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Free Online Taxes 2012

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Free Online Taxes 2012

Free online taxes 2012 Index Symbols 529 program (see Qualified tuition program (QTP)) A Academic period American opportunity credit, Academic period. Free online taxes 2012 Lifetime learning credit, Academic period. Free online taxes 2012 Student loan interest deduction, Academic period. Free online taxes 2012 Tuition and fees deduction, Academic period. Free online taxes 2012 Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Free online taxes 2012 Additional tax Coverdell ESA On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Free online taxes 2012 On taxable distributions, Additional Tax on Taxable Distributions IRA distributions, education exception, Education Exception to Additional Tax on Early IRA Distributions Qualified tuition program (QTP), on taxable distributions, Additional Tax on Taxable Distributions Adjusted qualified education expenses (see Qualified education expenses) American opportunity credit Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses, Tuition reduction. Free online taxes 2012 Tuition reduction, Tuition reduction. Free online taxes 2012 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 2-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Free online taxes 2012 Eligible student, Who Is an Eligible Student Requirements (Figure 2-2), Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the credit, Figuring the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Free online taxes 2012 Income limits, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Free online taxes 2012 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 Worksheet 2-1, Claiming the Credit Overview of American opportunity credit (Table 2-1), Introduction Phaseout, Phaseout. Free online taxes 2012 Qualified education expenses, Qualified Education Expenses Tax benefit of, What is the tax benefit of the American opportunity credit. Free online taxes 2012 Armed Forces Health Professions Scholarship and Financial Assistance Program, Exceptions. Free online taxes 2012 Assistance (see Tax help) Athletic scholarships, Athletic Scholarships B Bar review course, Bar or CPA Review Course Bonds, education savings (see Education savings bond program) Business deduction for work-related education, Business Deduction for Work-Related Education, Illustrated Example Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Free online taxes 2012 Adjustments to qualifying work-related education expenses, Adjustments to Qualifying Work-Related Education Expenses Allocating meal reimbursements, Allocating your reimbursements for meals. Free online taxes 2012 Deductible education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Deducting business expenses, Deducting Business Expenses, Impairment-Related Work Expenses Double benefit not allowed, No Double Benefit Allowed Education required by employer or by law, Education Required by Employer or by Law Education to maintain or improve skills, Education To Maintain or Improve Skills Education to meet minimum requirements, Education To Meet Minimum Requirements, Certification in a new state. Free online taxes 2012 Education to qualify for new trade or business, Education That Qualifies You for a New Trade or Business, Teaching and Related Duties Excess expenses, accountable plan, Excess expenses. Free online taxes 2012 , Allocating your reimbursements for meals. Free online taxes 2012 Indefinite absence, Education during indefinite absence. Free online taxes 2012 Maintaining skills vs. Free online taxes 2012 qualifying for new job, Maintaining skills vs. Free online taxes 2012 qualifying for new job. Free online taxes 2012 Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Nondeductible expenses. Free online taxes 2012 Qualified education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Recordkeeping requirements, Recordkeeping, Examples of records to keep. Free online taxes 2012 Reimbursements, treatment of, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Free online taxes 2012 Tax benefit of, What is the tax benefit of taking a business deduction for work-related education. Free online taxes 2012 Tax-free educational assistance, Tax-free educational assistance. Free online taxes 2012 Teachers, Requirements for Teachers, Teaching and Related Duties Temporary absence