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Filing 2012 Taxes For Free

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Filing 2012 Taxes For Free

Filing 2012 taxes for free Internal Revenue Bulletin:  2012-14  April 2, 2012  Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2012-23 Table of Contents SECTION 1. Filing 2012 taxes for free PURPOSE SECTION 2. Filing 2012 taxes for free BACKGROUND SECTION 3. Filing 2012 taxes for free SCOPE SECTION 4. Filing 2012 taxes for free APPLICATION. Filing 2012 taxes for free 01 Limitations on Depreciation Deductions for Certain Automobiles. Filing 2012 taxes for free . Filing 2012 taxes for free 02 Inclusions in Income of Lessees of Passenger Automobiles. Filing 2012 taxes for free SECTION 5. Filing 2012 taxes for free EFFECTIVE DATE SECTION 6. Filing 2012 taxes for free DRAFTING INFORMATION SECTION 1. Filing 2012 taxes for free PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2012, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2012, including a separate table of inclusion amounts for lessees of trucks and vans. Filing 2012 taxes for free The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Filing 2012 taxes for free SECTION 2. Filing 2012 taxes for free BACKGROUND . Filing 2012 taxes for free 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Filing 2012 taxes for free For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Filing 2012 taxes for free The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Filing 2012 taxes for free This change reflects the higher rate of price inflation for trucks and vans since 1988. Filing 2012 taxes for free . Filing 2012 taxes for free 02 Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Filing 2012 taxes for free L. Filing 2012 taxes for free No. Filing 2012 taxes for free 111-312, 124 Stat. Filing 2012 taxes for free 3296 (Dec. Filing 2012 taxes for free 17, 2010) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Filing 2012 taxes for free Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Filing 2012 taxes for free . Filing 2012 taxes for free 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Filing 2012 taxes for free Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Filing 2012 taxes for free Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv)). Filing 2012 taxes for free Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Filing 2012 taxes for free This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2012 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Filing 2012 taxes for free . Filing 2012 taxes for free 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Filing 2012 taxes for free The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Filing 2012 taxes for free Under § 1. Filing 2012 taxes for free 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Filing 2012 taxes for free One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Filing 2012 taxes for free Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Filing 2012 taxes for free SECTION 3. Filing 2012 taxes for free SCOPE . Filing 2012 taxes for free 01 The limitations on depreciation deductions in section 4. Filing 2012 taxes for free 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2012, and continue to apply for each taxable year that the passenger automobile remains in service. Filing 2012 taxes for free . Filing 2012 taxes for free 02 The tables in section 4. Filing 2012 taxes for free 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2012. Filing 2012 taxes for free Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Filing 2012 taxes for free See Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2007-30, 2007-1 C. Filing 2012 taxes for free B. Filing 2012 taxes for free 1104, for passenger automobiles first leased during calendar year 2007; Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2008-22, 2008-1 C. Filing 2012 taxes for free B. Filing 2012 taxes for free 658, for passenger automobiles first leased during calendar year 2008; Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2009-24, 2009-17 I. Filing 2012 taxes for free R. Filing 2012 taxes for free B. Filing 2012 taxes for free 885, for passenger automobiles first leased during calendar year 2009; Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2010-18, 2010-9 I. Filing 2012 taxes for free R. Filing 2012 taxes for free B. Filing 2012 taxes for free 427, as amplified and modified by section 4. Filing 2012 taxes for free 03 of Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2011-21, 2011-12 I. Filing 2012 taxes for free R. Filing 2012 taxes for free B. Filing 2012 taxes for free 560, for passenger automobiles first leased during calendar year 2010; and Rev. Filing 2012 taxes for free Proc. Filing 2012 taxes for free 2011-21, for passenger automobiles first leased during calendar year 2011. Filing 2012 taxes for free SECTION 4. Filing 2012 taxes for free APPLICATION . Filing 2012 taxes for free 01 Limitations on Depreciation Deductions for Certain Automobiles. Filing 2012 taxes for free (1) Amount of the inflation adjustment. Filing 2012 taxes for free (a) Passenger automobiles (other than trucks or vans). Filing 2012 taxes for free Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Filing 2012 taxes for free Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Filing 2012 taxes for free The new car component of the CPI was 115. Filing 2012 taxes for free 2 for October 1987 and 143. Filing 2012 taxes for free 419 for October 2011. Filing 2012 taxes for free The October 2011 index exceeded the October 1987 index by 28. Filing 2012 taxes for free 219. Filing 2012 taxes for free Therefore, the automobile price inflation adjustment for 2012 for passenger automobiles (other than trucks and vans) is 24. Filing 2012 taxes for free 5 percent (28. Filing 2012 taxes for free 219/115. Filing 2012 taxes for free 2 x 100%). Filing 2012 taxes for free The dollar limitations in § 280F(a) are multiplied by a factor of 0. Filing 2012 taxes for free 245, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2012. Filing 2012 taxes for free This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2012. Filing 2012 taxes for free (b) Trucks and vans. Filing 2012 taxes for free To determine the dollar limitations for trucks and vans first placed in service during calendar year 2012, the Service uses the new truck component of the CPI instead of the new car component. Filing 2012 taxes for free The new truck component of the CPI was 112. Filing 2012 taxes for free 4 for October 1987 and 146. Filing 2012 taxes for free 607 for October 2011. Filing 2012 taxes for free The October 2011 index exceeded the October 1987 index by 34. Filing 2012 taxes for free 207. Filing 2012 taxes for free Therefore, the automobile price inflation adjustment for 2012 for trucks and vans is 30. Filing 2012 taxes for free 43 percent (34. Filing 2012 taxes for free 207/112. Filing 2012 taxes for free 4 x 100%). Filing 2012 taxes for free The dollar limitations in § 280F(a) are multiplied by a factor of 0. Filing 2012 taxes for free 3043, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Filing 