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H And R Block Login

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H And R Block Login

H and r block login 1. H and r block login   Nonresident Alien or Resident Alien? Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Nonresident Aliens Resident AliensGreen Card Test Substantial Presence Test Effect of Tax Treaties Dual-Status AliensFirst Year of Residency Choosing Resident Alien Status Last Year of Residency Nonresident Spouse Treated as a ResidentHow To Make the Choice Aliens From American Samoa or Puerto Rico Introduction You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien. H and r block login If you are both a nonresident and resident in the same year, you have a dual status. H and r block login Dual status is explained later. H and r block login Also explained later are a choice to treat your nonresident spouse as a resident and some other special situations. H and r block login Topics - This chapter discusses: How to determine if you are a nonresident, resident, or dual-status alien, and How to treat a nonresident spouse as a resident alien. H and r block login Useful Items - You may want to see: Form (and Instructions) 1040 U. H and r block login S. H and r block login Individual Income Tax Return 1040A U. H and r block login S. H and r block login Individual Income Tax Return 1040NR U. H and r block login S. H and r block login Nonresident Alien Income Tax Return 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) 8840 Closer Connection Exception Statement for Aliens 8843 Statement for Exempt Individuals and Individuals With a Medical Condition See chapter 12 for information about getting these forms. H and r block login Nonresident Aliens If you are an alien (not a U. H and r block login S. H and r block login citizen), you are considered a nonresident alien unless you meet one of the two tests described next under Resident Aliens. H and r block login Resident Aliens You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2013 (January 1–December 31). H and r block login Even if you do not meet either of these tests, you may be able to choose to be treated as a U. H and r block login S. H and r block login resident for part of the year. H and r block login See First-Year Choice under Dual-Status Aliens, later. H and r block login Green Card Test You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2013. H and r block login (However, see Dual-Status Aliens , later. H and r block login ) This is known as the “green card” test. H and r block login You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. H and r block login You generally have this status if the U. H and r block login S. H and r block login Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a “green card. H and r block login ” You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned. H and r block login Resident status taken away. H and r block login   Resident status is considered to have been taken away from you if the U. H and r block login S. H and r block login government issues you a final administrative or judicial order of exclusion or deportation. H and r block login A final judicial order is an order that you may no longer appeal to a higher court of competent jurisdiction. H and r block login Resident status abandoned. H and r block login   An administrative or judicial determination of abandonment of resident status may be initiated by you, the USCIS, or a U. H and r block login S. H and r block login consular officer. H and r block login    If you initiate the determination, your resident status is considered to be abandoned when you file either of the following with the USCIS or U. H and r block login S. H and r block login consular officer. H and r block login Your application for abandonment. H and r block login Your Alien Registration Receipt Card attached to a letter stating your intent to abandon your resident status. H and r block login You must file the letter by certified mail, return receipt requested. H and r block login You must keep a copy of the letter and proof that it was mailed and received. H and r block login    Until you have proof your letter was received, you remain a resident alien for tax purposes even if the USCIS would not recognize the validity of your green card because it is more than ten years old or because you have been absent from the United States for a period of time. H and r block login   If the USCIS or U. H and r block login S. H and r block login consular officer initiates this determination, your resident status will be considered to be abandoned when the final administrative order of abandonment is issued. H and r block login If you are granted an appeal to a federal court of competent jurisdiction, a final judicial order is required. H and r block login   Under U. H and r block login S. H and r block login immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. H and r block login    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. H and r block login See Expatriation Tax in chapter 4. H and r block login Termination of residency after June 3, 2004, and before June 17, 2008. H and r block login   If you terminated your residency after June 3, 2004, and before June 17, 2008, you will still be considered a U. H and r block login S. H and r block login resident for tax purposes until you notify the Secretary of Homeland Security and file Form 8854, Initial and Annual Expatriation Statement. H and r block login Termination of residency after June 16, 2008. H and r block login   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. H and r block login Substantial Presence Test You will be considered a U. H and r block login S. H and r block login resident for tax purposes if you meet the substantial presence test for calendar year 2013. H and r block login To meet this test, you must be physically present in the United States on at least: 31 days during 2013, and 183 days during the 3-year period that includes 2013, 2012, and 2011, counting: All the days you were present in 2013, and 1/3 of the days you were present in 2012, and 1/6 of the days you were present in 2011. H and r block login Example. H and r block login You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. H and r block login To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). H and r block login Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. H and r block login The term United States includes the following areas. H and r block login All 50 states and the District of Columbia. H and r block login The territorial waters of the United States. H and r block login The seabed and subsoil of those submarine areas that are adjacent to U. H and r block login S. H and r block login territorial waters and over which the United States has exclusive rights under international law to explore and exploit natural resources. H and r block login The term does not include U. H and r block login S. H and r block login possessions and territories or U. H and r block login S. H and r block login airspace. H and r block login Days of Presence in the United