to acquire education, Education during temporary absence. Free online taxes 2012 Transportation expenses, Transportation Expenses, Using your car. Free online taxes 2012 Travel expenses, Travel Expenses C Cancellation of student loan (see Student loan cancellation) Candidate for a degree Scholarships and fellowships, Candidate for a degree. Free online taxes 2012 Change of designated beneficiary Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program, Changing the Designated Beneficiary Collapsed loans, Interest on refinanced student loans. Free online taxes 2012 Comprehensive or bundled fees American opportunity credit, Comprehensive or bundled fees. Free online taxes 2012 Lifetime learning credit, Comprehensive or bundled fees. Free online taxes 2012 Tuition and fees deduction, Comprehensive or bundled fees. Free online taxes 2012 Consolidated loans used to refinance student loans, Interest on refinanced student loans. Free online taxes 2012 Conventions outside U. Free online taxes 2012 S. Free online taxes 2012 , Cruises and conventions. Free online taxes 2012 Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits, Worksheet 7-3. Free online taxes 2012 Coverdell ESA—Taxable Distributions and Basis Additional tax On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Free online taxes 2012 On taxable distributions, Additional Tax on Taxable Distributions Assets to be distributed at age 30 or death of beneficiary, When Assets Must Be Distributed Contribution limits, Contribution Limits, Figuring the limit. Free online taxes 2012 Figuring the limit (Worksheet 6-2), Figuring the limit. Free online taxes 2012 Contributions to, Contributions, Figuring and reporting the additional tax. Free online taxes 2012 Table 7-2, Contributions Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP), Coordination With Qualified Tuition Program (QTP) Distributions Defined, What Is a Coverdell ESA Distributions, Distributions, How To Figure the Taxable Earnings Overview (Table 7-3), Distributions Divorce, transfer due to, Transfer Because of Divorce Eligible educational institution, Eligible Educational Institution Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution Worksheet 7-3, Worksheet 7-3. Free online taxes 2012 Coverdell ESA—Taxable Distributions and Basis Figuring the taxable earnings in required distribution, How To Figure the Taxable Earnings Losses, Losses on Coverdell ESA Investments Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 , MAGI when using Form 1040NR-EZ. Free online taxes 2012 Worksheet 6-1, Worksheet 7-1. Free online taxes 2012 MAGI for a Coverdell ESA Overview (Table 6-1), Coverdell Education Savings Account (ESA) Qualified education expenses, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Rollovers, Rollovers Tax benefit of, What is the tax benefit of the Coverdell ESA. Free online taxes 2012 Tax-free distributions, Tax-Free Distributions Taxable distributions, Taxable Distributions, Figuring the additional tax. Free online taxes 2012 Worksheet 7-3 to figure, Worksheet 7-3. Free online taxes 2012 Coverdell ESA—Taxable Distributions and Basis Transfers, Rollovers CPA review course, Bar or CPA Review Course Credits American opportunity (see American opportunity credit) Lifetime learning (see Lifetime learning credit) Cruises, educational, Cruises and conventions. Free online taxes 2012 D Deductions (see Business deduction for work-related education) Designated beneficiary Coverdell ESA, What Is a Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program (QTP), Designated beneficiary. Free online taxes 2012 , Changing the Designated Beneficiary Disabilities, persons with Impairment-related work expenses, Impairment-Related Work Expenses Distributions (see specific benefit ) Divorce Coverdell ESA transfer due to, Transfer Because of Divorce Expenses paid under decree American opportunity credit, Expenses paid by dependent. Free online taxes 2012 Lifetime learning credit, Expenses paid by dependent. Free online taxes 2012 Tuition and fees deduction, Expenses paid under divorce decree. Free online taxes 2012 Double benefit not allowed American opportunity credit, No Double Benefit Allowed Lifetime learning credit, No Double Benefit Allowed Student loan interest deduction, No Double Benefit Allowed Tuition and fees deduction, No Double Benefit Allowed Work-related education, No Double Benefit Allowed E Early distributions from IRAs, Education