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Compare tax software 6. Compare tax software   How To Report Table of Contents Where To ReportGifts. Compare tax software Statutory employees. Compare tax software Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Compare tax software Standard mileage rate. Compare tax software Actual expenses. Compare tax software Car rentals. Compare tax software Hours of service limits. Compare tax software Allocating your reimbursement. Compare tax software 1. Compare tax software Limit on meals and entertainment. Compare tax software 2. Compare tax software Limit on miscellaneous itemized deductions. Compare tax software 3. Compare tax software Limit on total itemized deductions. Compare tax software Special Rules This chapter explains where and how to report the expenses discussed in this publication. Compare tax software It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Compare tax software It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Compare tax software The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Compare tax software Where To Report This section provides general information on where to report the expenses discussed in this publication. Compare tax software Self-employed. Compare tax software   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Compare tax software You do not use Form 2106 or 2106-EZ. Compare tax software    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Compare tax software You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Compare tax software   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Compare tax software Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Compare tax software   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Compare tax software You can only include 50% of your meals and entertainment in that total. Compare tax software If you include car expenses, you must also complete Part III of the form. Compare tax software    If you file Schedule F (Form 1040): Report your car expenses on line 10. Compare tax software Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Compare tax software Report all other business expenses discussed in this publication on line 32. Compare tax software You can only include 50% of your meals and entertainment on that line. Compare tax software See your form instructions for more information on how to complete your tax return. Compare tax software Both self-employed and an employee. Compare tax software   If you are both self-employed and an employee, you must keep separate records for each business activity. Compare tax software Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Compare tax software Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Compare tax software Employees. Compare tax software    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Compare tax software However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Compare tax software You are an employee deducting expenses attributable to your job. Compare tax software You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Compare tax software If you claim car expenses, you use the standard mileage rate. Compare tax software   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Compare tax software Gifts. Compare tax software   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Compare tax software Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Compare tax software Statutory employees. Compare tax software    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Compare tax software Do not complete Form 2106 or 2106-EZ. Compare tax software   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Compare tax software If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Compare tax software Reimbursement for personal expenses. Compare tax software    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Compare tax software You cannot deduct personal expenses. Compare tax software Income-producing property. Compare tax software   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Compare tax software   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Compare tax software See Publication 527, Residential Rental Property, for more information on the rental of real estate. Compare tax software If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Compare tax software Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Compare tax software The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Compare tax software You cannot use the standard mileage rate. Compare tax software Value reported on Form W-2. Compare tax software   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Compare tax software Your employer must separately state the amount if 100% of the annual lease value was included in your income. Compare tax software If you are unsure of the amount included on your Form W-2, ask your employer. Compare tax software Full value included in your income. Compare tax software   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Compare tax software On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Compare tax software    To claim your expenses, complete Form 2106, Part II, Sections A and C. Compare tax software Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Compare tax software Complete the rest of the form. Compare tax software Less than full value included in your income. Compare tax software   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Compare tax software Do not enter this value on your Form 2106 because it is not deductible. Compare tax software   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Compare tax software Examples of costs that you may have are gas, oil, and repairs. Compare tax software Complete Form 2106, Part II, Sections A and C. Compare tax software Enter your actual costs on line 23 of Section C and leave line 25 blank. Compare tax software Complete the rest of the form. Compare tax software Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Compare tax software If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Compare tax software This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Compare tax software It also covers rules for independent contractors. Compare tax software No reimbursement. Compare tax software   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Compare tax software In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Compare tax software Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Compare tax software Reimbursement, allowance, or advance. Compare tax software   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Compare tax software Arrangements include per diem and car allowances. Compare tax software    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Compare tax software (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Compare tax software ) A car allowance is an amount your employer gives you for the business use of your car. Compare tax software   Your employer should tell you what method of reimbursement is used and what records you must provide. Compare tax software Employers. Compare tax software   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Compare tax software Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Compare tax software Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Compare tax software See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Compare tax software Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Compare tax software You must adequately account to your employer for these expenses within a reasonable period of time. Compare tax software You must return any excess reimbursement or allowance within a reasonable period of time. Compare tax software “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Compare tax software An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Compare tax software Reasonable period of time. Compare tax software   The definition of reasonable period of time depends on the facts and circumstances of your situation. Compare tax software However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Compare tax software You receive an advance within 30 days of the time you have an expense. Compare tax software You adequately account for your expenses within 60 days after they were paid or incurred. Compare tax software You return any excess reimbursement within 120 days after the expense was paid or incurred. Compare tax software You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Compare tax software Employee meets accountable plan rules. Compare tax software   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Compare tax software If your expenses equal your reimbursements, you do not complete Form 2106. Compare tax software You have no deduction since your expenses and reimbursement are equal. Compare tax software    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Compare tax software Accountable plan rules not met. Compare tax software   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Compare tax software All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Compare tax software Failure to return excess reimbursements. Compare tax software   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Compare tax software See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Compare tax software Reimbursement of nondeductible expenses. Compare tax software   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Compare tax software The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Compare tax software Example. Compare tax software Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Compare tax software The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Compare tax software The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Compare tax software If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Compare tax software Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Compare tax software You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Compare tax software (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Compare tax software ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Compare tax software See Per Diem and Car Allowances , later. Compare tax software You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Compare tax software This includes amounts you charged to your employer by credit card or other method. Compare tax software You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Compare tax software You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Compare tax software Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Compare tax software A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Compare tax software Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Compare tax software The allowance is similar in form to and not more than the federal rate (defined later). Compare tax software You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Compare tax software You are not related to your employer (as defined next). Compare tax software If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Compare tax software If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Compare tax software In this case, you must be able to prove your expenses to the IRS. Compare tax software Related to employer. Compare tax software   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Compare tax software You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Compare tax software The federal rate. Compare tax software   The federal rate can be figured using any one of the following methods. Compare tax software For per diem amounts: The regular federal per diem rate. Compare tax software The standard meal allowance. Compare tax software The high-low rate. Compare tax software For car expenses: The standard mileage rate. Compare tax software A fixed and variable rate (FAVR). Compare tax software    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Compare tax software Regular federal per diem rate. Compare tax software   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Compare tax software The rates are different for different locations. Compare tax software Your employer should have these rates available. Compare tax software You can also find federal per diem rates at www. Compare tax software gsa. Compare tax software gov/perdiem. Compare tax software The standard meal allowance. Compare tax software   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Compare tax software The rate for most small localities in the United States is $46 a day. Compare tax software Most major cities and many other localities qualify for higher rates. Compare tax software You can find this information on the Internet at www. Compare tax software gsa. Compare tax software gov/perdiem. Compare tax software   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Compare tax software Provides you with lodging (furnishes it in kind). Compare tax software Reimburses you, based on your receipts, for the actual cost of your lodging. Compare tax software Pays the hotel, motel, etc. Compare tax software , directly for your lodging. Compare tax software Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Compare tax software Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Compare tax software High-low rate. Compare tax software   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Compare tax software It eliminates the need to keep a current list of the per diem rates for each city. Compare tax software   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Compare tax software All other areas have a per diem amount of $163 (including $52 for M&IE). Compare tax software For more information, see Notice 2012-63, which can be found on the Internet at www. Compare tax software irs. Compare tax software gov/irb/2012-42_IRB/ar12. Compare tax software html. Compare tax software    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Compare tax software The rate for all other locations increased to $170 (including $52 for M&IE). Compare tax software Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Compare tax software For more information, see Notice 2013-65, which can be found on the Internet at www. Compare tax software irs. Compare tax software gov/pub/irs-drop/n-13–65. Compare tax software pdf and Revenue Procedure 2011-47 at www. Compare tax software irs. Compare tax software gov/irb/2011-42_IRB/ar12. Compare tax software html. Compare tax software Prorating the standard meal allowance on partial days of travel. Compare tax software   The standard meal allowance is for a full 24-hour day of travel. Compare tax software If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Compare tax software This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Compare tax software   You can use either of the following methods