States You are treated as present in the United States on any day you are physically present in the country at any time during the day. H and r block login However, there are exceptions to this rule. H and r block login Do not count the following as days of presence in the United States for the substantial presence test. H and r block login Days you commute to work in the United States from a residence in Canada or Mexico if you regularly commute from Canada or Mexico. H and r block login Days you are in the United States for less than 24 hours when you are in transit between two places outside the United States. H and r block login Days you are in the United States as a crew member of a foreign vessel. H and r block login Days you are unable to leave the United States because of a medical condition that arose while you are in the United States. H and r block login Days you are an exempt individual. H and r block login The specific rules that apply to each of these categories are discussed next. H and r block login Regular commuters from Canada or Mexico. H and r block login   Do not count the days on which you commute to work in the United States from your residence in Canada or Mexico if you regularly commute from Canada or Mexico. H and r block login You are considered to commute regularly if you commute to work in the United States on more than 75% of the workdays during your working period. H and r block login   For this purpose, “commute” means to travel to work and return to your residence within a 24-hour period. H and r block login “Workdays” are the days on which you work in the United States or Canada or Mexico. H and r block login “Working period” means the period beginning with the first day in the current year on which you are physically present in the United States to work and ending on the last day in the current year on which you are physically present in the United States to work. H and r block login If your work requires you to be present in the United States only on a seasonal or cyclical basis, your working period begins on the first day of the season or cycle on which you are present in the United States to work and ends on the last day of the season or cycle on which you are present in the United States to work. H and r block login You can have more than one working period in a calendar year, and your working period can begin in one calendar year and end in the following calendar year. H and r block login Example. H and r block login Maria Perez lives in Mexico and works for Compañía ABC in its office in Mexico. H and r block login She was assigned to her firm's office in the United States from February 1 through June 1. H and r block login On June 2, she resumed her employment in Mexico. H and r block login On 69 days, Maria commuted each morning from her home in Mexico to work in Compañía ABC's U. H and r block login S. H and r block login office. H and r block login She returned to her home in Mexico on each of those evenings. H and r block login On 7 days, she worked in her firm's Mexico office. H and r block login For purposes of the substantial presence test, Maria does not count the days she commuted to work in the United States because those days equal more than 75% of the workdays during the working period (69 workdays in the United States divided by 76 workdays in the working period equals 90. H and r block login 8%). H and r block login Days in transit. H and r block login   Do not count the days you are in the United States for less than 24 hours and you are in transit between two places outside the United States. H and r block login You are considered to be in transit if you engage in activities that are substantially related to completing travel to your foreign destination. H and r block login For example, if you travel between airports in the United States to change planes en route to your foreign destination, you are considered to be in transit. H and r block login However, you are not considered to be in transit if you attend a business meeting while in the United States. H and r block login This is true even if the meeting is held at the airport. H and r block login Crew members. H and r block login   Do not count the days you are temporarily present in the United States as a regular crew member of a foreign vessel (boat or ship) engaged in transportation between the United States and a foreign country or a U. H and r block login S. H and r block login possession. H and r block login However, this exception does not apply if you otherwise engage in any trade or business in the United States on those days. H and r block login Medical condition. H and r block login   Do not count the days you intended to leave, but could not leave the United States because of a medical condition or problem that arose while you were in the United States. H and r block login Whether you intended to leave the United States on a particular day is determined based on all the facts and circumstances. H and r block login For example, you may be able to establish that you intended to leave if your purpose for visiting the United States could be accomplished during a period that is not long enough to qualify you for the substantial presence test. H and r block login However, if you need an extended period of time to accomplish the purpose of your visit and that period would qualify you for the substantial presence test, you would not be able to establish an intent to leave the United States before the end of that extended period. H and r block login   In the case of an individual who is judged mentally incompetent, proof of intent to leave the United States can be determined by analyzing the individual's pattern of behavior before he or she was judged mentally incompetent. H and r block login   If you qualify to exclude days of presence because of a medical condition, you must file a fully completed Form 8843 with the IRS. H and r block login See Form 8843 , later. H and r block login   You cannot exclude any days of presence in the United States under the following circumstances. H and r block login You were initially prevented from leaving, were then able to leave, but remained in the United States beyond a reasonable period for making arrangements to leave. H and r block login You returned to the United States for treatment of a medical condition that arose during a prior stay. H and r block login The condition existed before your arrival in the United States and you were aware of the condition. H and r block login It does not matter whether you needed treatment for the condition when you entered the United States. H and r block login Exempt individual. H and r block login   Do not count days for which you are an exempt individual. H and r block login The term “exempt individual” does not refer to someone exempt from U. H and r block login S. H and r block login tax, but to anyone in the following categories. H and r block login An individual temporarily present in the United States as a foreign government-related individual under an “A” or “G” visa. H and r block login A teacher or trainee temporarily present