Exception to Additional Tax on Early IRA Distributions, Reporting Early Distributions Eligible educational institution, Eligible educational institution. Free online taxes 2012 Figuring amount not subject to 10% tax, Figuring the Amount Not Subject to the 10% Tax Qualified education expenses, Qualified education expenses. Free online taxes 2012 Reporting, Reporting Early Distributions Education IRA (see Coverdell education savings account (ESA)) Education loans (see Student loan interest deduction) Education savings account (see Coverdell education savings account (ESA)) Education savings bond program Cashing in bonds tax free, Who Can Cash In Bonds Tax Free, MAGI when using Form 1040. Free online taxes 2012 Claiming dependent's exemption, Dependent for whom you claim an exemption. Free online taxes 2012 Claiming exclusion, Claiming the Exclusion Eligible educational institution, Eligible educational institution. Free online taxes 2012 Figuring tax-free amount, Figuring the Tax-Free Amount Income level, effect on amount of exclusion, Effect of the Amount of Your Income on the Amount of Your Exclusion Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 , MAGI when using Form 1040. Free online taxes 2012 Phaseout, Effect of the Amount of Your Income on the Amount of Your Exclusion Qualified education expenses, Qualified education expenses. Free online taxes 2012 Educational assistance, employer-provided (see Employer-provided educational assistance) Eligible educational institution American opportunity credit, Eligible educational institution. Free online taxes 2012 Cancellation of student loan, Eligible educational institution. Free online taxes 2012 Coverdell ESA, Eligible Educational Institution Early distributions from IRAs, Eligible educational institution. Free online taxes 2012 Education savings bond program, Eligible educational institution. Free online taxes 2012 Lifetime learning credit, Eligible educational institution. Free online taxes 2012 Qualified tuition program (QTP), Eligible educational institution. Free online taxes 2012 Qualified tuition reduction, Qualified Tuition Reduction Scholarships and fellowships, Eligible educational institution. Free online taxes 2012 , Eligible educational institution. Free online taxes 2012 Student loan cancellation, Eligible educational institution. Free online taxes 2012 Student loan interest deduction, Eligible educational institution. Free online taxes 2012 Tuition and fees deduction, Eligible educational institution. Free online taxes 2012 Eligible elementary or secondary school Coverdell ESA, Eligible elementary or secondary school. Free online taxes 2012 Eligible student American opportunity credit, Who Is an Eligible Student Lifetime learning credit, Who Is an Eligible Student Student loan interest deduction, Eligible student. Free online taxes 2012 Tuition and fees deduction, Who Is an Eligible Student Employees Deducting work-related education expenses, Employees Employer-provided educational assistance, Employer-Provided Educational Assistance, Working condition fringe benefit. Free online taxes 2012 ESAs (see Coverdell education savings account (ESA)) Estimated tax, Reminders Excess contributions Coverdell ESA, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Free online taxes 2012 Excess expenses, accountable plan, Excess expenses. Free online taxes 2012 , Allocating your reimbursements for meals. Free online taxes 2012 Expenses (see specific benefit ) F Family members, beneficiary Coverdell ESA, Members of the beneficiary's family. Free online taxes 2012 Qualified tuition program (QTP), Members of the beneficiary's family. Free online taxes 2012 Fee-basis officials, work-related education deduction, Performing Artists and Fee-Basis Officials Fellowships (see Scholarships and fellowships) Figures (see Tables and figures) Financial aid (see Scholarships and fellowships) Form 1098-E Student loan interest deduction, Loan origination fee. Free online taxes 2012 , Form 1098-E. Free online taxes 2012 Form 1098-T, Reminders American opportunity credit, Form 1098-T. Free online taxes 2012 Lifetime learning credit, Form 1098-T. Free online taxes 2012 Tuition and fees deduction, Form 1098-T. Free online taxes 2012 Form 1099-Q Coverdell ESA, Exceptions. Free online taxes 2012 , Earnings and basis. Free online taxes 2012 Qualified tuition program (QTP), Earnings and return of investment. Free online