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How To Amend A Tax Return 2012

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How To Amend A Tax Return 2012

How to amend a tax return 2012 12. How to amend a tax return 2012   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. How to amend a tax return 2012 Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. How to amend a tax return 2012  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. How to amend a tax return 2012 5 cents per mile. How to amend a tax return 2012 For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. How to amend a tax return 2012 Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. How to amend a tax return 2012 To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. How to amend a tax return 2012 What is the tax benefit of taking a business deduction for work-related education. How to amend a tax return 2012   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. How to amend a tax return 2012 Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. How to amend a tax return 2012 An itemized deduction reduces the amount of your income subject to tax. How to amend a tax return 2012   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. How to amend a tax return 2012 This reduces the amount of your income subject to both income tax and self-employment tax. How to amend a tax return 2012   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. How to amend a tax return 2012 You may qualify for these other benefits even if you do not meet the requirements listed above. How to amend a tax return 2012   Also, your work-related education expenses may qualify you to claim more than one tax benefit. How to amend a tax return 2012 Generally, you may claim any number of benefits as long as you use different expenses to figure each one. How to amend a tax return 2012 Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. How to amend a tax return 2012 This is education that meets at least one of the following two tests. How to amend a tax return 2012 The education is required by your employer or the law to keep your present salary, status, or job. How to amend a tax return 2012 The required education must serve a bona fide business purpose of your employer. How to amend a tax return 2012 The education maintains or improves skills needed in your present work. How to amend a tax return 2012 However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. How to amend a tax return 2012 You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. How to amend a tax return 2012 Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. How to amend a tax return 2012 Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. How to amend a tax return 2012 This additional education is qualifying work-related education if all three of the following requirements are met. How to amend a tax return 2012 It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. How to amend a tax return 2012 When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. How to amend a tax return 2012 See Education To Maintain or Improve Skills , later. How to amend a tax return 2012 Example. How to amend a tax return 2012 You are a teacher who has satisfied the minimum requirements for teaching. How to amend a tax return 2012 Your employer requires you to take an additional college course each year to keep your teaching job. How to amend a tax return 2012 If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. How to amend a tax return 2012 This image is too large to be displayed in the current screen. How to amend a tax return 2012 Please click the link to view the image. How to amend a tax return 2012 Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. How to amend a tax return 2012 This could include refresher courses, courses on current developments, and academic or vocational courses. How to amend a tax return 2012 Example. How to amend a tax return 2012 You repair televisions, radios, and stereo systems for XYZ Store. How to amend a tax return 2012 To keep up with the latest changes, you take special courses in radio and stereo service. How to amend a tax return 2012 These courses maintain and improve skills required in your work. How to amend a tax return 2012 Maintaining skills vs. How to amend a tax return 2012 qualifying for new job. How to amend a tax return 2012   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. How to amend a tax return 2012 Education during temporary absence. How to amend a tax return 2012   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. How to amend a tax return 2012 Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. How to amend a tax return 2012 Example. How to amend a tax return 2012 You quit your biology research job to become a full-time biology graduate student for 1 year. How to amend a tax return 2012 If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. How to amend a tax return 2012 Education during indefinite absence. How to amend a tax return 2012   If you stop work for more than a year, your absence from your job is considered indefinite. How to amend a tax return 2012 Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. How to amend a tax return 2012 Therefore, it is not qualifying work-related education. How to amend a tax return 2012 Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. How to amend a tax return 2012 The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. How to amend a tax return 2012 Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. How to amend a tax return 2012 This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. How to amend a tax return 2012 You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 You are a full-time engineering student. How to amend a tax return 2012 Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. How to amend a tax return 2012 Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. How to amend a tax return 2012 The education is not qualifying work-related education. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 You are an accountant and you have met the minimum educational requirements of your employer. How to amend a tax return 2012 Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. How to amend a tax return 2012 These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. How to amend a tax return 2012 Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. How to amend a tax return 2012 The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. How to amend a tax return 2012 If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. How to amend a tax return 2012 The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. How to amend a tax return 2012 You generally will be considered a faculty member when one or more of the following occurs. How to amend a tax return 2012 You have tenure. How to amend a tax return 2012 Your years of service count toward obtaining tenure. How to amend a tax return 2012 You have a vote in faculty decisions. How to amend a tax return 2012 Your school makes contributions for you to a retirement plan other than social security or a similar program. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. How to amend a tax return 2012 In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. How to amend a tax return 2012 If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. How to amend a tax return 2012 However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. How to amend a tax return 2012 Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. How to amend a tax return 2012 If you have all the required education except the fifth year, you have met the minimum educational requirements. How to amend a tax return 2012 The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. How to amend a tax return 2012 The additional four education courses can be qualifying work-related education. How to amend a tax return 2012 Although you do not have all the required courses, you have already met the minimum educational requirements. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 Assume the same facts as in Example 1 except that you are hired with only 3 years of college. How to amend a tax return 2012 The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. How to amend a tax return 2012 They are needed to meet the minimum educational requirements for employment as a teacher. How to amend a tax return 2012 Example 4. How to amend a tax return 2012 You have a bachelor's degree and you work as a temporary instructor at a university. How to amend a tax return 2012 At the same time, you take graduate courses toward an advanced degree. How to amend a tax return 2012 The rules of the university state that you can become a faculty member only if you get a graduate degree. How to amend a tax return 2012 Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. How to amend a tax return 2012 You have not met the minimum educational requirements to qualify you as a faculty member. How to amend a tax return 2012 The graduate courses are not qualifying work-related education. How to amend a tax return 2012 Certification in a new state. How to amend a tax return 2012   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. How to amend a tax return 2012 This is true even if you must get additional education to be certified in another state. How to amend a tax return 2012 Any additional education you need is qualifying work-related education. How to amend a tax return 2012 You have already met the minimum requirements for teaching. How to amend a tax return 2012 Teaching in another state is not a new trade or business. How to amend a tax return 2012 Example. How to amend a tax return 2012 You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. How to amend a tax return 2012 You move to State B and are promptly hired as a teacher. How to amend a tax return 2012 You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. How to amend a tax return 2012 These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. How to amend a tax return 2012 Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. How to amend a tax return 2012 This is true even if you do not plan to enter that trade or business. How to amend a tax return 2012 If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 You are an accountant. How to amend a tax return 2012 Your employer requires you to get a law degree at your own expense. How to amend a tax return 2012 You register at a law school for the regular curriculum that leads to a law degree. How to amend a tax return 2012 Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 You are a general practitioner of medicine. How to amend a tax return 2012 You take a 2-week course to review developments in several specialized fields of medicine. How to amend a tax return 2012 The course does not qualify you for a new profession. How to amend a tax return 2012 It is qualifying work- related education because it maintains or improves skills required in your present profession. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. How to amend a tax return 2012 The program will lead to qualifying you to practice psychoanalysis. How to amend a tax return 2012 The psychoanalytic training does not qualify you for a new profession. How to amend a tax return 2012 It is qualifying work-related education because it maintains or improves skills required in your present profession. How to amend a tax return 2012 Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. How to amend a tax return 2012 They are part of a program of study that can qualify you for a new profession. How to amend a tax return 2012 Teaching and Related Duties All teaching and related duties are considered the same general kind of work. How to amend a tax return 2012 A change in duties in any of the following ways is not considered a change to a new business. How to amend a tax return 2012 Elementary school teacher to secondary school teacher. How to amend a tax return 2012 Teacher of one subject, such as biology, to teacher of another subject, such as art. How to amend a tax return 2012 Classroom teacher to guidance counselor. How to amend a tax return 2012 Classroom teacher to school administrator. How to amend a tax return 2012 What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. How to amend a tax return 2012 If you are not self-employed, you can deduct business expenses only if you itemize your deductions. How to amend a tax return 2012 You cannot deduct expenses