to figure the federal M&IE for that day. Compare tax software Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Compare tax software For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Compare tax software Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Compare tax software For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Compare tax software m. Compare tax software of one day to 5 p. Compare tax software m. Compare tax software of the next day as being no more than the federal rate. Compare tax software This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Compare tax software The standard mileage rate. Compare tax software   This is a set rate per mile that you can use to compute your deductible car expenses. Compare tax software For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Compare tax software Fixed and variable rate (FAVR). Compare tax software   This is an allowance your employer may use to reimburse your car expenses. Compare tax software Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Compare tax software ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Compare tax software ). Compare tax software If your employer chooses to use this method, your employer will request the necessary records from you. Compare tax software Reporting your expenses with a per diem or car allowance. Compare tax software   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Compare tax software The federal rate. Compare tax software Whether the allowance or your actual expenses were more than the federal rate. Compare tax software The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Compare tax software Allowance less than or equal to the federal rate. Compare tax software   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Compare tax software You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Compare tax software   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Compare tax software If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Compare tax software If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Compare tax software Example 1. Compare tax software In April, Jeremy takes a 2-day business trip to Denver. Compare tax software The federal rate for Denver is $215 per day. Compare tax software As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Compare tax software His employer reimburses him $215 a day ($430 total) for living expenses. Compare tax software Jeremy's living expenses in Denver are not more than $215 a day. Compare tax software Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Compare tax software Example 2. Compare tax software In June, Matt takes a 2-day business trip to Boston. Compare tax software Matt's employer uses the high-low method to reimburse employees. Compare tax software Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Compare tax software Matt's actual expenses totaled $700. Compare tax software Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Compare tax software Matt completes Form 2106 (showing all of his expenses and reimbursements). Compare tax software He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Compare tax software Example 3. Compare tax software Nicole drives 10,000 miles in 2013 for business. Compare tax software Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Compare tax software Her employer pays her a mileage allowance of 40 cents a mile. Compare tax software Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Compare tax software Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Compare tax software Allowance more than the federal rate. Compare tax software   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Compare tax software This amount is not taxable. Compare tax software However, the excess allowance will be included in box 1 of your Form W-2. Compare tax software You must report this part of your allowance as if it were wage income. Compare tax software   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Compare tax software   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Compare tax software You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Compare tax software You should be able to prove these amounts to the IRS. Compare tax software Example 1. Compare tax software Laura lives and works in Austin. Compare tax software In July her employer sent her to Albuquerque for 4 days on business. Compare tax software Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Compare tax software Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Compare tax software Table 6-1. Compare tax software Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Compare tax software No amount. Compare tax software No amount. Compare tax software Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Compare tax software The excess amount as wages in box 1. Compare tax software No amount. Compare tax software Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Compare tax software No amount. Compare tax software All expenses and reimbursements only if excess expenses are claimed. Compare tax software Otherwise, form is not filed. Compare tax software Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Compare tax software The excess amount as wages in box 1. Compare tax software The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Compare tax software No amount. Compare tax software Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Compare tax software The excess amount as wages in box 1. Compare tax software The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Compare tax software All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Compare tax software Otherwise, form is not filed. Compare tax software A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Compare tax software The entire amount as wages in box 1. Compare tax software All expenses. Compare tax software No reimbursement plan: The entire amount as wages in box 1. Compare tax software All expenses. Compare tax software * You may be able to use Form 2106-EZ. Compare tax software See Completing Forms 2106 and 2106-EZ . Compare tax software Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Compare tax software Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Compare tax software This amount is not included in Laura's income. Compare tax software Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Compare tax software Example 2. Compare tax software Joe also lives in Austin and works for the same employer as Laura. Compare tax software In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Compare tax software The employer reimbursed Joe $75 a day for his meals and incidental expenses. Compare tax software The federal rate for San Diego is $71 a day. Compare tax software Joe can prove that his actual meal expenses totaled $380. Compare tax software His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Compare tax software However, he does account for the time, place, and business purpose of the trip. Compare tax software This is Joe's only business trip this year. Compare tax software Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Compare tax software The employer includes the $16 as income on Joe's Form W-2 in box 1. Compare tax software The employer also enters $284 in box 12 of Joe's Form W-2. Compare tax software Joe completes Form 2106 to figure his deductible expenses. Compare tax software He enters the total of his actual expenses