taxes 2012 Form 1099-R Early distributions from IRAs, Reporting Early Distributions Form 2106, 50% limit on meals. Free online taxes 2012 , Form 2106 or 2106-EZ. Free online taxes 2012 Form 2106-EZ, 50% limit on meals. Free online taxes 2012 , Form 2106 or 2106-EZ. Free online taxes 2012 , Using Form 2106-EZ. Free online taxes 2012 Filled-in example, Form 5329 Coverdell ESA, Figuring the additional tax. Free online taxes 2012 Early distributions from IRAs, Reporting Early Distributions Qualified tuition program (QTP), Figuring the additional tax. Free online taxes 2012 Form 8815, MAGI when using Form 1040. Free online taxes 2012 , Claiming the Exclusion Form 8863 Filled-in examples, Form 8917 Filled-in examples, Form W-9S, Form 1098-T. Free online taxes 2012 , Form 1098-T. Free online taxes 2012 , Form 1098-E. Free online taxes 2012 , Form 1098-T. Free online taxes 2012 Free tax services, Free help with your tax return. Free online taxes 2012 Fulbright grants, Fulbright Grants G Glossary, Glossary. Free online taxes 2012 , Glossary, Transfer: Graduate education tuition reduction, Graduate Education Grants Fulbright, Fulbright Grants Pell, Pell Grants and Other Title IV Need-Based Education Grants Title IV need-based education, Pell Grants and Other Title IV Need-Based Education Grants H Half-time student American opportunity credit, Enrolled at least half-time. Free online taxes 2012 Coverdell ESA, Half-time student. Free online taxes 2012 Early distributions from IRAs, Half-time student. Free online taxes 2012 Student loan interest deduction, Enrolled at least half-time. Free online taxes 2012 Help (see Tax help) I Illustrated example of education credits (Appendix A), Appendix A. Free online taxes 2012 Illustrated Example of Education Credits, Impairment-related work expenses Work-related education deduction, Impairment-Related Work Expenses Individual retirement arrangements (IRAs), Coverdell Education Savings Account (ESA) Early distributions (see Early distributions from IRAs) L Lifetime learning credit, Differences between the American opportunity and lifetime learning credits. Free online taxes 2012 Academic period, Academic period. Free online taxes 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Tuition reduction, Tuition reduction. Free online taxes 2012 Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 3-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Free online taxes 2012 Eligible student, Who Is an Eligible Student Expenses qualifying for, What Expenses Qualify, Amounts that do not reduce qualified education expenses. Free online taxes 2012 Figuring the credit, Figuring the Credit, Claiming the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit Income limits, Effect of the Amount of Your Income on the Amount of Your Credit Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 Worksheet 3-1, MAGI when using Form 1040. Free online taxes 2012 Overview (Table 3-1), Table 3-1. Free online taxes 2012 Overview of the Lifetime Learning Credit Phaseout, Phaseout. Free online taxes 2012 Qualified education expenses, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Free online taxes 2012 Qualifying to claim (Figure 3-1), Tax benefit of, What is the tax benefit of the lifetime learning credit. Free online taxes 2012 Loans Cancellation (see Student loan cancellation) Capitalized interest on student loan, Capitalized interest. Free online taxes 2012 Origination fees on student loan, Loan origination fee. Free online taxes 2012 Qualified education expenses paid with American opportunity credit, Academic period. Free online taxes 2012 Lifetime learning credit, Paid with borrowed funds. Free online taxes 2012 Student loan repayment assistance, Student Loan Repayment Assistance Losses, deducting Coverdell ESA, Losses on Coverdell ESA Investments Qualified tuition program (QTP), Losses on QTP Investments Luxury water transportation, Cruises and conventions. Free online taxes 2012 M Mileage deduction for work-related education, What's New, Using your car. Free online taxes 2012 Military academy cadets, Payment to Service Academy Cadets Missing children, photographs of, Reminders Modified adjusted gross income (MAGI) American opportunity credit Worksheet 2-1, Claiming the Credit Coverdell ESA, Modified adjusted gross income (MAGI). Free online taxes 2012 , MAGI when using Form 1040NR-EZ. Free online taxes 2012 Worksheet 6-1, Worksheet 7-1. Free online