2012 taxes for free This adjustment applies to all trucks and vans that are first placed in service in calendar year 2012. Filing 2012 taxes for free (2) Amount of the limitation. Filing 2012 taxes for free Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2012. Filing 2012 taxes for free Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction applies. Filing 2012 taxes for free Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction does not apply. Filing 2012 taxes for free REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Filing 2012 taxes for free 02 Inclusions in Income of Lessees of Passenger Automobiles. Filing 2012 taxes for free A taxpayer must follow the procedures in § 1. Filing 2012 taxes for free 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2012. Filing 2012 taxes for free In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Filing 2012 taxes for free REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 2 4 5 6 8 19,000 19,500 2 4 7 7 9 19,500 20,000 2 5 8 8 10 20,000 20,500 3 5 9 10 11 20,500 21,000 3 6 9 12 12 21,000 21,500 3 7 10 12 14 21,500 22,000 3 8 11 13 16 22,000 23,000 4 8 13 15 17 23,000 24,000 4 10 15 17 20 24,000 25,000 5 11 17 19 23 25,000 26,000 6 12 19 21 26 26,000 27,000 6 14 20 24 28 27,000 28,000 7 15 22 26 31 28,000 29,000 7 16 25 28 33 29,000 30,000 8 18 25 32 35 30,000 31,000 9 19 27 34 38 31,000 32,000 9 20 30 36 41 32,000 33,000 10 21 32 38 43 33,000 34,000 10 23 33 41 46 34,000 35,000 11 24 35 43 49 35,000 36,000 12 25 37 45 52 36,000 37,000 12 27 39 47 54 37,000 38,000 13 28 41 49 57 38,000 39,000 13 29 43 52 59 39,000 40,000 14 30 45 54 62 40,000 41,000 14 32 47 56 65 41,000 42,000 15 33 49 58 68 42,000 43,000 16 34 51 61 70 43,000 44,000 16 36 52 63 73 44,000 45,000 17 37 54 66 75 45,000 46,000 17 38 57 67 78 46,000 47,000 18 39 59 70 80 47,000 48,000 19 40 61 72 83 48,000 49,000 19 42 62 75 86 49,000 50,000 20 43 64 77 89 50,000 51,000 20 45 66 79 91 51,000 52,000 21 46 68 81 94 52,000 53,000 21 47 70 84 96 53,000 54,000 22 48 72 86 99 54,000 55,000 23 49 74 88 102 55,000 56,000 23 51 76 90 104 56,000 57,000 24 52 78 92 107 57,000 58,000 24 54 79 95 110 58,000 59,000 25 55 81 97 113 59,000 60,000 26 56 83 100 115 60,000 62,000 26 58 86 103 119 62,000 64,000 28 60 90 108 124 64,000 66,000 29 63 94 112 129 66,000 68,000 30 66 97 117 135 68,000 70,000 31 68 102 121 140 70,000 72,000 32 71 105 126 145 72,000 74,000 33 74 109 130 151 74,000 76,000 35 76 113 135 156 76,000 78,000 36 78 117 140 161 78,000 80,000 37 81 120 145 166 80,000 85,000 39 86 127 152 176 85,000 90,000 42 92 137 163 189 90,000 95,000 45 98 147 175 202 95,000 100,000 48 105 155 187 215 100,000 110,000 52 115 170 203 235 110,000 120,000 58 127 189 227 262 120,000 130,000 64 140 208 250 288 130,000 140,000 70 153 227 272 315 140,000 150,000 75 166 246 296 340 150,000 160,000 81 179 265 318 368 160,000 170,000 87 192 284 341 394 170,000 180,000 93 204 304 364 420 180,000 190,000 99 217 323 387 446 190,000 200,000 105 230 342 409 473 200,000 210,000 111 243 361 432 499 210,000 220,000 116 256 380 455 526 220,000 230,000 122 269 399 478 552 230,000 240,000 128 282 418 501 578 240,000 and up 134 294 437 524 605 REV. Filing 2012 taxes for free PROC. Filing 2012 taxes for free 2012-23 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $19,000 $19,500 1 4 5 6 7 19,500 20,000 2 4 6 7 9 20,000 20,500 2 5 7 8 10 20,500 21,000 2 5 8 10 11 21,000 21,500 3 6 9 10 13 21,500 22,000 3 6 10 12 14 22,000 23,000 3 8 11 14 15 23,000 24,000 4 9 13 16 18 24,000 25,000 4 10 15 19 21 25,000 26,000 5 11 17 21 24 26,000 27,000 6 12 19 23 26 27,000 28,000 6 14 21 25 29 28,000 29,000 7 15 23 27 32 29,000 30,000 7 17 24 30 34 30,000 31,000 8 18 26 32 37 31,000 32,000 9 19 28 34 40 32,000 33,000 9 20 31 36 42 33,000 34,000 10 21 33 39 44 34,000 35,000 10 23 34 41 48 35,000 36,000 11 24 36 44 50 36,000 37,000 12 25 38 46 53 37,000 38,000 12 27 40 48 55 38,000 39,000 13 28 42 50 58 39,000 40,000 13 29 44 53 60 40,000 41,000 14 31 45 55 63 41,000 42,000 14 32 48 57 66 42,000 43,000 15 33 50 59 69 43,000 44,000 16 34 52 61 72 44,000 45,000 16 36 53 64 74 45,000 46,000 17 37 55 66 77 46,000 47,000 17 38 58 68 79 47,000 48,000 18 40 59 70 82 48,000 49,000 19 41 61 73 84 49,000 50,000 19 42 63 75 87 50,000 51,000 20 43 65 78 89 51,000 52,000 20 45 66 80 93 52,000 53,000 21 46 68 83 95 53,000 54,000 21 48 70 84 98 54,000 55,000 22 49 72 87 100 55,000 56,000 23 50 74 89 103 56,000 57,000 23 51 76 92 105 57,000 58,000 24 52 78 94 108 58,000 59,000 24 54 80 96 111 59,000 60,000 25 55 82 98 114 60,000 62,000 26 57 85 101 118 62,000 64,000 27 60 88 106 123 64,000 66,000 28 62 93 110 128 66,000 68,000 29 65 96 115 134 68,000 70,000 30 67 100 120 139 70,000 72,000 32 70 103 125 144 72,000 74,000 33 72 108 129 149 74,000 76,000 34 75 111 134 155 76,000 78,000 35 78 115 138 160 78,000 80,000 36 80 119 143 165 80,000 85,000 38 85 125 151 175 85,000 90,000 41 91 135 163 187 90,000 95,000 44 98 144 174 201 95,000 100,000 47 104 154 185 214 100,000 110,000 52 113 169 202 234 110,000 120,000 57 127 187 225 261 120,000 130,000 63 139 207 248 287 130,000 140,000 69 152 226 271 313 140,000 150,000 75 165 245 294 339 150,000 160,000 81 178 264 316 366 160,000 170,000 87 190 283 340 392 170,000 180,000 92 204 302 362 419 180,000 190,000 98 216 322 385 445 190,000 200,000 104 229 340 409 471 200,000 210,000 110 242 359 431 498 210,000 220,000 116 255 378 454 524 220,000 230,000 122 267 398 477 551 230,000 240,000 127 281 416 500 577 240,000 and up 133 294 435 523 603 SECTION 5. Filing 2012 taxes for free EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2012. Filing 2012 taxes for free SECTION 6. Filing 2012 taxes for free DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Filing 2012 taxes for free Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Filing 2012 taxes for free For further information regarding this revenue procedure, contact Mr. Filing 2012 taxes for free Harvey at (202) 622-4930 (not a toll-free call). Filing 2012 taxes for free Prev  Up  Next   Home   More Internal Revenue Bulletins
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IRS VITA Grant Program

The Volunteer Income Tax Assistance (VITA) Grant Program is an IRS initiative designed to promote and support free tax preparation service for the underserved, in both urban and non-urban locations. Service is targeted to low-to-moderate income individuals, persons with disabilities, the elderly, and limited English speaking. IRS awards matching grants each year to organizations that offer free tax preparation services during the tax filing season at locations in all 50 states and the District of Columbia. Congress appropriates this funding to support the Volunteer Income Tax Assistance Program.

This Grant Program is intended to provide direct funds to organizations to:

  • Enable VITA Programs to extend services to underserved populations in hardest-to-reach areas, both urban and non-urban;
  • Increase the capacity to file returns electronically;
  • Heighten quality control;
  • Enhance volunteer training; and
  • Significantly improve the accuracy rate of returns prepared at volunteer sites.