for the year ($380) on Form 2106. Compare tax software He also enters the reimbursements that were not included in his income ($284). Compare tax software His total deductible expense, before the 50% limit, is $96. Compare tax software After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Compare tax software Example 3. Compare tax software Debbie drives 10,000 miles in 2013 for business. Compare tax software Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Compare tax software Her total reimbursement is $6,000. Compare tax software Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Compare tax software That amount is not taxable. Compare tax software Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Compare tax software This is the reimbursement that is more than the standard mileage rate. Compare tax software If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Compare tax software If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Compare tax software She would then claim the excess expenses as an itemized deduction. Compare tax software Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Compare tax software Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Compare tax software For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Compare tax software “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Compare tax software Travel advance. Compare tax software   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Compare tax software Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Compare tax software   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Compare tax software Unproved amounts. Compare tax software   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Compare tax software If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Compare tax software Per diem allowance more than federal rate. Compare tax software   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Compare tax software However, the difference will be reported as wages on your Form W-2. Compare tax software This excess amount is considered paid under a nonaccountable plan (discussed later). Compare tax software Example. Compare tax software Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Compare tax software The federal per diem for meals and incidental expenses for Phoenix is $71. Compare tax software Your trip lasts only 3 days. Compare tax software Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Compare tax software For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Compare tax software However, the $27 will be reported on your Form W-2 as wages. Compare tax software Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Compare tax software In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Compare tax software See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Compare tax software An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Compare tax software This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Compare tax software If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Compare tax software Reporting your expenses under a nonaccountable plan. Compare tax software   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. Compare tax software Your employer will report the total in box 1 of your Form W-2. Compare tax software    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Compare tax software Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Compare tax software Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Compare tax software Example 1. Compare tax software Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Compare tax software Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Compare tax software Kim is being reimbursed under a nonaccountable plan. Compare tax software Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Compare tax software If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Compare tax software Example 2. Compare tax software Kevin is paid $2,000 a month by his employer. Compare tax software On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Compare tax software Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Compare tax software No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Compare tax software Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Compare tax software The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Compare tax software You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Compare tax software Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Compare tax software If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Compare tax software You must keep adequate records of these expenses whether or not you account to your client for these expenses. Compare tax software If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Compare tax software See 50% Limit in chapter 2. Compare tax software Adequate accounting. Compare tax software   As a self-employed person, you adequately account by reporting your actual expenses. Compare tax software You should follow the recordkeeping rules in chapter 5 . Compare tax software How to report. Compare tax software   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Compare tax software Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Compare tax software However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Compare tax software Contractor adequately accounts. Compare tax software   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Compare tax software Use your records as proof for a deduction on your tax return. Compare tax software If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Compare tax software If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Compare tax software Contractor does not adequately account. Compare tax software    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Compare tax software You are not subject to the 50% limit on entertainment in this case. Compare tax software You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Compare tax software However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Compare tax software How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Compare tax software The Two Substantiation Methods High-low method. Compare tax software   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Compare tax software Notice 2012–63, available at www. Compare tax software irs. Compare tax software gov/irb/2012–42_IRB/ar12. Compare tax software html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Compare tax software For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Compare tax software   Notice 2013–65, available at www. Compare tax software irs. Compare tax software gov/pub/irs-drop/n-13–65. Compare tax software pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Compare tax software For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Compare tax software Regular federal per diem rate method. Compare tax software   Regular federal per diem rates are published by the General Services Administration (GSA). Compare tax software Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Compare tax software The rates listed for FY2013 at www. Compare tax software gsa. Compare tax software gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Compare tax software The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Compare tax software For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Compare