taxes 2012 MAGI for a Coverdell ESA Education savings bond program, Modified adjusted gross income (MAGI). Free online taxes 2012 , MAGI when using Form 1040. Free online taxes 2012 Lifetime learning credit, Modified adjusted gross income (MAGI). Free online taxes 2012 Worksheet 3-1, MAGI when using Form 1040. Free online taxes 2012 Student loan interest deduction, Modified adjusted gross income (MAGI). Free online taxes 2012 Table 4-2, Table 4-2. Free online taxes 2012 Effect of MAGI on Student Loan Interest Deduction Tuition and fees deduction, Modified adjusted gross income (MAGI). Free online taxes 2012 Table 6-2, Table 6-2. Free online taxes 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Free online taxes 2012 MAGI for the Tuition and Fees Deduction N National Health Service Corps Scholarship Program, Exceptions. Free online taxes 2012 , Exceptions. Free online taxes 2012 Nonaccountable plans Work-related education, Nonaccountable Plans P Pell grants, Pell Grants and Other Title IV Need-Based Education Grants, Coordination with Pell grants and other scholarships. Free online taxes 2012 , Coordination with Pell grants and other scholarships. Free online taxes 2012 Performing artists, work-related education deduction, Performing Artists and Fee-Basis Officials Phaseout American opportunity credit, Phaseout. Free online taxes 2012 Education savings bond program, Effect of the Amount of Your Income on the Amount of Your Exclusion Lifetime learning credit, Phaseout. Free online taxes 2012 Student loan interest deduction, Phaseout. Free online taxes 2012 , Effect of the Amount of Your Income on the Amount of Your Deduction Publications (see Tax help) Q Qualified education expenses Adjustments to American opportunity credit, Adjustments to Qualified Education Expenses Coverdell ESA, Adjusted qualified education expenses. Free online taxes 2012 Education savings bond program, Adjusted qualified education expenses. Free online taxes 2012 Lifetime learning credit, Adjustments to Qualified Education Expenses Qualified tuition program (QTP), Adjusted qualified education expenses. Free online taxes 2012 Student loan interest deduction, Adjustments to Qualified Education Expenses Tuition and fees deduction, Adjustments to Qualified Education Expenses Work-related education, Adjustments to Qualifying Work-Related Education Expenses American opportunity credit, Qualified Education Expenses, Adjustments to Qualified Education Expenses Coverdell ESA, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Early distributions from IRAs, Qualified education expenses. Free online taxes 2012 Education savings bond program, Qualified education expenses. Free online taxes 2012 Expenses not qualified American opportunity credit, Expenses That Do Not Qualify, Comprehensive or bundled fees. Free online taxes 2012 Lifetime learning credit, Expenses That Do Not Qualify Tuition and fees deduction, Expenses That Do Not Qualify Lifetime learning credit, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Free online taxes 2012 Qualified tuition program (QTP), Qualified education expenses. Free online taxes 2012 Scholarships and fellowships, Qualified education expenses. Free online taxes 2012 Student loan interest deduction, Qualified Education Expenses Tuition and fees deduction, What Expenses Qualify, Adjustments to Qualified Education Expenses Work-related education, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Qualified elementary and secondary education expenses Coverdell ESAs, Qualified Elementary and Secondary Education Expenses Qualified employer plans Student loan interest deduction not allowed, Qualified employer plan. Free online taxes 2012 Qualified student loans, Qualified Student Loan, Qualified employer plan. Free online taxes 2012 Qualified tuition program (QTP), Qualified Tuition Program (QTP), Changing the Designated Beneficiary Additional tax on taxable distributions, Additional Tax on Taxable Distributions Change of designated beneficiary, Changing the Designated Beneficiary Contributions to, How Much Can You Contribute Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with Coverdell ESA distributions, Coordination With Coverdell ESA Distributions Defined, What Is a Qualified Tuition Program Eligible educational institution, Eligible educational institution. Free online taxes 2012 Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution, Losses on QTP