in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. H and r block login A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa. H and r block login A professional athlete temporarily in the United States to compete in a charitable sports event. H and r block login   The specific rules for each of these four categories (including any rules on the length of time you will be an exempt individual) are discussed next. H and r block login Foreign government-related individuals. H and r block login   A foreign government-related individual is an individual (or a member of the individual's immediate family) who is temporarily present in the United States: As a full-time employee of an international organization, By reason of diplomatic status, or By reason of a visa (other than a visa that grants lawful permanent residence) that the Secretary of the Treasury determines represents full-time diplomatic or consular status. H and r block login Note. H and r block login You are considered temporarily present in the United States regardless of the actual amount of time you are present in the United States. H and r block login    An international organization is any public international organization that the President of the United States has designated by Executive Order as being entitled to the privileges, exemptions, and immunities provided for in the International Organizations Act. H and r block login An individual is a full-time employee if his or her work schedule meets the organization's standard full-time work schedule. H and r block login   An individual is considered to have full-time diplomatic or consular status if he or she: Has been accredited by a foreign government that is recognized by the United States, Intends to engage primarily in official activities for that foreign government while in the United States, and Has been recognized by the President, Secretary of State, or a consular officer as being entitled to that status. H and r block login Note. H and r block login If you are present in the United States under an “A” or “G” visa you are considered a foreign government-related individual (with full-time diplomatic or consular status). H and r block login None of your days count for purposes of the substantial presence test. H and r block login   Members of the immediate family include the individual's spouse and unmarried children (whether by blood or adoption) but only if the spouse's or unmarried children's visa statuses are derived from and dependent on the exempt individual's visa classification. H and r block login Unmarried children are included only if they: Are under 21 years of age, Reside regularly in the exempt individual's household, and Are not members of another household. H and r block login Teachers and trainees. H and r block login   A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa. H and r block login You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. H and r block login S. H and r block login immigration laws and could result in the loss of your visa status. H and r block login   Also included are immediate family members of exempt teachers and trainees. H and r block login See the definition of immediate family, earlier, under Foreign government-related individuals . H and r block login   You will not be an exempt individual as a teacher or trainee in 2013 if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years. H and r block login However, you will be an exempt individual if all of the following conditions are met. H and r block login You were exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 preceding calendar years, A foreign employer paid all of your compensation during 2013, and A foreign employer paid all of your compensation during each of the preceding 6 years you were present in the United States as a teacher or trainee. H and r block login A foreign employer includes an office or place of business of an American entity in a foreign country or a U. H and r block login S. H and r block login possession. H and r block login   If you qualify to exclude days of presence as a teacher or trainee, you must file a fully completed Form 8843 with the IRS. H and r block login See Form 8843 , later. H and r block login Example. H and r block login Carla was temporarily in the United States during the year as a teacher on a “J” visa. H and r block login Her compensation for the year was paid by a foreign employer. H and r block login Carla was treated as an exempt teacher for the previous 2 years but her compensation was not paid by a foreign employer. H and r block login She will not be considered an exempt individual for the current year because she was exempt as a teacher for at least 2 of the past 6 years. H and r block login If her compensation for the past 2 years had been paid by a foreign employer, she would be an exempt individual for the current year. H and r block login Students. H and r block login   A student is any individual who is temporarily in the United States on an “F,” “J,” “M,” or “Q” visa and who substantially complies with the requirements of that visa. H and r block login You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. H and r block login S. H and r block login immigration laws and could result in the loss of your visa status. H and r block login   Also included are immediate family members of exempt students. H and r block login See the definition of immediate family, earlier, under Foreign government-related individuals . H and r block login   You will not be an exempt individual as a student in 2013 if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you meet both of the following requirements. H and r block login You establish that you do not intend to reside permanently in the United States. H and r block login You have substantially complied with the requirements of your visa. H and r block login The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to, the following. H and r block login Whether you have maintained a closer connection to a foreign country (discussed later). H and r block login Whether you have taken affirmative steps to change your status from nonimmigrant to lawful permanent resident as discussed later under Closer Connection to a Foreign Country . H and r block login   If you qualify to exclude days of presence as a student, you must file a fully completed Form 8843 with the IRS. H and r block login See Form 8843 , later. H and r block login Professional athletes. H and r block login   A professional athlete who is temporarily in the United States to compete in a charitable sports event is an exempt individual. H and r block login A charitable sports event is one that meets the following conditions. H and r block login The main purpose is to benefit a qualified charitable organization. H and r block login The entire net proceeds go to charity. H and r block login Volunteers perform substantially all the work. H and r block login   In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in a sports event. H and r block login You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. H and r block login   If you