related to tax-exempt and excluded income. How to amend a tax return 2012 Deductible expenses. How to amend a tax return 2012   The following education expenses can be deducted. How to amend a tax return 2012 Tuition, books, supplies, lab fees, and similar items. How to amend a tax return 2012 Certain transportation and travel costs. How to amend a tax return 2012 Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. How to amend a tax return 2012 Nondeductible expenses. How to amend a tax return 2012   You cannot deduct personal or capital expenses. How to amend a tax return 2012 For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. How to amend a tax return 2012 This amount is a personal expense. How to amend a tax return 2012 Unclaimed reimbursement. How to amend a tax return 2012   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. How to amend a tax return 2012 Example. How to amend a tax return 2012 Your employer agrees to pay your education expenses if you file a voucher showing your expenses. How to amend a tax return 2012 You do not file a voucher and you do not get reimbursed. How to amend a tax return 2012 Because you did not file a voucher, you cannot deduct the expenses on your tax return. How to amend a tax return 2012 Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. How to amend a tax return 2012 If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. How to amend a tax return 2012 Temporary basis. How to amend a tax return 2012   You go to school on a temporary basis if either of the following situations applies to you. How to amend a tax return 2012 Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. How to amend a tax return 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. How to amend a tax return 2012 Your attendance is temporary up to the date you determine it will last more than 1 year. How to amend a tax return 2012 If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. How to amend a tax return 2012 Attendance not on a temporary basis. How to amend a tax return 2012   You do not go to school on a temporary basis if either of the following situations apply to you. How to amend a tax return 2012 Your attendance at school is realistically expected to last more than 1 year. How to amend a tax return 2012 It does not matter how long you actually attend. How to amend a tax return 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. How to amend a tax return 2012 Your attendance is not temporary after the date you determine it will last more than 1 year. How to amend a tax return 2012 Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. How to amend a tax return 2012 This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. How to amend a tax return 2012 Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. How to amend a tax return 2012 Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 You regularly work in a nearby town, and go directly from work to home. How to amend a tax return 2012 You also attend school every work night for 3 months to take a course that improves your job skills. How to amend a tax return 2012 Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. How to amend a tax return 2012 This is true regardless of the distance traveled. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. How to amend a tax return 2012 You can deduct your transportation expenses from your regular work site to school and then home. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. How to amend a tax return 2012 Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. How to amend a tax return 2012 Example 4. How to amend a tax return 2012 Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. How to amend a tax return 2012 Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. How to amend a tax return 2012 If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. How to amend a tax return 2012 If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. How to amend a tax return 2012 Using your car. How to amend a tax return 2012    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. How to amend a tax return 2012 The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. How to amend a tax return 2012 5 cents per mile. How to amend a tax return 2012 Whichever method you use, you can also deduct parking fees and tolls. How to amend a tax return 2012 See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. How to amend a tax return 2012 Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. How to amend a tax return 2012 Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. How to amend a tax return 2012 For more information, see chapter 1 of Publication 463. How to amend a tax return 2012 You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. How to amend a tax return 2012 Mainly personal travel. How to amend a tax return 2012   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. How to amend a tax return 2012 You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. How to amend a tax return 2012   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. How to amend a tax return 2012 An important factor is the comparison of time spent on personal activities with time spent on educational activities. How to amend a tax return 2012 If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 John works in Newark, New Jersey. How to amend a tax return 2012 He traveled to Chicago to take a deductible 1-week course at the request of his employer. How to amend a tax return 2012 His main reason for going to Chicago was to take the course. How to amend a tax return 2012 While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. How to amend a tax return 2012 Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. How to amend a tax return 2012 He cannot deduct his transportation expenses of going to Pleasantville. How to amend a tax return 2012 He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Sue works in Boston. How to amend a tax return 2012 She went to a university in Michigan to take a course for work. How to amend a tax return 2012 The course is qualifying work-related education. How to amend a tax return 2012 She took one course, which is one-fourth of a full course load of study. How to amend a tax return 2012 She