Investments Losses, Losses on QTP Investments Qualified education expenses, Qualified education expenses. Free online taxes 2012 Rollovers, Rollovers and Other Transfers, Changing the Designated Beneficiary Tax benefit of, What is the tax benefit of a QTP. Free online taxes 2012 Taxability of distributions, Are Distributions Taxable, Figuring the additional tax. Free online taxes 2012 Taxable earnings, Taxable earnings. Free online taxes 2012 Transfers, Rollovers and Other Transfers, Changing the Designated Beneficiary Qualified tuition reduction, Qualified Tuition Reduction, How To Report Qualified U. Free online taxes 2012 S. Free online taxes 2012 savings bonds, Qualified U. Free online taxes 2012 S. Free online taxes 2012 savings bonds. Free online taxes 2012 Qualifying work-related education, Qualifying Work-Related Education, Teaching and Related Duties Determining if qualified (Figure 11-1), R Recapture American opportunity credit, Credit recapture. Free online taxes 2012 Lifetime learning credit, Credit recapture. Free online taxes 2012 Tuition and fees deduction, Credit recapture. Free online taxes 2012 Recordkeeping requirements Work-related education, Recordkeeping, Examples of records to keep. Free online taxes 2012 Refinanced student loans, Interest on refinanced student loans. Free online taxes 2012 , Refinanced Loan Reimbursements Nondeductible expenses, Reimbursements for nondeductible expenses. Free online taxes 2012 Work-related education, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Free online taxes 2012 Related persons Coverdell ESA, Members of the beneficiary's family. Free online taxes 2012 Qualified tuition program (QTP), Members of the beneficiary's family. Free online taxes 2012 Student loan interest deduction, Related person. Free online taxes 2012 Repayment programs (see Student loan repayment assistance) Reporting American opportunity credit, Claiming the Credit Coverdell ESA, Exceptions. Free online taxes 2012 , Figuring and reporting the additional tax. Free online taxes 2012 , Figuring the Taxable Portion of a Distribution, Figuring the additional tax. Free online taxes 2012 Early distributions from IRAs, Reporting Early Distributions Education savings bond program, Claiming the Exclusion Lifetime learning credit, Claiming the Credit Qualified tuition program (QTP), Taxable earnings. Free online taxes 2012 , Losses on QTP Investments, Rollovers Scholarships and fellowships, taxable, Reporting Scholarships and Fellowships Student loan interest deduction, Claiming the Deduction Tuition and fees deduction, Claiming the Deduction Tuition reduction, taxable, How To Report Work-related education expenses, Deducting Business Expenses, Impairment-Related Work Expenses Revolving lines of credit, interest on, Interest on revolving lines of credit. Free online taxes 2012 Rollovers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary S Scholarships and fellowships, Scholarships and Fellowships, Form 1040NR-EZ. Free online taxes 2012 , Coordination with Pell grants and other scholarships. Free online taxes 2012 , Coordination with Pell grants and other scholarships. Free online taxes 2012 Athletic scholarships, Athletic Scholarships Eligible educational institution, Eligible educational institution. Free online taxes 2012 , Eligible educational institution. Free online taxes 2012 Figuring tax-free and taxable parts (Worksheet 1-1), Worksheet 1-1. Free online taxes 2012 Qualified education expenses, Qualified education expenses. Free online taxes 2012 Reporting, Reporting Scholarships and Fellowships Scholarship, defined, Scholarships and Fellowships Tax treatment of (Table 1-1), Tax-Free Scholarships and Fellowships Tax-free, Tax-Free Scholarships and Fellowships, Athletic Scholarships Taxable, Taxable Scholarships and Fellowships Section 501(c)(3) organizations (see Student loan cancellation) Section 529 program (see Qualified tuition program (QTP)) Self-employed persons Deducting work-related education expenses, Self-Employed Persons Service academy cadets, Payment to Service Academy Cadets Sports, games, hobbies, and noncredit courses American opportunity credit, Sports, games, hobbies, and noncredit courses. Free online taxes 2012 Education savings bond program, Qualified education expenses. Free online taxes 2012 Lifetime learning credit, Sports, games, hobbies, and noncredit courses. Free online taxes 2012 Tuition and fees