qualify to exclude days of presence as a professional athlete, you must file a fully completed Form 8843 with the IRS. H and r block login See Form 8843 , next. H and r block login Form 8843. H and r block login   If you exclude days of presence in the United States because you fall into any of the following categories, you must file a fully completed Form 8843. H and r block login You were unable to leave the United States as planned because of a medical condition or problem. H and r block login You were temporarily in the United States as a teacher or trainee on a “J” or “Q” visa. H and r block login You were temporarily in the United States as a student on an “F,” “J,” “M,” or “Q” visa. H and r block login You were a professional athlete competing in a charitable sports event. H and r block login Attach Form 8843 to your 2013 income tax return. H and r block login If you do not have to file a return, send Form 8843 to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. H and r block login The due date for filing is discussed in chapter 7. H and r block login If you do not timely file Form 8843, you cannot exclude the days you were present in the United States as a professional athlete or because of a medical condition that arose while you were in the United States. H and r block login This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. H and r block login Closer Connection to a Foreign Country Even if you meet the substantial presence test, you can be treated as a nonresident alien if you: Are present in the United States for less than 183 days during the year, Maintain a tax home in a foreign country during the year, and Have a closer connection during the year to one foreign country in which you have a tax home than to the United States (unless you have a closer connection to two foreign countries, discussed next). H and r block login Closer connection to two foreign countries. H and r block login   You can demonstrate that you have a closer connection to two foreign countries (but not more than two) if you meet all of the following conditions. H and r block login You maintained a tax home beginning on the first day of the year in one foreign country. H and r block login You changed your tax home during the year to a second foreign country. H and r block login You continued to maintain your tax home in the second foreign country for the rest of the year. H and r block login You had a closer connection to each foreign country than to the United States for the period during which you maintained a tax home in that foreign country. H and r block login You are subject to tax as a resident under the tax laws of either foreign country for the entire year or subject to tax as a resident in both foreign countries for the period during which you maintained a tax home in each foreign country. H and r block login Tax home. H and r block login   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. H and r block login Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. H and r block login If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. H and r block login If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. H and r block login   For determining whether you have a closer connection to a foreign country, your tax home must also be in existence for the entire current year, and must be located in the same foreign country to which you are claiming to have a closer connection. H and r block login Foreign country. H and r block login   In determining whether you have a closer connection to a foreign country, the term “foreign country” means: Any territory under the sovereignty of the United Nations or a government other than that of the United States, The territorial waters of the foreign country (determined under U. H and r block login S. H and r block login law), The seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country and over which the foreign country has exclusive rights under international law to explore and exploit natural resources, and Possessions and territories of the United States. H and r block login Establishing a closer connection. H and r block login   You will be considered to have a closer connection to a foreign country than the United States if you or the IRS establishes that you have maintained more significant contacts with the foreign country than with the United States. H and r block login In determining whether you have maintained more significant contacts with the foreign country than with the United States, the facts and circumstances to be considered include, but are not limited to, the following. H and r block login The country of residence you designate on forms and documents. H and r block login The types of official forms and documents you file, such as Form W-9, Form W-8BEN, or Form W-8ECI. H and r block login The location of: Your permanent home, Your family, Your personal belongings, such as cars, furniture, clothing, and jewelry, Your current social, political, cultural, professional, or religious affiliations, Your business activities (other than those that constitute your tax home), The jurisdiction in which you hold a driver's license, The jurisdiction in which you vote, and Charitable organizations to which you contribute. H and r block login It does not matter whether your permanent home is a house, an apartment, or a furnished room. H and r block login It also does not matter whether you rent or own it. H and r block login It is important, however, that your home be available at all times, continuously, and not solely for short stays. H and r block login When you cannot have a closer connection. H and r block login   You cannot claim you have a closer connection to a foreign country if either of the following applies: You personally applied, or took other steps during the year, to change your status to that of a permanent resident, or You had an application pending for adjustment of status during the current year. H and r block login Steps to change your status to that of a permanent resident include, but are not limited to, the filing of the following forms. H and r block login Form I-508, Waiver of Rights, Privileges, Exemptions and Immunities Form I-485, Application to Register Permanent Residence or Adjust Status Form I-130, Petition for Alien Relative, on your behalf Form I-140, Immigrant Petition for Alien Worker, on your behalf Form ETA-750, Application for Alien Employment Certification, on your behalf Form DS-230, Application for Immigrant Visa and Alien Registration Form 8840. H and r block login   You must attach a fully completed Form 8840 to your income tax return to claim you have a closer connection to a foreign country or countries. H and r block login   If you do not have to file a return, send the form to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. H and r block login The due date for filing is discussed later in chapter 7. H and r block login   If you do not timely file Form 8840, you cannot claim a closer connection to a foreign country or countries. H and r block login This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. H and r