amending 2010 taxes   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Amending 2010 taxes The amount of the deduction is $5 a day. Amending 2010 taxes You can use this method only if you did not pay or incur any meal expenses. Amending 2010 taxes You cannot use this method on any day that you use the standard meal allowance. Amending 2010 taxes This method is subject to the proration rules for partial days. Amending 2010 taxes See Travel for days you depart and return , later in this chapter. Amending 2010 taxes Note. Amending 2010 taxes The incidental-expenses-only method is not subject to the 50% limit discussed below. Amending 2010 taxes Federal employees should refer to the Federal Travel Regulations at www. Amending 2010 taxes gsa. Amending 2010 taxes gov. Amending 2010 taxes 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. Amending 2010 taxes 50% limit may apply. Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. Amending 2010 taxes There is no optional standard lodging amount similar to the standard meal allowance. Amending 2010 taxes Your allowable lodging expense deduction is your actual cost. Amending 2010 taxes Who can use the standard meal allowance. Amending 2010 taxes   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. Amending 2010 taxes Use of the standard meal allowance for other travel. Amending 2010 taxes   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Amending 2010 taxes You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Amending 2010 taxes You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Amending 2010 taxes Amount of standard meal allowance. Amending 2010 taxes   The standard meal allowance is the federal M&IE rate. Amending 2010 taxes For travel in 2013, the rate for most small localities in the United States is $46 a day. Amending 2010 taxes    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Amending 2010 taxes    You can find this information (organized by state) on the Internet at www. Amending 2010 taxes gsa. Amending 2010 taxes gov/perdiem. Amending 2010 taxes Enter a zip code or select a city and state for the per diem rates for the current fiscal year. Amending 2010 taxes Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. Amending 2010 taxes ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. Amending 2010 taxes 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. Amending 2010 taxes   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. Amending 2010 taxes If you work in the transportation industry, however, see Special rate for transportation workers , later. Amending 2010 taxes Standard meal allowance for areas outside the continental United States. Amending 2010 taxes   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Amending 2010 taxes The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Amending 2010 taxes S. Amending 2010 taxes Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Amending 2010 taxes The Department of State establishes per diem rates for all other foreign areas. Amending 2010 taxes    You can access per diem rates for non-foreign areas outside the continental United States at: www. Amending 2010 taxes defensetravel. Amending 2010 taxes dod. Amending 2010 taxes mil/site/perdiemCalc. Amending 2010 taxes cfm. Amending 2010 taxes You can access all other foreign per diem rates at: www. Amending 2010 taxes state. Amending 2010 taxes gov/travel/. Amending 2010 taxes Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. Amending 2010 taxes Special rate for transportation workers. Amending 2010 taxes   You can use a special standard meal allowance if you work in the transportation industry. Amending 2010 taxes 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. Amending 2010 taxes If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes Travel for days you depart and return. Amending 2010 taxes   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). Amending 2010 taxes You can do so by one of two methods. Amending 2010 taxes Method 1: You can claim 3/4 of the standard meal allowance. Amending 2010 taxes Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Amending 2010 taxes Example. Amending 2010 taxes Jen is employed in New Orleans as a convention planner. Amending 2010 taxes In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Amending 2010 taxes She left her home in New Orleans at 10 a. Amending 2010 taxes m. Amending 2010 taxes on Wednesday and arrived in Washington, DC, at 5:30 p. Amending 2010 taxes m. Amending 2010 taxes After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Amending 2010 taxes m. Amending 2010 taxes Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Amending 2010 taxes 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. Amending 2010 taxes Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Amending 2010 taxes 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. Amending 2010 taxes Travel in the United States The following discussion applies to travel in the United States. Amending 2010 taxes For this purpose, the United States includes the 50 states and the District of Columbia. Amending 2010 taxes 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. Amending 2010 taxes See Part of Trip Outside the United States , later. Amending 2010 taxes Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. Amending 2010 taxes 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. Amending 2010 taxes These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Amending 2010 taxes Example. Amending 2010 taxes You work in Atlanta and take a business trip to New Orleans in May. Amending 2010 taxes Your business travel totals 850 miles round trip. Amending 2010 taxes On your way, you stop in Mobile to visit your parents. Amending 2010 taxes You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Amending 2010 taxes If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. Amending 2010 taxes You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. Amending 2010 taxes The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Amending 2010 taxes 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. Amending 2010 taxes However, you can deduct any expenses you have while at your destination that are directly related to your business. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes For the part of your trip that is inside the United States, use the rules for travel in the United States. Amending 2010 taxes Travel outside the United States does not include travel from one point in the United States to another point in the United States. Amending 2010 taxes The following discussion can help you determine whether your trip was entirely within the United States. Amending 2010 taxes Public transportation. Amending 2010 taxes   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. Amending 2010 taxes 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 . Amending 2010 taxes Example. Amending 2010 taxes You fly from New York to Puerto Rico with a scheduled stop in Miami. Amending 2010 taxes You return to New York nonstop. Amending 2010 taxes 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. Amending 2010 taxes Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Amending 2010 taxes Private car. Amending 2010 taxes   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. Amending 2010 taxes Example. Amending 2010 taxes You travel by car from Denver to Mexico City and return. Amending 2010 taxes 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. Amending 2010 taxes The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Amending 2010 taxes 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. Amending 2010 taxes For this purpose, the United States includes the 50 states and the District of Columbia. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes Travel entirely for business. Amending 2010 taxes   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Amending 2010 taxes Travel considered entirely for business. Amending 2010 taxes   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. Amending 2010 taxes Exception 1 - No substantial control. Amending 2010 taxes   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Amending 2010 taxes The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Amending 2010 taxes   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. Amending 2010 taxes    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . Amending 2010 taxes   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. Amending 2010 taxes   A self-employed person generally has substantial control over arranging business trips. Amending 2010 taxes Exception 2 - Outside United States no more than a week. Amending 2010 taxes   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Amending 2010 taxes One week means 7 consecutive days. Amending 2010 taxes 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. Amending 2010 taxes Example. Amending 2010 taxes You traveled to Brussels primarily for business. Amending 2010 taxes You left Denver on Tuesday and flew to New York. Amending 2010 taxes On Wednesday, you flew from New York to Brussels, arriving the next morning. Amending 2010 taxes On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. Amending 2010 taxes You flew back to New York, arriving Wednesday afternoon. Amending 2010 taxes On Thursday, you flew back to Denver. Amending 2010 taxes 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. Amending 2010 taxes This is because the day you depart does not count as a day outside the United States. Amending 2010 taxes You can deduct your cost of the round-trip flight between Denver and Brussels. Amending 2010 taxes You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. Amending 2010 taxes However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. Amending 2010 taxes Exception 3 - Less than 25% of time on personal activities. Amending 2010 taxes   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. Amending 2010 taxes For this purpose, count both the day your trip began and the day it ended. Amending 2010 taxes Example. Amending 2010 taxes You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. Amending 2010 taxes You then flew back to Seattle. Amending 2010 taxes You spent 1 day flying in each direction. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes Exception 4 - Vacation not a major consideration. Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes You can only deduct the business portion of your cost of getting to and from your destination. Amending 2010 taxes You must allocate the costs between your business and other activities to determine your deductible amount. Amending 2010 taxes See Travel allocation rules , later. Amending 2010 taxes 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 . Amending 2010 taxes In those cases, you can deduct the total cost of getting to and from your destination. Amending 2010 taxes Travel allocation rules. Amending 2010 taxes   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. Amending 2010 taxes The days you depart from and return to the United States are both counted as days outside the United States. Amending 2010 taxes   To figure the deductible amount of your round-trip travel expenses, use the following fraction. Amending 2010 taxes The numerator (top number) is the total number of business days outside the United States. Amending 2010 taxes The denominator (bottom number) is the total number of business and nonbusiness days of travel. Amending 2010 taxes Counting business days. Amending 2010 taxes   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. Amending 2010 taxes Transportation day. Amending 2010 taxes   Count as a business day any day you spend traveling to or from a business destination. Amending 2010 taxes 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. Amending 2010 taxes Extra days for side trips or nonbusiness activities cannot be counted as business days. Amending 2010 taxes Presence required. Amending 2010 taxes   Count as a business day any day your presence is required at a particular place for a specific business purpose. Amending 2010 taxes Count it as a business day even if you spend most of the day on nonbusiness activities. Amending 2010 taxes Day spent on business. Amending 2010 taxes   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Amending 2010 taxes Also, count as a business day any day you are prevented from working because of circumstances beyond your control. Amending 2010 taxes Certain weekends and holidays. Amending 2010 taxes   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. Amending 2010 taxes 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. Amending 2010 taxes Example 1. Amending 2010 taxes Your tax home is New York City. Amending 2010 taxes You travel to Quebec, where you have a business appointment on Friday. Amending 2010 taxes You have another appointment on the following Monday. Amending 2010 taxes Because your presence was required on both Friday and Monday, they are business days. Amending 2010 taxes Because the weekend is between business days, Saturday and Sunday are counted as business days. Amending 2010 taxes This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. Amending 2010 taxes Example 2. Amending 2010 taxes 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. Amending 2010 taxes Nonbusiness activity on the way to or from your business destination. Amending 2010 taxes   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. Amending 2010 taxes   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. Amending 2010 taxes   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Amending 2010 taxes 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. Amending 2010 taxes Example. Amending 2010 taxes You live in New York. Amending 2010 taxes On May 4 you flew to Paris to attend a business conference that began on May 5. Amending 2010 taxes The conference ended at noon on May 14. Amending 2010 taxes 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. Amending 2010 taxes The primary purpose for the trip was to attend the conference. Amending 2010 taxes If you had not stopped in Dublin, you would have arrived home the evening of May 14. Amending 2010 taxes You do not meet any of the exceptions that would allow you to consider your travel entirely for business. Amending 2010 taxes May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. Amending 2010 taxes