deduction, Sports, games, hobbies, and noncredit courses. Free online taxes 2012 Standard mileage rate Work-related education, What's New, Using your car. Free online taxes 2012 State prepaid education accounts (see Qualified tuition program (QTP)) Student loan cancellation, Student Loan Cancellation Eligible educational institution, Eligible educational institution. Free online taxes 2012 Section 501(c)(3) organizations, Section 501(c)(3) organization. Free online taxes 2012 Student loan interest deduction Academic period, Academic period. Free online taxes 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Allocation between interest and principal, Allocating Payments Between Interest and Principal Claiming the deduction, Claiming the Deduction Eligible educational institution, Eligible educational institution. Free online taxes 2012 Eligible student, Eligible student. Free online taxes 2012 Figuring the deduction, Figuring the Deduction, Which Worksheet To Use Include as interest, Include As Interest Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan repayment assistance, Do Not Include As Interest Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 , Which Worksheet To Use Table 4-2, Table 4-2. Free online taxes 2012 Effect of MAGI on Student Loan Interest Deduction Not included as interest, Do Not Include As Interest Phaseout, Phaseout. Free online taxes 2012 , Effect of the Amount of Your Income on the Amount of Your Deduction Qualified education expenses, Qualified Education Expenses Qualified employer plans, Qualified employer plan. Free online taxes 2012 Qualified student loans, Qualified Student Loan, Qualified employer plan. Free online taxes 2012 Reasonable period of time, Reasonable period of time. Free online taxes 2012 Related persons, Related person. Free online taxes 2012 Student loan interest, defined, Student Loan Interest Defined, When Must Interest Be Paid Third party interest payments, Interest paid by others. Free online taxes 2012 When interest must be paid, When Must Interest Be Paid Worksheet 4-1, Worksheet 4-1. Free online taxes 2012 Student Loan Interest Deduction Worksheet Student loan repayment assistance, Student Loan Repayment Assistance Surviving spouse Coverdell ESA transfer to, Exception for Transfer to Surviving Spouse or Family Member T Tables and figures American opportunity credit Eligible student requirements (Figure 2-2), Overview (Table 2-1), Introduction Qualifying to claim (Figure 2-1), Comparison of education tax benefits (Appendix B), Coverdell ESAs Contributions to (Table 7-2), Contribution Limits Distributions (Table 7-3), Distributions Overview (Table 6-1), Coverdell Education Savings Account (ESA) Education credits Overview of American opportunity credit (Table 2-1), Introduction Overview of lifetime learning credit (Table 3-1), Table 3-1. Free online taxes 2012 Overview of the Lifetime Learning Credit Lifetime learning credit Overview (Table 3-1), Table 3-1. Free online taxes 2012 Overview of the Lifetime Learning Credit Qualifying to claim (Figure 3-1), Scholarships and fellowships, taxability of (Table 1-1), Tax-Free Scholarships and Fellowships Student loan interest deduction MAGI, effect of (Table 4-2), Table 4-2. Free online taxes 2012 Effect of MAGI on Student Loan Interest Deduction Overview (Table 4-1), Table 4-1. Free online taxes 2012 Student Loan Interest Deduction at a Glance Summary chart of differences between education tax benefits (Appendix B), Tuition and fees deduction MAGI, effect of (Table 6-2), Table 6-2. Free online taxes 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Overview (Table 6-1), Table 6-1. Free online taxes 2012 Tuition and Fees Deduction at a Glance Work-related education, qualifying (Figure 112-1), Tax help, How To Get Tax Help Tax-free educational assistance American opportunity credit, Tax-free educational assistance. Free online taxes 2012 Coverdell ESA, Adjusted qualified education expenses. Free online taxes 2012 Early distributions from IRAs, Figuring the Amount Not Subject to the 10% Tax Education savings bond program, Adjusted qualified education expenses. Free online taxes 2012 Lifetime learning credit, Tax-free educational assistance. Free online taxes 2012 Qualified tuition program (QTP), Adjusted qualified education expenses. Free online taxes 2012 Tuition and fees deduction, Tax-free educational assistance. Free online taxes 2012 Work-related education, Tax-free