block login Effect of Tax Treaties The rules given here to determine if you are a U. H and r block login S. H and r block login resident do not override tax treaty definitions of residency. H and r block login If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. H and r block login A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. H and r block login The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). H and r block login If you are treated as a resident of a foreign country under a tax treaty, you are treated as a nonresident alien in figuring your U. H and r block login S. H and r block login income tax. H and r block login For purposes other than figuring your tax, you will be treated as a U. H and r block login S. H and r block login resident. H and r block login For example, the rules discussed here do not affect your residency time periods as discussed later under Dual-Status Aliens . H and r block login Information to be reported. H and r block login   If you are a dual-resident taxpayer and you claim treaty benefits, you must file a return by the due date (including extensions) using Form 1040NR or Form 1040NR-EZ, and compute your tax as a nonresident alien. H and r block login You must also attach a fully completed Form 8833 if you determine your residency under a tax treaty and receive payments or income items totaling more than $100,000. H and r block login You may also have to attach Form 8938 (discussed in chapter 7). H and r block login See Reporting Treaty Benefits Claimed in chapter 9 for more information on reporting treaty benefits. H and r block login Dual-Status Aliens You can be both a nonresident alien and a resident alien during the same tax year. H and r block login This usually occurs in the year you arrive in or depart from the United States. H and r block login Aliens who have dual status should see chapter 6 for information on filing a return for a dual-status tax year. H and r block login First Year of Residency If you are a U. H and r block login S. H and r block login resident for the calendar year, but you were not a U. H and r block login S. H and r block login resident at any time during the preceding calendar year, you are a U. H and r block login S. H and r block login resident only for the part of the calendar year that begins on the residency starting date. H and r block login You are a nonresident alien for the part of the year before that date. H and r block login Residency starting date under substantial presence test. H and r block login   If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year. H and r block login However, you do not have to count up to 10 days of actual presence in the United States if on those days you establish that: You had a closer connection to a foreign country than to the United States, and Your tax home was in that foreign country. H and r block login See Closer Connection to a Foreign Country , earlier. H and r block login   In determining whether you can exclude up to 10 days, the following rules apply. H and r block login You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. H and r block login You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. H and r block login Although you can exclude up to 10 days of presence in determining your residency starting date, you must include those days when determining whether you meet the substantial presence test. H and r block login Example. H and r block login Ivan Ivanovich is a citizen of Russia. H and r block login He came to the United States for the first time on January 6, 2013, to attend a business meeting and returned to Russia on January 10, 2013. H and r block login His tax home remained in Russia. H and r block login On March 1, 2013, he moved to the United States and resided here for the rest of the year. H and r block login Ivan is able to establish a closer connection to Russia for the period January 6–10. H and r block login Thus, his residency starting date is March 1. H and r block login Statement required to exclude up to 10 days of presence. H and r block login   You must file a statement with the IRS if you are excluding up to 10 days of presence in the United States for purposes of your residency starting date. H and r block login You must sign and date this statement and include a declaration that it is made under penalties of perjury. H and r block login The statement must contain the following information (as applicable). H and r block login Your name, address, U. H and r block login S. H and r block login taxpayer identification number (if any), and U. H and r block login S. H and r block login visa number (if any). H and r block login Your passport number and the name of the country that issued your passport. H and r block login The tax year for which the statement applies. H and r block login The first day that you were present in the United States during the year. H and r block login The dates of the days you are excluding in figuring your first day of residency. H and r block login Sufficient facts to establish that you have maintained your tax home in and a closer connection to a foreign country during the period you are excluding. H and r block login   Attach the required statement to your income tax return. H and r block login If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. H and r block login The due date for filing is discussed in chapter 7. H and r block login   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. H and r block login Therefore, your first day of residency will be the first day you are present in the United States. H and r block login This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. H and r block login Residency starting date under green card test. H and r block login   If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident. H and r block login   If you meet both the substantial presence test and the green card test, your residency starting date is the earlier of the first day during the year you are present in the United States under the substantial presence test or as a lawful permanent resident. H and r block login Residency during the preceding year. H and r block login   If you were a U. H and r block login S. H and r block login resident during any part of the preceding calendar year and you are a U. H and r block login S. H and r block login resident for any part of the current year, you will be considered a U. H and r block login S. H and r block login resident at the beginning of the current year. H and r block login This applies whether you are a resident under the substantial presence test or green card test. H and r block login Example. H and r block login Robert Bach is a citizen of Switzerland. H and r block login He came to the United States as a U. H and r block login S. H and r block login resident for the first time on May 1, 2012, and remained until November 5, 2012, when he returned to Switzerland. H and r block login Robert came back to the United States on March 5, 2013, as a lawful permanent resident and still resides here. H and r block login In calendar year 2013, Robert's U. H and r