This webpage serves as a resource for organizations interested in applying for a VITA Grant as well as for organizations who have been awarded a grant.

Select from the following categories to get started:

 

Contact the VITA Grant Program at Grant.Program.Office@irs.gov.

Page Last Reviewed or Updated: 07-Nov-2013

The Filing 2012 Taxes For Free

Filing 2012 taxes for free 6. Filing 2012 taxes for free   How To Report Table of Contents Where To ReportGifts. Filing 2012 taxes for free Statutory employees. Filing 2012 taxes for free 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. Filing 2012 taxes for free Standard mileage rate. Filing 2012 taxes for free Actual expenses. Filing 2012 taxes for free Car rentals. Filing 2012 taxes for free Hours of service limits. Filing 2012 taxes for free Allocating your reimbursement. Filing 2012 taxes for free 1. Filing 2012 taxes for free Limit on meals and entertainment. Filing 2012 taxes for free 2. Filing 2012 taxes for free Limit on miscellaneous itemized deductions. Filing 2012 taxes for free 3. Filing 2012 taxes for free Limit on total itemized deductions. Filing 2012 taxes for free Special Rules This chapter explains where and how to report the expenses discussed in this publication. Filing 2012 taxes for free It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Filing 2012 taxes for free It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Filing 2012 taxes for free The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Filing 2012 taxes for free Where To Report This section provides general information on where to report the expenses discussed in this publication. Filing 2012 taxes for free Self-employed. Filing 2012 taxes for free   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. Filing 2012 taxes for free You do not use Form 2106 or 2106-EZ. Filing 2012 taxes for free    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Filing 2012 taxes for free You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Filing 2012 taxes for free   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. Filing 2012 taxes for free Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Filing 2012 taxes for free   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Filing 2012 taxes for free You can only include 50% of your meals and entertainment in that total. Filing 2012 taxes for free If you include car expenses, you must also complete Part III of the form. Filing 2012 taxes for free    If you file Schedule F (Form 1040): Report your car expenses on line 10. Filing 2012 taxes for free Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Filing 2012 taxes for free Report all other business expenses discussed in this publication on line 32. Filing 2012 taxes for free You can only include 50% of your meals and entertainment on that line. Filing 2012 taxes for free See your form instructions for more information on how to complete your tax return. Filing 2012 taxes for free Both self-employed and an employee. Filing 2012 taxes for free   If you are both self-employed and an employee, you must keep separate records for each business activity. Filing 2012 taxes for free 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. Filing 2012 taxes for free Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Filing 2012 taxes for free Employees. Filing 2012 taxes for free    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Filing 2012 taxes for free However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Filing 2012 taxes for free You are an employee deducting expenses attributable to your job. Filing 2012 taxes for free You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Filing 2012 taxes for free If you claim car expenses, you use the standard mileage rate. Filing 2012 taxes for free   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Filing 2012 taxes for free Gifts. Filing 2012 taxes for free   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. Filing 2012 taxes for free Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Filing 2012 taxes for free Statutory employees. Filing 2012 taxes for free    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). Filing 2012 taxes for free Do not complete Form 2106 or 2106-EZ. Filing 2012 taxes for free   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Filing 2012 taxes for free 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. Filing 2012 taxes for free Reimbursement for personal expenses. Filing 2012 taxes for free    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. Filing 2012 taxes for free You cannot deduct personal expenses. Filing 2012 taxes for free Income-producing property. Filing 2012 taxes for free   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Filing 2012 taxes for free   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Filing 2012 taxes for free See Publication 527, Residential Rental Property, for more information on the rental of real estate. Filing 2012 taxes for free If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free You cannot use the standard mileage rate. Filing 2012 taxes for free Value reported on Form W-2. Filing 2012 taxes for free   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). Filing 2012 taxes for free Your employer must separately state the amount if 100% of the annual lease value was included in your income. Filing 2012 taxes for free If you are unsure of the amount included on your Form W-2, ask your employer. Filing 2012 taxes for free Full value included in your income. Filing 2012 taxes for free   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. Filing 2012 taxes for free On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Filing 2012 taxes for free    To claim your expenses, complete Form 2106, Part II, Sections A and C. Filing 2012 taxes for free Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Filing 2012 taxes for free Complete the rest of the form. Filing 2012 taxes for free Less than full value included in your income. Filing 2012 taxes for free   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. Filing 2012 taxes for free Do not enter this value on your Form 2106 because it is not deductible. Filing 2012 taxes for free   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. Filing 2012 taxes for free Examples of costs that you may have are gas, oil, and repairs. Filing 2012 taxes for free Complete Form 2106, Part II, Sections A and C. Filing 2012 taxes for free Enter your actual costs on line 23 of Section C and leave line 25 blank. Filing 2012 taxes for free Complete the rest of the form. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free It also covers rules for independent contractors. Filing 2012 taxes for free No reimbursement. Filing 2012 taxes for free   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. Filing 2012 taxes for free In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Filing 2012 taxes for free Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Filing 2012 taxes for free Reimbursement, allowance, or advance. Filing 2012 taxes for free   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. Filing 2012 taxes for free Arrangements include per diem and car allowances. Filing 2012 taxes for free    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. Filing 2012 taxes for free (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Filing 2012 taxes for free ) A car allowance is an amount your employer gives you for the business use of your car. Filing 2012 taxes for free   Your employer should tell you what method of reimbursement is used and what records you must provide. Filing 2012 taxes for free Employers. Filing 2012 taxes for free   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. Filing 2012 taxes for free Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Filing 2012 taxes for free Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Filing 2012 taxes for free See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Filing 2012 taxes for free 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. Filing 2012 taxes for free You must adequately account to your employer for these expenses within a reasonable period of time. Filing 2012 taxes for free You must return any excess reimbursement or allowance within a reasonable period of time. Filing 2012 taxes for free “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Filing 2012 taxes for free 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. Filing 2012 taxes for free Reasonable period of time. Filing 2012 taxes for free   The definition of reasonable period of time depends on the facts and circumstances of your situation. Filing 2012 taxes for free 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. Filing 2012 taxes for free You receive an advance within 30 days of the time you have an expense. Filing 2012 taxes for free You adequately account for your expenses within 60 days after they were paid or incurred. Filing 2012 taxes for free You return any excess reimbursement within 120 days after the expense was paid or incurred. Filing 2012 taxes for free 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. Filing 2012 taxes for free Employee meets accountable plan rules. Filing 2012 taxes for free   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. Filing 2012 taxes for free If your expenses equal your reimbursements, you do not complete Form 2106. Filing 2012 taxes for free You have no deduction since your expenses and reimbursement are equal. Filing 2012 taxes for free    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. Filing 2012 taxes for free Accountable plan rules not met. Filing 2012 taxes for free   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Filing 2012 taxes for free 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). Filing 2012 taxes for free Failure to return excess reimbursements. Filing 2012 taxes for free   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. Filing 2012 taxes for free See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Filing 2012 taxes for free Reimbursement of nondeductible expenses. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free Example. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Filing 2012 taxes for free 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. Filing 2012 taxes for free Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Filing 2012 taxes for free ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Filing 2012 taxes for free See Per Diem and Car Allowances , later. Filing 2012 taxes for free You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Filing 2012 taxes for free This includes amounts you charged to your employer by credit card or other method. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Filing 2012 taxes for free Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Filing 2012 taxes for free The allowance is similar in form to and not more than the federal rate (defined later). Filing 2012 taxes for free 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. Filing 2012 taxes for free You are not related to your employer (as defined next). Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free In this case, you must be able to prove your expenses to the IRS. Filing 2012 taxes for free Related to employer. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free The federal rate. Filing 2012 taxes for free   The federal rate can be figured using any one of the following methods. Filing 2012 taxes for free For per diem amounts: The regular federal per diem rate. Filing 2012 taxes for free The standard meal allowance. Filing 2012 taxes for free The high-low rate. Filing 2012 taxes for free For car expenses: The standard mileage rate. Filing 2012 taxes for free A fixed and variable rate (FAVR). Filing 2012 taxes for free    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Filing 2012 taxes for free Regular federal per diem rate. Filing 2012 taxes for free   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. Filing 2012 taxes for free The rates are different for different locations. Filing 2012 taxes for free Your employer should have these rates available. Filing 2012 taxes for free You can also find federal per diem rates at www. Filing 2012 taxes for free gsa. Filing 2012 taxes for free gov/perdiem. Filing 2012 taxes for free The standard meal allowance. Filing 2012 taxes for free   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Filing 2012 taxes for free The rate for most small localities in the United States is $46 a day. Filing 2012 taxes for free Most major cities and many other localities qualify for higher rates. Filing 2012 taxes for free You can find this information on the Internet at www. Filing 2012 taxes for free gsa. Filing 2012 taxes for free gov/perdiem. Filing 2012 taxes for free   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Filing 2012 taxes for free Provides you with lodging (furnishes it in kind). Filing 2012 taxes for free Reimburses you, based on your receipts, for the actual cost of your lodging. Filing 2012 taxes for free Pays the hotel, motel, etc. Filing 2012 taxes for free , directly for your lodging. Filing 2012 taxes for free 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. Filing 2012 taxes for free Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Filing 2012 taxes for free High-low rate. Filing 2012 taxes for free   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Filing 2012 taxes for free It eliminates the need to keep a current list of the per diem rates for each city. Filing 2012 taxes for free   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. Filing 2012 taxes for free All other areas have a per diem amount of $163 (including $52 for M&IE). Filing 2012 taxes for free For more information, see Notice 2012-63, which can be found on the Internet at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/irb/2012-42_IRB/ar12. Filing 2012 taxes for free html. Filing 2012 taxes for free    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Filing 2012 taxes for free The rate for all other locations increased to $170 (including $52 for M&IE). Filing 2012 taxes for free Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Filing 