educational assistance. Free online taxes 2012 Taxable scholarships and fellowships, Taxable Scholarships and Fellowships Teachers, Requirements for Teachers, Teaching and Related Duties Temporary-basis student, transportation expenses of, Temporary basis. Free online taxes 2012 Title IV need-based education grants, Pell Grants and Other Title IV Need-Based Education Grants Transfers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary Transportation expenses Work-related education, Transportation Expenses, Using your car. Free online taxes 2012 Travel expenses 50% limit on meals, 50% limit on meals. Free online taxes 2012 Not deductible as form of education, Travel as Education Work-related education, Travel Expenses TTY/TDD information, How To Get Tax Help Tuition and fees deduction, Tuition and Fees Deduction, Illustrated Example Academic period, Academic period. Free online taxes 2012 Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Can you claim the deduction, Can You Claim the Deduction Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Claiming the deduction, Claiming the Deduction Double benefit not allowed, No Double Benefit Allowed Eligible educational institution, Eligible educational institution. Free online taxes 2012 Eligible student, Who Is an Eligible Student Expenses not qualifying for, Expenses That Do Not Qualify Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the deduction, Figuring the Deduction, MAGI when using Form 1040. Free online taxes 2012 Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan used to pay tuition and fees, Paid with borrowed funds. Free online taxes 2012 Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Free online taxes 2012 Table 6-2, Table 6-2. Free online taxes 2012 Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Free online taxes 2012 MAGI for the Tuition and Fees Deduction Overview (Table 4-1), Table 4-1. Free online taxes 2012 Student Loan Interest Deduction at a Glance Overview (Table 6-1), Table 6-1. Free online taxes 2012 Tuition and Fees Deduction at a Glance Qualified education expenses, What Expenses Qualify, Adjustments to Qualified Education Expenses Qualifying for deduction, Can You Claim the Deduction Tax benefit of, What is the tax benefit of the tuition and fees deduction. Free online taxes 2012 Tax-free educational assistance, Tax-free educational assistance. Free online taxes 2012 Tuition reduction American opportunity credit, Tuition reduction. Free online taxes 2012 Lifetime learning credit, Tuition reduction. Free online taxes 2012 Qualified, Qualified Tuition Reduction, How To Report Tuition and fees deduction, Tuition reduction. Free online taxes 2012 U U. Free online taxes 2012 S. Free online taxes 2012 savings bonds, Qualified U. Free online taxes 2012 S. Free online taxes 2012 savings bonds. Free online taxes 2012 Unclaimed reimbursement Work-related education, Unclaimed reimbursement. Free online taxes 2012 V Veterans' benefits, Veterans' Benefits Voluntary interest payments, Voluntary interest payments. Free online taxes 2012 W Withholding, Analyzing your tax withholding. Free online taxes 2012 Work-related education (see Business deduction for work-related education) Working condition fringe benefit, Working condition fringe benefit. Free online taxes 2012 Worksheets Coverdell ESA Contribution limit (Worksheet 6-2), Figuring the limit. Free online taxes 2012 MAGI, calculation of (Worksheet 6-1), Worksheet 7-1. Free online taxes 2012 MAGI for a Coverdell ESA Taxable distributions and basis (Worksheet 6-3), Worksheet 7-3. Free online taxes 2012 Coverdell ESA—Taxable Distributions and Basis Taxable distributions and basis (Worksheet 7-3), Worksheet 7-3. Free online taxes 2012 Coverdell ESA—Taxable Distributions and Basis Lifetime learning credit MAGI calculation (Worksheet 3-1), MAGI when using Form 1040. Free online taxes 2012 Scholarships and fellowships, taxable income (Worksheet 1-1), Worksheet 1-1. Free online taxes 2012 Student loan interest deduction (Worksheet 4-1), Worksheet 4-1. Free online taxes 2012 Student Loan Interest Deduction Worksheet Tuition and fees deduction, MAGI calculation (Worksheet 6-1), Worksheet 6-1. Free online taxes 2012 MAGI for the Tuition and Fees Deduction Prev  Up     Home   More Online Publications
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The Free Online Taxes 2012

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