tax software Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Compare tax software During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Compare tax software High-low method. Compare tax software   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Compare tax software However, you must continue using the high-low method for the rest of the calendar year (through December 31). Compare tax software If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Compare tax software   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Compare tax software You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Compare tax software irs. Compare tax software gov/irb. Compare tax software Federal per diem rate method. Compare tax software   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Compare tax software Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Compare tax software However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Compare tax software   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Compare tax software Go to www. Compare tax software gsa. Compare tax software gov/perdiem. Compare tax software Per diem rates for localities listed for FY2014 may change at any time. Compare tax software To be sure you have the most current rate, check www. Compare tax software gsa. Compare tax software gov/perdiem. Compare tax software Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Compare tax software Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Compare tax software The instructions for the forms have more information on completing them. Compare tax software If you are self-employed, do not file Form 2106 or 2106-EZ. Compare tax software Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Compare tax software See the instructions for the form that you must file. Compare tax software Form 2106-EZ. Compare tax software   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Compare tax software You can use this form if you meet all the following conditions. Compare tax software You are an employee deducting ordinary and necessary expenses attributable to your job. Compare tax software You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Compare tax software If you are claiming car expenses, you are using the standard mileage rate. Compare tax software Car expenses. Compare tax software   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Compare tax software These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Compare tax software Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Compare tax software Information on use of cars. Compare tax software   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Compare tax software The information relates to the following items. Compare tax software Date placed in service. Compare tax software Mileage (total, business, commuting, and other personal mileage). Compare tax software Percentage of business use. Compare tax software After-work use. Compare tax software Use of other vehicles. Compare tax software Whether you have evidence to support the deduction. Compare tax software Whether or not the evidence is written. Compare tax software Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Compare tax software Standard mileage rate. Compare tax software   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Compare tax software The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Compare tax software In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Compare tax software If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Compare tax software See Standard Mileage Rate in chapter 4 for information on using this rate. Compare tax software Actual expenses. Compare tax software   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Compare tax software You must complete Form 2106, Part II, Section C. Compare tax software In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Compare tax software   If you are still using a car that is fully depreciated, continue to complete Section C. Compare tax software Since you have no depreciation deduction, enter zero on line 28. Compare tax software In this case, do not complete Section D. Compare tax software Car rentals. Compare tax software   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Compare tax software If so, you can show your car expenses and any inclusion amount as follows. Compare tax software Compute the inclusion amount without taking into account your business use percentage for the tax year. Compare tax software Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Compare tax software Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Compare tax software The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Compare tax software Transportation expenses. Compare tax software   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Compare tax software Also include on this line business expenses you have for parking fees and tolls. Compare tax software Do not include expenses of operating your car or expenses of commuting between your home and work. Compare tax software Employee business expenses other than meals and entertainment. Compare tax software   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Compare tax software Do not include expenses for meals and entertainment on those lines. Compare tax software Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Compare tax software    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Compare tax software Claim these amounts directly on Schedule A (Form 1040), line 21. Compare tax software List the type and amount of each expense on the dotted lines and include the total on line 21. Compare tax software Meal and entertainment expenses. Compare tax software   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Compare tax software Include meals while away from your tax home overnight and other business meals and entertainment. Compare tax software Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Compare tax software   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Compare tax software Enter the result on line 5. Compare tax software Hours of service limits. Compare tax software   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Compare tax software Reimbursements. Compare tax software   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Compare tax software This includes any amount reported under code L in box 12 of Form W-2. Compare tax software Allocating your reimbursement. Compare tax software   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Compare tax software This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Compare tax software You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Compare tax software Example. Compare tax software Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Compare tax software The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Compare tax software The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Compare tax software Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Compare tax software Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Compare tax software To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Compare tax software His completed worksheet follows. Compare tax software Reimbursement Allocation Worksheet (Keep for your records)   1. Compare tax software Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Compare tax software Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Compare tax software Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Compare tax software Divide line 3 by line 2. Compare tax software Enter the result as a decimal (rounded to at least three places) . Compare tax software 529   5. Compare tax software Multiply line 1 by line 4. Compare tax software Enter the result here and in Column B, line 7 3,703   6. Compare tax software Subtract line 5 from line 1. Compare tax software Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Compare tax software After you complete the form. Compare tax software   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Compare tax software For most taxpayers, this is line 21 of Schedule A (Form 1040). Compare tax software However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Compare tax software Limits on employee business expenses. Compare tax software   Your employee business expenses may be subject to either of the limits described next. Compare tax software They are figured in the following order on the specified form. Compare tax software 1. Compare tax software Limit on meals and entertainment. Compare tax software   Certain meal and entertainment expenses are subject to a 50% limit. Compare tax software If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Compare tax software (See 50% Limit in chapter 2. Compare tax software ) 2. Compare tax software Limit on miscellaneous itemized deductions. Compare tax software   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Compare tax software Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Compare tax software This limit is figured on line 26 of Schedule A (Form 1040). Compare tax software 3. Compare tax software Limit on total itemized deductions. Compare tax software   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Compare tax software See your form instructions for information on how to figure this limit. Compare tax software Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Compare tax software Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Compare tax software The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Compare tax software See Per Diem and Car Allowances , earlier, for more information. Compare tax software Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Compare tax software Member of a reserve component. Compare tax software   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Compare tax software How to report. Compare tax software   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Compare tax software Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Compare tax software Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Compare tax software   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Compare tax software Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Compare tax software Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Compare tax software Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Compare tax software They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Compare tax software If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Compare tax software Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Compare tax software To qualify, you must meet all of the following requirements. Compare tax software During the tax year, you perform services in the performing arts as an employee for at least two employers. Compare tax software You receive at least $200 each from any two of these employers. Compare tax software Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Compare tax software Your adjusted gross income is not more than $16,000 before deducting these business expenses. Compare tax software Special rules for married persons. Compare tax software   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Compare tax software If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Compare tax software However, requirement (4) applies to your and your spouse's combined adjusted gross income. Compare tax software Where to report. Compare tax software   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Compare tax software Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Compare tax software   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Compare tax software Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Compare tax software Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Compare tax software After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Compare tax software Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Compare tax software Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Compare tax software You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Compare tax software You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Compare tax software Example 1. Compare tax software You are blind. Compare tax software You must use a reader to do your work. Compare tax software You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Compare tax software The reader's services are only for your work. Compare tax software You can deduct your expenses for the reader as business expenses. Compare tax software Example 2. Compare tax software You are deaf. Compare tax software You must use a sign language interpreter during meetings while you are at work. Compare tax software The interpreter's services are used only for your work. Compare tax software You can deduct your expenses for the interpreter as business expenses. Compare tax software Prev  Up  Next   Home   More Online Publications
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Compare tax software Publication 510 - Introductory Material Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Excise Taxes Not Covered What's New Medical device excise tax. Compare tax software  The Affordable Care Act (the “Act”) (Public Law 111-148, amended by Public Law 111-152) imposes a 2. Compare tax software 3% (. Compare tax software 023) excise tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device. Compare tax software The tax applies to sales of taxable medical devices after December 31, 2012. Compare tax software See Taxable Medical Devices in chapter 5, later. Compare tax software Tax on seasonal flu vaccines. Compare tax software  Sales of all vaccines against seasonal influenza are now subject to the section 4131 excise tax at the existing rate of $. Compare tax software 75 per dose of taxable vaccine. Compare tax software Previously, only trivalent influenza vaccines were subject to this tax. Compare tax software See Vaccines in chapter 5, later. Compare tax software Patient-centered outcomes research fee. Compare tax software  The Act imposes a fee on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4576) to help fund the Patient-Centered Outcomes Research Institute. Compare tax software The fee, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, is based on the average number of lives covered under the policy or plan. Compare tax software The fee applies to policy or plan years ending on or after October 1, 2012. Compare tax software See chapter 11, later. Compare tax software Extension of fuel tax credits. Compare tax software  The following section 6426 credits, previously expired on December 31, 2011, are retroactively extended. Compare tax software Biodiesel or renewable diesel mixture credit. Compare tax software Alternative fuel credit. Compare tax software Alternative