block login S. H and r block login residency is deemed to begin on January 1, 2013, because he qualified as a resident in calendar year 2012. H and r block login First-Year Choice If you do not meet either the green card test or the substantial presence test for 2012 or 2013 and you did not choose to be treated as a resident for part of 2012, but you meet the substantial presence test for 2014, you can choose to be treated as a U. H and r block login S. H and r block login resident for part of 2013. H and r block login To make this choice, you must: Be present in the United States for at least 31 days in a row in 2013, and Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2013. H and r block login For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States. H and r block login When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States. H and r block login If you make the first-year choice, your residency starting date for 2013 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. H and r block login You are treated as a U. H and r block login S. H and r block login resident for the rest of the year. H and r block login If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. H and r block login If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period. H and r block login Note. H and r block login You do not have to be married to make this choice. H and r block login Example 1. H and r block login Juan DaSilva is a citizen of the Philippines. H and r block login He came to the United States for the first time on November 1, 2013, and was here on 31 consecutive days (from November 1 through December 1, 2013). H and r block login Juan returned to the Philippines on December 1 and came back to the United States on December 17, 2013. H and r block login He stayed in the United States for the rest of the year. H and r block login During 2014, Juan was a resident of the United States under the substantial presence test. H and r block login Juan can make the first-year choice for 2013 because he was in the United States in 2013 for a period of 31 days in a row (November 1 through December 1) and for at least 75% of the days following (and including) the first day of his 31-day period (46 total days of presence in the United States divided by 61 days in the period from November 1 through December 31 equals 75. H and r block login 4%). H and r block login If Juan makes the first-year choice, his residency starting date will be November 1, 2013. H and r block login Example 2. H and r block login The facts are the same as in Example 1, except that Juan was also absent from the United States on December 24, 25, 29, 30, and 31. H and r block login He can make the first-year choice for 2013 because up to 5 days of absence are considered days of presence for purposes of the 75% requirement. H and r block login Statement required to make the first-year choice for 2013. H and r block login   You must attach a statement to Form 1040 to make the first-year choice for 2013. H and r block login The statement must contain your name and address and specify the following. H and r block login That you are making the first-year choice for 2013. H and r block login That you were not a resident in 2012. H and r block login That you are a resident under the substantial presence test in 2014. H and r block login The number of days of presence in the United States during 2014. H and r block login The date or dates of your 31-day period of presence and the period of continuous presence in the United States during 2013. H and r block login The date or dates of absence from the United States during 2013 that you are treating as days of presence. H and r block login You cannot file Form 1040 or the statement until you meet the substantial presence test for 2014. H and r block login If you have not met the test for 2014 as of April 15, 2014, you can request an extension of time for filing your 2013 Form 1040 until a reasonable period after you have met that test. H and r block login To request an extension to file until October 15, 2014, use Form 4868, Application for Automatic Extension of Time To File U. H and r block login S. H and r block login Individual Income Tax Return. H and r block login You can file the paper form or use one of the electronic filing options explained in the Form 4868 instructions. H and r block login You should pay with this extension the amount of tax you expect to owe for 2013 figured as if you were a nonresident alien the entire year. H and r block login You can use Form 1040NR or Form 1040NR-EZ to figure the tax. H and r block login Enter the tax on Form 4868. H and r block login If you do not pay the tax due, you will be charged interest on any tax not paid by the regular due date of your return, and you may be charged a penalty on the late payment. H and r block login   Once you make the first-year choice, you may not revoke it without the approval of the Internal Revenue Service. H and r block login   If you do not follow the procedures discussed here for making the first-year choice, you will be treated as a nonresident alien for all of 2013. H and r block login However, this does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing procedures and significant steps to comply with the procedures. H and r block login Choosing Resident Alien Status If you are a dual-status alien, you can choose to be treated as a U. H and r block login S. H and r block login resident for the entire year if all of the following apply. H and r block login You were a nonresident alien at the beginning of the year. H and r block login You are a resident alien or U. H and r block login S. H and r block login citizen at the end of the year. H and r block login You are married to a U. H and r block login S. H and r block login citizen or resident alien at the end of the year. H and r block login Your spouse joins you in making the choice. H and r block login This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year. H and r block login Note. H and r block login If you are single at the end of the year, you cannot make this choice. H and r block login If you make this choice, the following rules apply. H and r block login You and your spouse are treated as U. H and r block login S. H and r block login residents for the entire year for income tax purposes. H and r block login You and your spouse are taxed on worldwide income. H and r block login You and your spouse must file a joint return for the year of the choice. H and r block login Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced, or remarried. H and r block login The special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. H and r block login Note. H and r block login A similar choice is available if, at the end of the tax year, one spouse is a nonresident alien and the other spouse is a U. H and r block login S. H and r block login citizen or resident. H and r block login See Nonresident Spouse Treated as a Resident , later. H and r block login If you previously made that choice and it is still in effect, you do not need to make the choice explained here. H and r block