2012 taxes for free For more information, see Notice 2013-65, which can be found on the Internet at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/pub/irs-drop/n-13–65. Filing 2012 taxes for free pdf and Revenue Procedure 2011-47 at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/irb/2011-42_IRB/ar12. Filing 2012 taxes for free html. Filing 2012 taxes for free Prorating the standard meal allowance on partial days of travel. Filing 2012 taxes for free   The standard meal allowance is for a full 24-hour day of travel. Filing 2012 taxes for free 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. Filing 2012 taxes for free This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Filing 2012 taxes for free   You can use either of the following methods to figure the federal M&IE for that day. Filing 2012 taxes for free Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Filing 2012 taxes for free For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Filing 2012 taxes for free Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Filing 2012 taxes for free 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. Filing 2012 taxes for free m. Filing 2012 taxes for free of one day to 5 p. Filing 2012 taxes for free m. Filing 2012 taxes for free of the next day as being no more than the federal rate. Filing 2012 taxes for free 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. Filing 2012 taxes for free The standard mileage rate. Filing 2012 taxes for free   This is a set rate per mile that you can use to compute your deductible car expenses. Filing 2012 taxes for free For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Filing 2012 taxes for free Fixed and variable rate (FAVR). Filing 2012 taxes for free   This is an allowance your employer may use to reimburse your car expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Filing 2012 taxes for free ). Filing 2012 taxes for free If your employer chooses to use this method, your employer will request the necessary records from you. Filing 2012 taxes for free Reporting your expenses with a per diem or car allowance. Filing 2012 taxes for free   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Filing 2012 taxes for free The federal rate. Filing 2012 taxes for free Whether the allowance or your actual expenses were more than the federal rate. Filing 2012 taxes for free The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Filing 2012 taxes for free Allowance less than or equal to the federal rate. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free   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). Filing 2012 taxes for free 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. Filing 2012 taxes for free If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Filing 2012 taxes for free Example 1. Filing 2012 taxes for free In April, Jeremy takes a 2-day business trip to Denver. Filing 2012 taxes for free The federal rate for Denver is $215 per day. Filing 2012 taxes for free As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Filing 2012 taxes for free His employer reimburses him $215 a day ($430 total) for living expenses. Filing 2012 taxes for free Jeremy's living expenses in Denver are not more than $215 a day. Filing 2012 taxes for free 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. Filing 2012 taxes for free Example 2. Filing 2012 taxes for free In June, Matt takes a 2-day business trip to Boston. Filing 2012 taxes for free Matt's employer uses the high-low method to reimburse employees. Filing 2012 taxes for free 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. Filing 2012 taxes for free Matt's actual expenses totaled $700. Filing 2012 taxes for free Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Filing 2012 taxes for free Matt completes Form 2106 (showing all of his expenses and reimbursements). Filing 2012 taxes for free He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Filing 2012 taxes for free Example 3. Filing 2012 taxes for free Nicole drives 10,000 miles in 2013 for business. Filing 2012 taxes for free Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Filing 2012 taxes for free Her employer pays her a mileage allowance of 40 cents a mile. Filing 2012 taxes for free 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. Filing 2012 taxes for free Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Filing 2012 taxes for free Allowance more than the federal rate. Filing 2012 taxes for free   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. Filing 2012 taxes for free This amount is not taxable. Filing 2012 taxes for free However, the excess allowance will be included in box 1 of your Form W-2. Filing 2012 taxes for free You must report this part of your allowance as if it were wage income. Filing 2012 taxes for free   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. Filing 2012 taxes for free   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free You should be able to prove these amounts to the IRS. Filing 2012 taxes for free Example 1. Filing 2012 taxes for free Laura lives and works in Austin. Filing 2012 taxes for free In July her employer sent her to Albuquerque for 4 days on business. Filing 2012 taxes for free Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Filing 2012 taxes for free Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Filing 2012 taxes for free Table 6-1. Filing 2012 taxes for free 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. Filing 2012 taxes for free No amount. Filing 2012 taxes for free No amount. Filing 2012 taxes for free Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Filing 2012 taxes for free The excess amount as wages in box 1. Filing 2012 taxes for free No amount. Filing 2012 taxes for free Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Filing 2012 taxes for free No amount. Filing 2012 taxes for free All expenses and reimbursements only if excess expenses are claimed. Filing 2012 taxes for free Otherwise, form is not filed. Filing 2012 taxes for free Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Filing 2012 taxes for free The excess amount as wages in box 1. Filing 2012 taxes for free The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Filing 2012 taxes for free No amount. Filing 2012 taxes for free Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Filing 2012 taxes for free The excess amount as wages in box 1. Filing 2012 taxes for free The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Filing 2012 taxes for free All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Filing 2012 taxes for free Otherwise, form is not filed. Filing 2012 taxes for free A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Filing 2012 taxes for free The entire amount as wages in box 1. Filing 2012 taxes for free All expenses. Filing 2012 taxes for free No reimbursement plan: The entire amount as wages in box 1. Filing 2012 taxes for free All expenses. Filing 2012 taxes for free * You may be able to use Form 2106-EZ. Filing 2012 taxes for free See Completing Forms 2106 and 2106-EZ . Filing 2012 taxes for free Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Filing 2012 taxes for free Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Filing 2012 taxes for free This amount is not included in Laura's income. Filing 2012 taxes for free 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). Filing 2012 taxes for free Example 2. Filing 2012 taxes for free Joe also lives in Austin and works for the same employer as Laura. Filing 2012 taxes for free In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Filing 2012 taxes for free The employer reimbursed Joe $75 a day for his meals and incidental expenses. Filing 2012 taxes for free The federal rate for San Diego is $71 a day. Filing 2012 taxes for free Joe can prove that his actual meal expenses totaled $380. Filing 2012 taxes for free 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. Filing 2012 taxes for free However, he does account for the time, place, and business purpose of the trip. Filing 2012 taxes for free This is Joe's only business trip this year. Filing 2012 taxes for free Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Filing 2012 taxes for free The employer includes the $16 as income on Joe's Form W-2 in box 1. Filing 2012 taxes for free The employer also enters $284 in box 12 of Joe's Form W-2. Filing 2012 taxes for free Joe completes Form 2106 to figure his deductible expenses. Filing 2012 taxes for free He enters the total of his actual expenses for the year ($380) on Form 2106. Filing 2012 taxes for free He also enters the reimbursements that were not included in his income ($284). Filing 2012 taxes for free His total deductible expense, before the 50% limit, is $96. Filing 2012 taxes for free After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Filing 2012 taxes for free Example 3. Filing 2012 taxes for free Debbie drives 10,000 miles in 2013 for business. Filing 2012 taxes for free Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Filing 2012 taxes for free Her total reimbursement is $6,000. Filing 2012 taxes for free 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. Filing 2012 taxes for free That amount is not taxable. Filing 2012 taxes for free Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Filing 2012 taxes for free This is the reimbursement that is more than the standard mileage rate. Filing 2012 taxes for free If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Filing 2012 taxes for free 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). Filing 2012 taxes for free She would then claim the excess expenses as an itemized deduction. Filing 2012 taxes for free 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. Filing 2012 taxes for free Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Filing 2012 taxes for free 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. Filing 2012 taxes for free “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Filing 2012 taxes for free Travel advance. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free   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). Filing 2012 taxes for free Unproved amounts. Filing 2012 taxes for free   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. Filing 2012 taxes for free If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Filing 2012 taxes for free Per diem allowance more than federal rate. Filing 2012 taxes for free   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. Filing 2012 taxes for free However, the difference will be reported as wages on your Form W-2. Filing 2012 taxes for free This excess amount is considered paid under a nonaccountable plan (discussed later). Filing 2012 taxes for free Example. Filing 2012 taxes for free 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. Filing 2012 taxes for free The federal per diem for meals and incidental expenses for Phoenix is $71. Filing 2012 taxes for free Your trip lasts only 3 days. Filing 2012 taxes for free Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Filing 2012 taxes for free 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). Filing 2012 taxes for free However, the $27 will be reported on your Form W-2 as wages. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Filing 2012 taxes for free 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. Filing 2012 taxes for free This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Filing 2012 taxes for free If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Filing 2012 taxes for free Reporting your expenses under a nonaccountable plan. Filing 2012 taxes for free   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. Filing 2012 taxes for free Your employer will report the total in box 1 of your Form W-2. Filing 2012 taxes for free    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Filing 2012 taxes for free Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Filing 2012 taxes for free Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Filing 2012 taxes for free Example 1. Filing 2012 taxes for free Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free Kim is being reimbursed under a nonaccountable plan. Filing 2012 taxes for free Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Filing 2012 taxes for free If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Filing 2012 taxes for free Example 2. Filing 2012 taxes for free Kevin is paid $2,000 a month by his employer. Filing 2012 taxes for free 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. Filing 2012 taxes for free Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Filing 2012 taxes for free No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Filing 2012 taxes for free Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Filing 2012 taxes for free 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. Filing 2012 taxes for free You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Filing 2012 taxes for free 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. Filing 2012 taxes for free If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Filing 2012 taxes for free You must keep adequate records of these expenses whether or not you account to your client for these expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free See 50% Limit in chapter 2. Filing 2012 taxes for free Adequate accounting. Filing 2012 taxes for free   As a self-employed person, you adequately account by reporting your actual expenses. Filing 2012 taxes for free You should follow the recordkeeping rules in chapter 5 . Filing 2012 taxes for free How to report. Filing 2012 taxes for free   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free Contractor adequately accounts. Filing 2012 taxes for free   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 . Filing 2012 taxes for free Use your records as proof for a deduction on your tax return. Filing 2012 taxes for free If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Filing 2012 taxes for free If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Filing 2012 taxes for free Contractor does not adequately account. Filing 2012 taxes for free    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. Filing 