fuel mixture credit. Compare tax software See Notice 2013–26 (fuel tax credits) on page 984 of I. Compare tax software R. Compare tax software B. Compare tax software 2013–18 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb13-18. Compare tax software pdf; also see chapter 2, later. Compare tax software Alternative fuel mixture credit can be claimed on Schedule C (Form 720) only. Compare tax software  For alternative fuel mixtures produced after December 31, 2011, the section 6426 alternative fuel mixture credit can be claimed on Schedule C (Form 720) only, not on Form 4136, Credit for Federal Tax Paid on Fuels, or Schedule 3 (Form 8849), Claim for Refund of Excise Taxes, and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel, and kerosene. Compare tax software See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit in chapter 2, later. Compare tax software Expiration of alcohol fuel mixture credit. Compare tax software  The section 6426 alcohol fuel mixture credit expired after December 31, 2011. Compare tax software Expiration of alcohol fuels credits. Compare tax software  The section 40 alcohol, alcohol mixture, and small ethanol producer credits expired after December 31, 2011. Compare tax software Second generation biofuel producer credit and excise tax. Compare tax software  The section 40 cellulosic biofuel producer credit was retroactively extended to include fuel sold or used through January 2, 2013. Compare tax software After January 2, 2013, cellulosic biofuel is renamed second generation biofuel, which adds algae-based fuel. Compare tax software The second generation biofuel producer credit is for fuel sold or used after January 2, 2013, and before January 1, 2014. Compare tax software You are liable for an excise tax on each gallon of cellulosic or second generation biofuel at the rate you used to figure the credit if you do not use the fuel for the purposes described under Qualified Cellulosic Biofuel Production or Qualified Second Generation Biofuel Production, later. Compare tax software Report the tax on Form 720. Compare tax software See Cellulosic or Second Generation Biofuel Not Used as Fuel, later; also see Form 6478, Biofuel Producer Credit, for more information. Compare tax software Extension of section 40A biodiesel fuels credit. Compare tax software  The biodiesel fuels credit, previously expired on December 31, 2011, is retroactively extended. Compare tax software Future developments. Compare tax software  The IRS has created a page on IRS. Compare tax software gov that includes information about Publication 510 at www. Compare tax software irs. Compare tax software gov/pub510. Compare tax software Information about any future developments will be posted on that page. Compare tax software Reminders Publication 510 updates. Compare tax software  Publication 510 is not updated annually. Compare tax software Instead, it will be updated only when there are major changes in the tax law. Compare tax software Use of international air travel facilities. Compare tax software  Generally, the tax on the use of international air travel facilities increases annually. Compare tax software See the Instructions for Form 720 for the tax rate. Compare tax software For more information, see Air Transportation Taxes in chapter 4. Compare tax software Aviation fuels for use in foreign trade. Compare tax software  Aviation gasoline and kerosene for use in aviation are exempt from the leaking underground storage tank (LUST) tax. Compare tax software Arrow shafts, tax rate. Compare tax software  Generally, the tax on arrow shafts increases annually. Compare tax software See Form 720 for the tax rate. Compare tax software Disregarded entities and qualified subchapter S subsidiaries. Compare tax software  Qualified subchapter S subsidiaries (QSubs) and eligible single-owner disregarded entities are treated as separate entities for excise tax and reporting purposes. Compare tax software QSubs and eligible single-owner disregarded entities must pay and report excise taxes (other than IRS Nos. Compare tax software 31, 51, and 117), register for most excise tax activities, and claim any refunds, credits, and payments under the entity's employer identification number (EIN). Compare tax software These actions cannot take place under the owner's taxpayer identification number (TIN). Compare tax software Some QSubs and disregarded entities may already have an EIN. Compare tax software However, if you are unsure, please call the IRS Business and Specialty Tax line at 1-800-829-4933. Compare tax software Generally, QSubs and eligible single-owner disregarded entities will continue to be treated as disregarded entities for other federal tax purposes (other than employment taxes). Compare tax software For more information on these regulations, see Treasury Decision (T. Compare tax software D. Compare tax software ) 9356, T. Compare tax software D. Compare tax software 9462, and T. Compare tax software D. Compare tax software 9596. Compare tax software You can find T. Compare tax software D. Compare tax software 9356 on page 675 of Internal Revenue Bulletin (I. Compare tax software R. Compare tax software B. Compare tax software ) 2007-39 at  www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb07-39. Compare tax software pdf;  T. Compare tax software D. Compare tax software 9462 on page 504 of I. Compare tax software R. Compare tax software B. Compare tax software 2009-42 at  www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb09-42. Compare tax software pdf;  and T. Compare tax software D. Compare tax software 9596 on page 84 of I. Compare tax software R. Compare tax software B. Compare tax software 2012-30 at  www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb12-30. Compare tax software pdf. Compare tax software Registration for certain activities. Compare tax software  You are required to be registered for certain excise tax activities, such as blending of gasoline, diesel fuel, or kerosene outside the bulk transfer/terminal system. Compare tax software See the instructions for Form 637 for the list of activities for which you must register. Compare tax software Also see Registration Requirements under Fuel Taxes in chapter 1 for information on registration for activities related to fuel. Compare tax software Each business unit that has, or is required to have, a separate employer identification number must be registered. Compare tax software To apply for registration, complete Form 637 and provide the information requested in its instructions. Compare tax software If your application is approved, you will receive a Letter of Registration showing the activities for which you are registered, the effective date of the registration, and your registration number. Compare tax software A copy of Form 637 is not a Letter of Registration. Compare tax software Photographs of missing children. Compare tax software  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Compare tax software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Compare tax software You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Compare tax software Introduction This publication covers the excise taxes for which you may be liable and which are reported on Form 720 and other forms. Compare tax software It also covers fuel tax credits and refunds. Compare tax software For information on fuel credits against income tax (the section 40 credits