login Making the choice. H and r block login   You should attach a statement signed by both spouses to your joint return for the year of the choice. H and r block login The statement must contain the following information. H and r block login A declaration that you both qualify to make the choice and that you choose to be treated as U. H and r block login S. H and r block login residents for the entire tax year. H and r block login The name, address, and taxpayer identification number (SSN or ITIN) of each spouse. H and r block login (If one spouse died, include the name and address of the person who makes the choice for the deceased spouse. H and r block login )   You generally make this choice when you file your joint return. H and r block login However, you also can make the choice by filing Form 1040X, Amended U. H and r block login S. H and r block login Individual Income Tax Return. H and r block login Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. H and r block login If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. H and r block login   You generally must file the amended joint return within 3 years from the date you filed your original U. H and r block login S. H and r block login income tax return or 2 years from the date you paid your income tax for that year, whichever is later. H and r block login Last Year of Residency If you were a U. H and r block login S. H and r block login resident in 2013 but are not a U. H and r block login S. H and r block login resident during any part of 2014, you cease to be a U. H and r block login S. H and r block login resident on your residency termination date. H and r block login Your residency termination date is December 31, 2013, unless you qualify for an earlier date as discussed next. H and r block login Earlier residency termination date. H and r block login   You may qualify for a residency termination date that is earlier than December 31. H and r block login This date is: The last day in 2013 that you are physically present in the United States, if you met the substantial presence test, The first day in 2013 that you are no longer a lawful permanent resident of the United States, if you met the green card test, or The later of (1) or (2), if you met both tests. H and r block login You can use this date only if, for the remainder of 2013, your tax home was in a foreign country and you had a closer connection to that foreign country. H and r block login See Closer Connection to a Foreign Country , earlier. H and r block login    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. H and r block login See Expatriation Tax in chapter 4. H and r block login Termination of residency. H and r block login   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. H and r block login De minimis presence. H and r block login   If you are a U. H and r block login S. H and r block login resident because of the substantial presence test and you qualify to use the earlier residency termination date, you can exclude up to 10 days of actual presence in the United States in determining your residency termination date. H and r block login In determining whether you can exclude up to 10 days, the following rules apply. H and r block login You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. H and r block login You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. H and r block login Although you can exclude up to 10 days of presence in determining your residency termination date, you must include those days when determining whether you meet the substantial presence test. H and r block login Example. H and r block login Lola Bovary is a citizen of Malta. H and r block login She came to the United States for the first time on March 1, 2013, and resided here until August 25, 2013. H and r block login On December 12, 2013, Lola came to the United States for vacation and stayed here until December 16, 2013, when she returned to Malta. H and r block login She is able to establish a closer connection to Malta for the period December 12–16. H and r block login Lola is not a U. H and r block login S. H and r block login resident for tax purposes during 2014 and can establish a closer connection to Malta for the rest of calendar year 2013. H and r block login Lola is a U. H and r block login S. H and r block login resident under the substantial presence test for 2013 because she was present in the United States for 183 days (178 days for the period March 1 to August 25 plus 5 days in December). H and r block login Lola's residency termination date is August 25, 2013. H and r block login Residency during the next year. H and r block login   If you are a U. H and r block login S. H and r block login resident during any part of 2014 and you are a resident during any part of 2013, you will be treated as a resident through the end of 2013. H and r block login This applies whether you have a closer connection to a foreign country than the United States during 2013, and whether you are a resident under the substantial presence test or green card test. H and r block login Statement required to establish your residency termination date. H and r block login   You must file a statement with the IRS to establish your residency termination date. H and r block login You must sign and date this statement and include a declaration that it is made under penalties of perjury. H and r block login The statement must contain the following information (as applicable). H and r block login Your name, address, U. H and r block login S. H and r block login taxpayer identification number (if any), and U. H and r block login S. H and r block login visa number (if any). H and r block login Your passport number and the name of the country that issued your passport. H and r block login The tax year for which the statement applies. H and r block login The last day that you were present in the United States during the year. H and r block login Sufficient facts to establish that you have maintained your tax home in, and that you have a closer connection to, a foreign country following your last day of presence in the United States during the year or following the abandonment or rescission of your status as a lawful permanent resident during the year. H and r block login The date that your status as a lawful permanent resident was abandoned or rescinded. H and r block login Sufficient facts (including copies of relevant documents) to establish that your status as a lawful permanent resident has been abandoned or rescinded. H and r block login If you can exclude days under the de minimis presence rule, discussed earlier, include the dates of the days you are excluding and sufficient facts to establish that you have maintained your tax home in and that you have a closer connection to a foreign country during the period you are excluding. H and r block login   Attach the required statement to your income tax return. H and r block login If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. H and r block login The due date for filing is discussed in chapter 7. H and r block login   