2012 taxes for free You are not subject to the 50% limit on entertainment in this case. Filing 2012 taxes for free You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free The Two Substantiation Methods High-low method. Filing 2012 taxes for free   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. Filing 2012 taxes for free Notice 2012–63, available at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/irb/2012–42_IRB/ar12. Filing 2012 taxes for free html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Filing 2012 taxes for free 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. Filing 2012 taxes for free   Notice 2013–65, available at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/pub/irs-drop/n-13–65. Filing 2012 taxes for free pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Filing 2012 taxes for free For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Filing 2012 taxes for free Regular federal per diem rate method. Filing 2012 taxes for free   Regular federal per diem rates are published by the General Services Administration (GSA). Filing 2012 taxes for free Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Filing 2012 taxes for free The rates listed for FY2013 at www. Filing 2012 taxes for free gsa. Filing 2012 taxes for free gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Filing 2012 taxes for free The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Filing 2012 taxes for free For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Filing 2012 taxes for free 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. Filing 2012 taxes for free During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Filing 2012 taxes for free High-low method. Filing 2012 taxes for free   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. Filing 2012 taxes for free However, you must continue using the high-low method for the rest of the calendar year (through December 31). Filing 2012 taxes for free If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Filing 2012 taxes for free   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. Filing 2012 taxes for free You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Filing 2012 taxes for free irs. Filing 2012 taxes for free gov/irb. Filing 2012 taxes for free Federal per diem rate method. Filing 2012 taxes for free   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Filing 2012 taxes for free 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). Filing 2012 taxes for free 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. Filing 2012 taxes for free   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Filing 2012 taxes for free Go to www. Filing 2012 taxes for free gsa. Filing 2012 taxes for free gov/perdiem. Filing 2012 taxes for free Per diem rates for localities listed for FY2014 may change at any time. Filing 2012 taxes for free To be sure you have the most current rate, check www. Filing 2012 taxes for free gsa. Filing 2012 taxes for free gov/perdiem. Filing 2012 taxes for free Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Filing 2012 taxes for free Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Filing 2012 taxes for free The instructions for the forms have more information on completing them. Filing 2012 taxes for free If you are self-employed, do not file Form 2106 or 2106-EZ. Filing 2012 taxes for free Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Filing 2012 taxes for free See the instructions for the form that you must file. Filing 2012 taxes for free Form 2106-EZ. Filing 2012 taxes for free   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Filing 2012 taxes for free You can use this form if you meet all the following conditions. Filing 2012 taxes for free You are an employee deducting ordinary and necessary expenses attributable to your job. Filing 2012 taxes for free You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Filing 2012 taxes for free If you are claiming car expenses, you are using the standard mileage rate. Filing 2012 taxes for free Car expenses. Filing 2012 taxes for free   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Filing 2012 taxes for free These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Filing 2012 taxes for free Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Filing 2012 taxes for free Information on use of cars. Filing 2012 taxes for free   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. Filing 2012 taxes for free The information relates to the following items. Filing 2012 taxes for free Date placed in service. Filing 2012 taxes for free Mileage (total, business, commuting, and other personal mileage). Filing 2012 taxes for free Percentage of business use. Filing 2012 taxes for free After-work use. Filing 2012 taxes for free Use of other vehicles. Filing 2012 taxes for free Whether you have evidence to support the deduction. Filing 2012 taxes for free Whether or not the evidence is written. Filing 2012 taxes for free Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Filing 2012 taxes for free Standard mileage rate. Filing 2012 taxes for free   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. Filing 2012 taxes for free The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Filing 2012 taxes for free In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Filing 2012 taxes for free If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Filing 2012 taxes for free See Standard Mileage Rate in chapter 4 for information on using this rate. Filing 2012 taxes for free Actual expenses. Filing 2012 taxes for free   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Filing 2012 taxes for free You must complete Form 2106, Part II, Section C. Filing 2012 taxes for free In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Filing 2012 taxes for free   If you are still using a car that is fully depreciated, continue to complete Section C. Filing 2012 taxes for free Since you have no depreciation deduction, enter zero on line 28. Filing 2012 taxes for free In this case, do not complete Section D. Filing 2012 taxes for free Car rentals. Filing 2012 taxes for free   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. Filing 2012 taxes for free If so, you can show your car expenses and any inclusion amount as follows. Filing 2012 taxes for free Compute the inclusion amount without taking into account your business use percentage for the tax year. Filing 2012 taxes for free Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Filing 2012 taxes for free Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Filing 2012 taxes for free 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. Filing 2012 taxes for free Transportation expenses. Filing 2012 taxes for free   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. Filing 2012 taxes for free Also include on this line business expenses you have for parking fees and tolls. Filing 2012 taxes for free Do not include expenses of operating your car or expenses of commuting between your home and work. Filing 2012 taxes for free Employee business expenses other than meals and entertainment. Filing 2012 taxes