spent the rest of the time on personal activities. How to amend a tax return 2012 Her reasons for taking the course in Michigan were all personal. How to amend a tax return 2012 Sue's trip is mainly personal because three-fourths of her time is considered personal time. How to amend a tax return 2012 She cannot deduct the cost of her round-trip train ticket to Michigan. How to amend a tax return 2012 She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 Dave works in Nashville and recently traveled to California to take a 2-week seminar. How to amend a tax return 2012 The seminar is qualifying work-related education. How to amend a tax return 2012 While there, he spent an extra 8 weeks on personal activities. How to amend a tax return 2012 The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. How to amend a tax return 2012 Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. How to amend a tax return 2012 He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. How to amend a tax return 2012 Cruises and conventions. How to amend a tax return 2012   Certain cruises and conventions offer seminars or courses as part of their itinerary. How to amend a tax return 2012 Even if the seminars or courses are work related, your deduction for travel may be limited. How to amend a tax return 2012 This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. How to amend a tax return 2012   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. How to amend a tax return 2012 50% limit on meals. How to amend a tax return 2012   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. How to amend a tax return 2012 If you were reimbursed for the meals, see How To Treat Reimbursements , later. How to amend a tax return 2012   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. How to amend a tax return 2012 Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. How to amend a tax return 2012 Example. How to amend a tax return 2012 You are a French language teacher. How to amend a tax return 2012 While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. How to amend a tax return 2012 You chose your itinerary and most of your activities to improve your French language skills. How to amend a tax return 2012 You cannot deduct your travel expenses as education expenses. How to amend a tax return 2012 This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. How to amend a tax return 2012 No Double Benefit Allowed You cannot do either of the following. How to amend a tax return 2012 Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. How to amend a tax return 2012 Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. How to amend a tax return 2012 See Adjustments to Qualifying Work-Related Education Expenses, next. How to amend a tax return 2012 Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. How to amend a tax return 2012 You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. How to amend a tax return 2012 Tax-free educational assistance. How to amend a tax return 2012   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). How to amend a tax return 2012 Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How to amend a tax return 2012 Amounts that do not reduce qualifying work-related education expenses. How to amend a tax return 2012   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. How to amend a tax return 2012 Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. How to amend a tax return 2012 How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. How to amend a tax return 2012 There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. How to amend a tax return 2012 You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. How to amend a tax return 2012 Note. How to amend a tax return 2012 The following rules about reimbursement arrangements also apply to expense allowances received from your employer. How to amend a tax return 2012 Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. How to amend a tax return 2012 Your expenses must have a business connection. How to amend a tax return 2012 This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. How to amend a tax return 2012 You must adequately account to your employer for your expenses within a reasonable period of time. How to amend a tax return 2012 You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. How to amend a tax return 2012 If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. How to amend a tax return 2012 If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. How to amend a tax return 2012 Accountable plan rules not met. How to amend a tax return 2012   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. How to amend a tax return 2012 Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). How to amend a tax return 2012 Expenses equal reimbursement. How to amend a tax return 2012   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. How to amend a tax return 2012 Because your expenses and reimbursements are equal, you do not have a deduction. How to amend a tax return 2012 Excess expenses. How to amend a tax return 2012   If your expenses are more than your reimbursement, you can deduct your excess expenses. How to amend a tax return 2012 This is discussed later, under Deducting Business Expenses . How to amend a tax return 2012 Allocating your reimbursements for meals. How to amend a tax return 2012   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. How to amend a tax return 2012 If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. How to amend a tax return 2012 Make the allocation as follows. How to amend a tax return 2012 Divide your meal expenses by your total expenses. How to amend a tax return 2012 Multiply your total reimbursement by the result from (1). How to amend a tax return 2012 This is the allocated reimbursement for your meal expenses. How to amend a tax return 2012 Subtract the amount figured in (2) from your total reimbursement. How to amend a tax return 2012 The difference is the allocated reimbursement for your other expenses of qualifying work-related education. How to amend a tax return 2012 Example. How to amend a tax return 2012 Your employer paid you an expense allowance of $2,000 under an accountable plan. How to amend a tax return 