for the production of cellulosic biofuel and second generation biofuel, and the section 40A credit for biodiesel and renewable diesel used as fuel) see the instructions for Form 6478 and Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Compare tax software Comments and suggestions. Compare tax software   We welcome your comments about this publication and your suggestions for future editions. Compare tax software   You can write to us at the following address: Internal Revenue Service Individual and Specialty Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Compare tax software NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Compare tax software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Compare tax software   You can email us at taxforms@irs. Compare tax software gov. Compare tax software Please put “Publications Comment” on the subject line. Compare tax software You can also send us comments from www. Compare tax software irs. Compare tax software gov/Forms-&-Pubs/More-Information/ and select “Comment on Tax Forms and Publications”. Compare tax software   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Compare tax software Useful Items - You may want to see: Publication 509 Tax Calendars Form (and Instructions) 11-C Occupational Tax and Registration Return for Wagering 637 Application for Registration (For Certain Excise Tax Activities) 720 Quarterly Federal Excise Tax Return 720X Amended Quarterly Federal Excise Tax Return 730 Monthly Tax Return for Wagers 1363 Export Exemption Certificate 2290 Heavy Highway Vehicle Use Tax Return 2290(SP) Declaración del Impuesto sobre el Uso de Vehículos Pesados en las Carreteras 4136 Credit for Federal Tax Paid on Fuels 6197 Gas Guzzler Tax 6478 Biofuel Producer Credit 6627 Environmental Taxes 8849 Claim for Refund of Excise Taxes, and Schedules 1–3, 5, 6, and 8 8864 Biodiesel and Renewable Diesel Fuels Credit Information Returns    Form 720-TO, Terminal Operator Report Form 720-CS, Carrier Summary Report   See How To Get Tax Help in chapter 17 for information about ordering forms and publications. Compare tax software Guidance    You can find Notice 2005-4 (fuel tax guidance) on page 289 of I. Compare tax software R. Compare tax software B. Compare tax software 2005-2 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb05-02. Compare tax software pdf. Compare tax software Notice 2005-62 (biodiesel and aviation-grade kerosene) on page 443 of I. Compare tax software R. Compare tax software B. Compare tax software 2005-35 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb05-35. Compare tax software pdf. Compare tax software Notice 2005-80 (LUST, kerosene, claims by credit card issuers, and mechanical dye injection) on page 953 of I. Compare tax software R. Compare tax software B. Compare tax software 2005-46 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb05-46. Compare tax software pdf. Compare tax software Notice 2006-92 (alternative fuels and alternative fuel mixtures) on page 774 of I. Compare tax software R. Compare tax software B. Compare tax software 2006-43 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb06-43. Compare tax software pdf. Compare tax software Notice 2008-110 (biodiesel and cellulosic biofuel) on page 1298 of I. Compare tax software R. Compare tax software B. Compare tax software 2008-51 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb08-51. Compare tax software pdf. Compare tax software Notice 2010-68 (Alaska dyed diesel exemption) on page 576 of I. Compare tax software R. Compare tax software B. Compare tax software 2010-44 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb10-44. Compare tax software pdf. Compare tax software Notice 2012-27 (fractional aircraft ownership programs fuel surtax) on page 849 of I. Compare tax software R. Compare tax software B. Compare tax software 2012-17 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb12-17. Compare tax software pdf. Compare tax software Notice 2013-26 (fuel tax credits) on page 984 of I. Compare tax software R. Compare tax software B. Compare tax software 2013-18 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb13-18. Compare tax software pdf. Compare tax software T. Compare tax software D. Compare tax software 9604 and Notice 2012–77 (medical device tax) on pages 730 and 781, respectively, of I. Compare tax software R. Compare tax software B. Compare tax software 2012-52 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb12-52. Compare tax software pdf. Compare tax software T. Compare tax software D. Compare tax software 9602 (patient-centered outcomes research fee) on page 746 of I. Compare tax software R. Compare tax software B. Compare tax software 2012-52 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb12-52. Compare tax software pdf. Compare tax software Revenue Procedure 2012-41 (inflation adjustments) on page 539 of I. Compare tax software R. Compare tax software B. Compare tax software 2012-45 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb12-45. Compare tax software pdf. Compare tax software T. Compare tax software D. Compare tax software 9621 (indoor tanning services tax) on page 49 of I. Compare tax software R. Compare tax software B. Compare tax software 2013-28 at www. Compare tax software irs. Compare tax software gov/pub/irs-irbs/irb13-28. Compare tax software pdf. Compare tax software Excise Taxes Not Covered In addition to the taxes discussed in this publication, you may have to report certain other excise taxes. Compare tax software For tax forms relating to alcohol, firearms, and tobacco, visit the Alcohol and Tobacco Tax and Trade Bureau website at www. Compare tax software ttb. Compare tax software gov. Compare tax software Heavy highway vehicle use tax. Compare tax software   You report the federal excise tax on the use of certain trucks, truck tractors, and buses used on public highways on Form 2290, Heavy Highway Vehicle Use Tax Return. Compare tax software The tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Compare tax software Vans, pickup trucks, panel trucks, and similar trucks generally are not subject to this tax. Compare tax software Note. Compare tax software A Spanish version (Formulario 2290(SP)) is also available. Compare tax software See How To Get Tax Help in chapter 17. Compare tax software Registration of vehicles. Compare tax software   Generally, you must prove that you paid your heavy highway vehicle use tax to register your taxable vehicle with your state motor vehicle department or to enter the United States in a Canadian or Mexican registered taxable vehicle. Compare tax software Generally, a copy of Schedule 1 (Form 2290) is stamped by the IRS and returned to you as proof of payment. Compare tax software    If you have questions on Form 2290, see its separate instructions, or you can call the Form 2290 call site at 1-866-699-4096 (toll free) from the United States, and 1-859-669-5733 (not toll free) from Canada and Mexico. Compare tax software The hours of service are 8:00 a. Compare tax software m. Compare tax software to 6:00 p. Compare tax software m. Compare tax software Eastern time. Compare tax software Wagering tax and occupational tax. Compare tax software   The information on wagering tax can be found in the instructions for Form 730, Tax on Wagering, and Form 11-C, Occupational Tax and Registration Return for Wagering. Compare tax software Prev  Up  Next   Home   More Online Publications