for free   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Filing 2012 taxes for free Do not include expenses for meals and entertainment on those lines. Filing 2012 taxes for free Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Filing 2012 taxes for free    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. Filing 2012 taxes for free Claim these amounts directly on Schedule A (Form 1040), line 21. Filing 2012 taxes for free List the type and amount of each expense on the dotted lines and include the total on line 21. Filing 2012 taxes for free Meal and entertainment expenses. Filing 2012 taxes for free   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Filing 2012 taxes for free Include meals while away from your tax home overnight and other business meals and entertainment. Filing 2012 taxes for free Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Filing 2012 taxes for free   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%. Filing 2012 taxes for free Enter the result on line 5. Filing 2012 taxes for free Hours of service limits. Filing 2012 taxes for free   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. Filing 2012 taxes for free Reimbursements. Filing 2012 taxes for free   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. Filing 2012 taxes for free This includes any amount reported under code L in box 12 of Form W-2. Filing 2012 taxes for free Allocating your reimbursement. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Filing 2012 taxes for free Example. Filing 2012 taxes for free Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Filing 2012 taxes for free The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Filing 2012 taxes for free The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Filing 2012 taxes for free Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Filing 2012 taxes for free Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Filing 2012 taxes for free To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Filing 2012 taxes for free His completed worksheet follows. Filing 2012 taxes for free Reimbursement Allocation Worksheet (Keep for your records)   1. Filing 2012 taxes for free 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. Filing 2012 taxes for free Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Filing 2012 taxes for free Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Filing 2012 taxes for free Divide line 3 by line 2. Filing 2012 taxes for free Enter the result as a decimal (rounded to at least three places) . Filing 2012 taxes for free 529   5. Filing 2012 taxes for free Multiply line 1 by line 4. Filing 2012 taxes for free Enter the result here and in Column B, line 7 3,703   6. Filing 2012 taxes for free Subtract line 5 from line 1. Filing 2012 taxes for free 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. Filing 2012 taxes for free After you complete the form. Filing 2012 taxes for free   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. Filing 2012 taxes for free For most taxpayers, this is line 21 of Schedule A (Form 1040). Filing 2012 taxes for free 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. Filing 2012 taxes for free Limits on employee business expenses. Filing 2012 taxes for free   Your employee business expenses may be subject to either of the limits described next. Filing 2012 taxes for free They are figured in the following order on the specified form. Filing 2012 taxes for free 1. Filing 2012 taxes for free Limit on meals and entertainment. Filing 2012 taxes for free   Certain meal and entertainment expenses are subject to a 50% limit. Filing 2012 taxes for free If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Filing 2012 taxes for free (See 50% Limit in chapter 2. Filing 2012 taxes for free ) 2. Filing 2012 taxes for free Limit on miscellaneous itemized deductions. Filing 2012 taxes for free   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). Filing 2012 taxes for free Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Filing 2012 taxes for free This limit is figured on line 26 of Schedule A (Form 1040). Filing 2012 taxes for free 3. Filing 2012 taxes for free Limit on total itemized deductions. Filing 2012 taxes for free   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. Filing 2012 taxes for free See your form instructions for information on how to figure this limit. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free See Per Diem and Car Allowances , earlier, for more information. Filing 2012 taxes for free Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Filing 2012 taxes for free Member of a reserve component. Filing 2012 taxes for free   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. Filing 2012 taxes for free How to report. Filing 2012 taxes for free   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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Filing 2012 taxes for free Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Filing 2012 taxes for free 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). Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free To qualify, you must meet all of the following requirements. Filing 2012 taxes for free During the tax year, you perform services in the performing arts as an employee for at least two employers. Filing 2012 taxes for free You receive at least $200 each from any two of these employers. Filing 2012 taxes for free Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Filing 2012 taxes for free Your adjusted gross income is not more than $16,000 before deducting these business expenses. Filing 2012 taxes for free Special rules for married persons. Filing 2012 taxes for free   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Filing 2012 taxes for free If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Filing 2012 taxes for free However, requirement (4) applies to your and your spouse's combined adjusted gross income. Filing 2012 taxes for free Where to report. Filing 2012 taxes for free   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Filing 2012 taxes for free 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. Filing 2012 taxes for free   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free 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. Filing 2012 taxes for free Example 1. Filing 2012 taxes for free You are blind. Filing 2012 taxes for free You must use a reader to do your work. Filing 2012 taxes for free 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. Filing 2012 taxes for free The reader's services are only for your work. Filing 2012 taxes for free You can deduct your expenses for the reader as business expenses. Filing 2012 taxes for free Example 2. Filing 2012 taxes for free You are deaf. Filing 2012 taxes for free You must use a sign language interpreter during meetings while you are at work. Filing 2012 taxes for free The interpreter's services are used only for your work. Filing 2012 taxes for free You can deduct your expenses for the interpreter as business expenses. Filing 2012 taxes for free Prev  Up  Next   Home   More Online Publications