2012 The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. How to amend a tax return 2012 There was no indication of how much of the reimbursement was for each type of expense. How to amend a tax return 2012 Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). How to amend a tax return 2012 Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. How to amend a tax return 2012   1. How to amend a tax return 2012 $425 meal expenses  $2,500 total expenses = . How to amend a tax return 2012 17   2. How to amend a tax return 2012 $2,000 (reimbursement)×. How to amend a tax return 2012 17     =$340 (allocated reimbursement for meal expenses)   3. How to amend a tax return 2012 $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). How to amend a tax return 2012 After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). How to amend a tax return 2012 Nonaccountable Plans 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 and report the total in box 1 of your Form W-2. How to amend a tax return 2012 You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. How to amend a tax return 2012 This is discussed later under Deducting Business Expenses . How to amend a tax return 2012 An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. How to amend a tax return 2012 Reimbursements for nondeductible expenses. How to amend a tax return 2012   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. How to amend a tax return 2012 You must include them in your income. How to amend a tax return 2012 For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. How to amend a tax return 2012   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. How to amend a tax return 2012 Deducting Business Expenses Self-employed persons and employees report their business expenses differently. How to amend a tax return 2012 The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. How to amend a tax return 2012 Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). How to amend a tax return 2012 If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. How to amend a tax return 2012 See the instructions for the form you file for information on how to complete it. How to amend a tax return 2012 Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. How to amend a tax return 2012 If either (1) or (2) applies, you can deduct the total qualifying cost. How to amend a tax return 2012 If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. How to amend a tax return 2012 In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. How to amend a tax return 2012 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. How to amend a tax return 2012 ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. How to amend a tax return 2012 Form 2106 or 2106-EZ. How to amend a tax return 2012   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. How to amend a tax return 2012 Form not required. How to amend a tax return 2012   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. How to amend a tax return 2012   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. How to amend a tax return 2012 (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. How to amend a tax return 2012 ) Using Form 2106-EZ. How to amend a tax return 2012   This form is shorter and easier to use than Form 2106. How to amend a tax return 2012 Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. How to amend a tax return 2012   If you do not meet both of these requirements, use Form 2106. How to amend a tax return 2012 Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. How to amend a tax return 2012 Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. How to amend a tax return 2012 You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. How to amend a tax return 2012 You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . How to amend a tax return 2012 For more information on qualified performing artists, see chapter 6 of Publication 463. How to amend a tax return 2012 Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. How to amend a tax return 2012 They are not subject to the 2%-of-adjusted-gross-income limit. How to amend a tax return 2012 To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . How to amend a tax return 2012 For more information on impairment-related work expenses, see chapter 6 of Publication 463. How to amend a tax return 2012 Recordkeeping You must keep records as proof of any deduction claimed on your tax return. How to amend a tax return 2012 Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. How to amend a tax return 2012 If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. How to amend a tax return 2012 However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. How to amend a tax return 2012 Examples of records to keep. How to amend a tax return 2012   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. How to amend a tax return 2012 You should keep adequate records or have sufficient evidence that will support your expenses. How to amend a tax return 2012 Estimates or approximations do not qualify as proof of an expense. How to amend a tax return 2012 Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. How to amend a tax return 2012 , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. How to amend a tax return 2012 Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. How to amend a tax return 2012 Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. How to amend a tax return 2012 Complete information about any scholarship or fellowship grants, including amounts you received during the year. How to amend a tax return 2012 Illustrated Example Victor Jones teaches math at a private high school in North Carolina. How to amend a tax return 2012 He was selected to attend a 3-week math seminar at a university in California. How to amend a tax return 2012 The seminar will improve his skills in his current job and is qualifying work-related education. How to amend a tax return 2012 He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. How to amend a tax return 2012 Victor will file Form 1040. How to amend a tax return 2012 His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. How to amend a tax return 2012 He shows his expenses for the seminar in Part I of the form. How