You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. Amending 2010 taxes You cannot deduct your expenses while in Dublin. Amending 2010 taxes You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. Amending 2010 taxes 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. Amending 2010 taxes Round-trip airfare from New York to Dublin would have been $1,250. Amending 2010 taxes 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). Amending 2010 taxes Your deductible air travel expense is $1,364 ($1,850 − $486). Amending 2010 taxes Nonbusiness activity at, near, or beyond business destination. Amending 2010 taxes   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. Amending 2010 taxes   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. Amending 2010 taxes   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Amending 2010 taxes 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. Amending 2010 taxes   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. Amending 2010 taxes Example. Amending 2010 taxes 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. Amending 2010 taxes You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. Amending 2010 taxes In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. Amending 2010 taxes 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. Amending 2010 taxes (Assume these expenses total $4,939. Amending 2010 taxes ) 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. Amending 2010 taxes Other methods. Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes Example. Amending 2010 taxes The university from which you graduated has a continuing education program for members of its alumni association. Amending 2010 taxes 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. Amending 2010 taxes However, none of the conferences are directed toward specific occupations or professions. Amending 2010 taxes It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. Amending 2010 taxes 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. Amending 2010 taxes These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Amending 2010 taxes Professional conference directors schedule and conduct the sessions. Amending 2010 taxes Participants can choose those sessions they wish to attend. Amending 2010 taxes You can participate in this program since you are a member of the alumni association. Amending 2010 taxes You and your family take one of the trips. Amending 2010 taxes You spend about 2 hours at each of the planned sessions. Amending 2010 taxes The rest of the time you go touring and sightseeing with your family. Amending 2010 taxes The trip lasts less than 1 week. Amending 2010 taxes Your travel expenses for the trip are not deductible since the trip was primarily a vacation. Amending 2010 taxes 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. Amending 2010 taxes These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. Amending 2010 taxes 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. Amending 2010 taxes The limit is twice the highest federal per diem rate allowable at the time of your travel. Amending 2010 taxes (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. Amending 2010 taxes ) Daily limit on luxury water travel. Amending 2010 taxes   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. Amending 2010 taxes   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. Amending 2010 taxes 1 – Mar. Amending 2010 taxes 31 $367 $734   Apr. Amending 2010 taxes 1 – June 30 312 624   July 1 – Aug. Amending 2010 taxes 31 310 620   Sept. Amending 2010 taxes 1 – Sept. Amending 2010 taxes 30 366 732   Oct. Amending 2010 taxes 1 – Dec. Amending 2010 taxes 31 374 748 Example. Amending 2010 taxes Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Amending 2010 taxes Her expense for the 6-day cruise was $5,200. Amending 2010 taxes Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). Amending 2010 taxes Meals and entertainment. Amending 2010 taxes   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. Amending 2010 taxes For a discussion of the 50% Limit , see chapter 2. Amending 2010 taxes Example. Amending 2010 taxes In the previous example, Caroline's luxury water travel had a total cost of $5,200. Amending 2010 taxes Of that amount, $3,700 was separately stated as meals and entertainment. Amending 2010 taxes Caroline, who is self-employed, is not reimbursed for any of her travel expenses. Amending 2010 taxes Caroline figures her deductible travel expenses as follows. Amending 2010 taxes Meals and entertainment $3,700   50% limit × . Amending 2010 taxes 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. Amending 2010 taxes Not separately stated. Amending 2010 taxes   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. Amending 2010 taxes 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. Amending 2010 taxes See Cruise Ships under Conventions. Amending 2010 taxes Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Amending 2010 taxes You cannot deduct the travel expenses for your family. Amending 2010 taxes If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Amending 2010 taxes Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Amending 2010 taxes You can deduct your travel expenses only if your attendance is connected to your own trade or business. Amending 2010 taxes Convention agenda. Amending 2010 taxes   The convention agenda or program generally shows the purpose of the convention. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes See Reasonableness test , later. Amending 2010 taxes 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 . Amending 2010 taxes North American area. Amending 2010 taxes   The North American area includes the following locations. Amending 2010 taxes 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. Amending 2010 taxes S. Amending 2010 taxes Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. Amending 2010 taxes S. Amending 2010 taxes islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. Amending 2010 taxes Reasonableness test. Amending 2010 taxes   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. Amending 2010 taxes The purpose of the meeting and the activities taking place at the meeting. Amending 2010 taxes The purposes and activities of the sponsoring organizations or groups. Amending 2010 taxes 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. Amending 2010 taxes Other relevant factors you may present. Amending 2010 taxes 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. Amending 2010 taxes All ships that sail are considered cruise ships. Amending 2010 taxes You can deduct these expenses only if all of the following requirements are met. Amending 2010 taxes The convention, seminar, or meeting is directly related to your trade or business. Amending 2010 taxes The cruise ship is a vessel registered in the United States. Amending 2010 taxes All of the cruise ship's ports of call are in the United States or in possessions of the United States. Amending 2010 taxes 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. Amending 2010 taxes 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. Amending 2010 taxes Prev  Up  Next   Home   More Online Publications