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. H and r block login This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. H and r block login Nonresident Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. H and r block login S. H and r block login citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U. H and r block login S. H and r block login resident. H and r block login This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year. H and r block login If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. H and r block login Neither you nor your spouse can claim under any tax treaty not to be a U. H and r block login S. H and r block login resident. H and r block login You are both taxed on worldwide income. H and r block login You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years. H and r block login If you file a joint return under this provision, the special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. H and r block login Example. H and r block login Bob and Sharon Williams are married and both are nonresident aliens at the beginning of the year. H and r block login In June, Bob became a resident alien and remained a resident for the rest of the year. H and r block login Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return. H and r block login Bob and Sharon must file a joint return for the year they make the choice, but they can file either joint or separate returns for later years. H and r block login How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. H and r block login It should contain the following information. H and r block login A declaration that one spouse was a nonresident alien and the other spouse a U. H and r block login S. H and r block login citizen or resident alien on the last day of your tax year, and that you choose to be treated as U. H and r block login S. H and r block login residents for the entire tax year. H and r block login The name, address, and identification number of each spouse. H and r block login (If one spouse died, include the name and address of the person making the choice for the deceased spouse. H and r block login ) Amended return. H and r block login   You generally make this choice when you file your joint return. H and r block login However, you can also make the choice by filing a joint amended return on Form 1040X. H and r block login Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. H and r block login If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. H and r block login   You generally must file the amended joint return within 3 years from the date you filed your original U. H and r block login S. H and r block login income tax return or 2 years from the date you paid your income tax for that year, whichever is later. H and r block login Suspending the Choice The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U. H and r block login S. H and r block login citizen or resident alien at any time during the tax year. H and r block login This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7. H and r block login Example. H and r block login Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. H and r block login They chose to treat Judy as a resident alien and filed joint 2010 and 2011 income tax returns. H and r block login On January 10, 2012, Dick became a nonresident alien. H and r block login Judy had remained a nonresident alien throughout the period. H and r block login Dick and Judy could have filed joint or separate returns for 2012 because Dick was a resident alien for part of that year. H and r block login However, because neither Dick nor Judy is a resident alien at any time during 2013, their choice is suspended for that year. H and r block login If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns as nonresident aliens for 2013. H and r block login If Dick becomes a resident alien again in 2014, their choice is no longer suspended. H and r block login Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice ) or ended in one of the following ways. H and r block login If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year. H and r block login Revocation. H and r block login Either spouse can revoke the choice for any tax year, provided he or she makes the revocation by the due date for filing the tax return for that tax year. H and r block login The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. H and r block login The statement must include the name, address, and identification number of each spouse. H and r block login (If one spouse dies, include the name and address of the person who is revoking the choice for the deceased spouse. H and r block login ) The statement also must include a list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. H and r block login File the statement as follows. H and r block login If the spouse revoking the choice must file a return, attach the statement to the return for the first year the revocation applies. H and r block login If the spouse revoking the choice does not have to file a return, but does file a return (for example, to obtain a refund), attach the statement to the return. H and r block login If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where you filed the last joint return. H and r block login Death. H and r block login The death of either spouse ends the choice, beginning with the first tax year following the year the spouse died. H and r block login However, if the surviving spouse is a U. H and r block login S. H and r block login citizen or resident and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. H and r block login If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. H and r block login Legal separation. H and r block login A legal separation under a decree of divorce or separate maintenance ends the choice as of the beginning of the tax year in which the legal separation occurs. H and r block login Inadequate records. H and r block login The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. H and r block login Aliens From American Samoa or Puerto Rico If you are a nonresident alien in the United States and a bona fide resident of American Samoa or Puerto Rico during the entire tax year, you are taxed, with certain exceptions, according to the rules for resident aliens of the United States. H and r block login For more information, see Bona Fide Residents of American Samoa or Puerto Rico in chapter 5. H and r block login If you are a nonresident alien from American Samoa or Puerto Rico who does not qualify as a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you are taxed as a nonresident alien. H and r block login Resident aliens who formerly were bona fide residents of American Samoa or Puerto Rico are taxed according to the rules for resident aliens. H and r block login Prev  Up  Next   Home   More Online Publications
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Department of Education (ED)

The mission of the Department of Education is to foster educational excellence and to ensure equal access to educational opportunity for all.

The H And R Block Login

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