to amend a tax return 2012 He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. How to amend a tax return 2012 He enters $400 on line 4 for his tuition and books. How to amend a tax return 2012 On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. How to amend a tax return 2012 He multiplies that amount by 50% and enters the result, $263, on line 5. How to amend a tax return 2012 On line 6, Victor totals the amounts from lines 3 through 5. How to amend a tax return 2012 He carries the total, $2,313, to Schedule A (Form 1040), line 21. How to amend a tax return 2012 Since he does not claim any vehicle expenses, Victor leaves Part II blank. How to amend a tax return 2012 His filled-in form is shown on the next page. How to amend a tax return 2012 This image is too large to be displayed in the current screen. How to amend a tax return 2012 Please click the link to view the image. How to amend a tax return 2012 Form 2106-EZ for V. How to amend a tax return 2012 Jones Prev  Up  Next   Home   More Online Publications
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The How To Amend A Tax Return 2012

How to amend a tax return 2012 Publication 587 - Main Content Table of Contents Qualifying for a DeductionExclusive Use Regular Use Trade or Business Use Principal Place of Business Place To Meet Patients, Clients, or Customers Separate Structure Figuring the DeductionUsing Actual Expenses Using the Simplified Method Daycare Facility Standard meal and snack rates. How to amend a tax return 2012 Sale or Exchange of Your HomeGain on Sale Depreciation Basis Adjustment Reporting the Sale More Information Business Furniture and EquipmentListed Property Property Bought for Business Use Personal Property Converted to Business Use Recordkeeping Where To DeductSelf-Employed Persons Employees Partners How To Get Tax HelpLow Income Taxpayer Clinics Worksheet To Figure the Deduction for Business Use of Your HomeInstructions for the Worksheet Worksheets To Figure the Deduction for Business Use of Your Home (Simplified Method) Instructions for the Simplified Method Worksheet Instructions for the Daycare Facility Worksheet Instructions for the Area Adjustment Worksheet Qualifying for a Deduction Generally, you cannot deduct items related to your home, such as mortgage interest, real estate taxes, utilities, maintenance, rent, depreciation, or property insurance, as business expenses. How to amend a tax return 2012 However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. How to amend a tax return 2012 Even then, the deductible amount of these types of expenses may be limited. How to amend a tax return 2012 Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home. How to amend a tax return 2012 To qualify to deduct expenses for business use of your home, you must use part of your home: Exclusively and regularly as your principal place of business (defined later), Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, In the case of a separate structure which is not attached to your home, in connection with your trade or business, On a regular basis for certain storage use (see Storage of inventory or product samples , later), For rental use (see Publication 527), or As a daycare facility (see Daycare Facility , later). How to amend a tax return 2012 Additional tests for employee use. How to amend a tax return 2012   If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. How to amend a tax return 2012 You must meet the tests discussed earlier plus: Your business use must be for the convenience of your employer, and You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer. How to amend a tax return 2012 If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. How to amend a tax return 2012 Exclusive Use To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. How to amend a tax return 2012 The area used for business can be a room or other separately identifiable space. How to amend a tax return 2012 The space does not need to be marked off by a permanent partition. How to amend a tax return 2012 You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. How to amend a tax return 2012 Example. How to amend a tax return 2012 You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. How to amend a tax return 2012 Your family also uses the den for recreation. How to amend a tax return 2012 The den is not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den. How to amend a tax return 2012 Exceptions to Exclusive Use You do not have to meet the exclusive use test if either of the following applies. How to amend a tax return 2012 You use part of your home for the storage of inventory or product samples (discussed next). How to amend a tax return 2012 You use part of your home as a daycare facility, discussed later under Daycare Facility . How to amend a tax return 2012 Note. How to amend a tax return 2012 With the exception of these two uses, any portion of the home used for business purposes must meet the exclusive use test. How to amend a tax return 2012 Storage of inventory or product samples. How to amend a tax return 2012    If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. How to amend a tax return 2012 However, you must meet all the following tests. How to amend a tax return 2012 You sell products at wholesale or retail as your trade or business. How to amend a tax return 2012 You keep the inventory or product samples in your home for use in your trade or business. How to amend a tax return 2012 Your home is the only fixed location of your trade or business. How to amend a tax return 2012 You use the storage space on a regular basis. How to amend a tax return 2012 The space you use is a separately identifiable space suitable for storage. How to amend a tax return 2012 Example. How to amend a tax return 2012 Your home is the only fixed location of your business of selling mechanics' tools at retail. How to amend a tax return 2012 You regularly use half of your basement for storage of inventory and product samples. How to amend a tax return 2012 You sometimes use the area for personal purposes. How to amend a tax return 2012 The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business. How to amend a tax return 2012 Regular Use To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. How to amend a tax return 2012 Incidental or occasional business use is not regular use. How to amend a tax return 2012 You must consider all facts and circumstances in determining whether your use is on a regular basis. How to amend a tax return 2012 Trade or Business Use To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or business. How to amend a tax return 2012 If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use. How to amend a tax return 2012 Example. How to amend a tax return 2012 You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. How to amend a tax return 2012 You do not make investments as a broker or dealer. How to amend a tax return 2012 So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home. How to amend a tax return 2012 Principal Place of Business You can have more than one business location, including your home, for a single trade or business. How to amend a tax return 2012 To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. How to amend a tax return 2012 To determine whether your home is your principal place of business, you must consider: The relative importance of the activities performed at each place where you conduct business, and The amount of time spent at each place where you conduct business. How to amend a tax return 2012 Your home office will qualify as your principal place of business if you meet the following requirements. How to amend a tax return 2012 You use it exclusively and regularly for administrative or management activities of your trade or business. How to amend a tax return 2012 You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. How to amend a tax return 2012 If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. How to amend a tax return 2012 However, see the later discussions under Place To Meet Patients, Clients, or Customers and Separate Structure for other ways to qualify to deduct home office expenses. How to amend a tax return 2012 Administrative or management activities. How to amend a tax return 2012   There are many activities that are administrative or managerial in nature. How to amend a tax return 2012 The following are a few examples. How to amend a tax return 2012 Billing customers, clients, or patients. How to amend a tax return 2012 Keeping books and records. How to amend a tax return 2012 Ordering supplies. How to amend a tax return 2012 Setting up appointments. How to amend a tax return 2012 Forwarding orders or writing reports. How to amend a tax return 2012 Administrative or management activities performed at other locations. How to amend a tax return 2012   The following activities performed by you or others will not disqualify your home office from being your principal place of business. How to amend a tax return 2012 You have others conduct your administrative or management activities at locations other than your home. How to amend a tax return 2012 (For example, another company does your billing from its place of business. How to amend a tax return 2012 ) You conduct administrative or management activities at places that are not fixed locations of your business, such as in a car or a hotel room. How to amend a tax return 2012 You occasionally conduct minimal administrative or management activities at a fixed location outside your home. How to amend a tax return 2012 You conduct substantial nonadministrative or nonmanagement business activities at a fixed location outside your home. How to amend a tax return 2012 (For example, you meet with or provide services to customers, clients, or patients at a fixed location of the business outside your home. How to amend a tax return 2012 ) You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead. How to amend a tax return 2012 Please click here for the text description of the image. How to amend a tax return 2012 Can you deduct business use of the home expenses? Example 1. How to amend a tax return 2012 John is a self-employed plumber. How to amend a tax return 2012 Most of John's time is spent at customers' homes and offices installing and repairing plumbing. How to amend a tax return 2012 He has a small office in his home that he uses exclusively and regularly for the administrative or management activities of his business, such as phoning customers, ordering supplies, and keeping his books. How to amend a tax return 2012 John writes up estimates and records of work completed at his customers' premises. How to amend a tax return 2012 He does not conduct any substantial administrative or management activities at any fixed location other than his home office. How to amend a tax return 2012 John does not do his own billing. How to amend a tax return 2012 He uses a local bookkeeping service to bill his customers. How to amend a tax return 2012 John's home office qualifies as his principal place of business for deducting expenses for its use. How to amend a tax return 2012 He uses the home office for the administrative or managerial activities of his plumbing business and he has no other fixed location where he conducts these administrative or managerial activities. How to amend a tax return 2012 His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. How to amend a tax return 2012 He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Pamela is a self-employed sales representative for several different product lines. How to amend a tax return 2012 She has an office in her home that she uses exclusively and regularly to set up appointments and write up orders and other reports for the companies whose products she sells. How to amend a tax return 2012 She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight. How to amend a tax return 2012 Pamela's business is selling products to customers at various locations throughout her territory. How to amend a tax return 2012 To make these sales, she regularly visits customers to explain the available products and take orders. How to amend a tax return 2012 Pamela's home office qualifies as her principal place of business for deducting expenses for its use. How to amend a tax return 2012 She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. How to amend a tax return 2012 The fact that she conducts some administrative or management activities in her hotel room (not a fixed location) does not disqualify her home office from being her principal place of business. How to amend a tax return 2012 She meets all the qualifications, including principal place of business, so she can deduct expenses (subject to certain limitations, explained later) for the business use of her home. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 Paul is a self-employed anesthesiologist. How to amend a tax return 2012 He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. How to amend a tax return 2012 One of the hospitals provides him with a small shared office where he could conduct administrative or management activities. How to amend a tax return 2012 Paul very rarely uses the office the hospital provides. How to amend a tax return 2012 He uses a room in his home that he has converted to an office. How to amend a tax return 2012 He uses this room exclusively and regularly to conduct all the following activities. How to amend a tax return 2012 Contacting patients, surgeons, and hospitals regarding scheduling. How to amend a tax return 2012 Preparing for treatments and presentations. How to amend a tax return 2012 Maintaining billing records and patient logs. How to amend a tax return 2012 Satisfying continuing medical education requirements. How to amend a tax return 2012 Reading medical journals and books. How to amend a tax return 2012 Paul's home office qualifies as his principal place of business for deducting expenses for its use. How to amend a tax return 2012 He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. How to amend a tax return 2012 His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. How to amend a tax return 2012 His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. How to amend a tax return 2012 He meets all the qualifications, including principal place of business, so he can deduct expenses (subject to certain limitations, explained later) for the business use of his home. How to amend a tax return 2012 Example 4. How to amend a tax return 2012 Kathleen is employed as a teacher. How to amend a tax return 2012 She is required to teach and meet with students at the school and to grade papers and tests. How to amend a tax return 2012 The school provides her with a small office where she can work on her lesson plans, grade papers and tests, and meet with parents and students. How to amend a tax return 2012 The school does not require her to work at home. How to amend a tax return 2012 Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. How to amend a tax return 2012 She uses this home office exclusively and regularly for the administrative duties of her teaching job. How to amend a tax return 2012 Kathleen must meet the convenience-of-the-employer test, even if her home qualifies as her principal place of business for deducting expenses for its use. How to amend a tax return 2012 Her employer provides her with an office and does not require her to work at home, so she does not meet the convenience-of-the-employer test and cannot claim a deduction for the business use of her home. How to amend a tax return 2012 More Than One Trade or Business The same home office can be the principal place of business for two or more separate business activities. How to amend a tax return 2012 Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. How to amend a tax return 2012 You must use the home office exclusively and regularly for one or more of the following purposes. How to amend a tax return 2012 As the principal place of business for one or more of your trades or businesses. How to amend a tax return 2012 As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses. How to amend a tax return 2012 If your home office is a separate structure, in connection with one or more of your trades or businesses. How to amend a tax return 2012 You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (i. How to amend a tax return 2012 e. How to amend a tax return 2012 , personal) activities. How to amend a tax return 2012 If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. How to amend a tax return 2012 See Rental to employer , later, if you rent part of your home to your employer. How to amend a tax return 2012 Example. How to amend a tax return 2012 Tracy White is employed as a teacher. How to amend a tax return 2012 Her principal place of work is the school, which provides her office space to do her school work. How to amend a tax return 2012 She also has a mail order jewelry business. How to amend a tax return 2012 All her work in the jewelry business is done in her home office and the office is used exclusively for that business. How to amend a tax return 2012 If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business. How to amend a tax return 2012 If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. How to amend a tax return 2012 As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. How to amend a tax return 2012 She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity. How to amend a tax return 2012 Place To Meet Patients, Clients, or Customers If you meet or deal with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business if you meet both the following tests. How to amend a tax return 2012 You physically meet with patients, clients, or customers on your premises. How to amend a tax return 2012 Their use of your home is substantial and integral to the conduct of your business. How to amend a tax return 2012 Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement. How to amend a tax return 2012 Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home. How to amend a tax return 2012 The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business. How to amend a tax return 2012 Example. How to amend a tax return 2012 June Quill, a self-employed attorney, works 3 days a week in her city office. How to amend a tax return 2012 She works 2 days a week in her home office used only for business. How to amend a tax return 2012 She regularly meets clients there. How to amend a tax return 2012 Her home office qualifies for a business deduction because she meets clients there in the normal course of her business. How to amend a tax return 2012 Separate Structure You can deduct expenses for a separate free-standing structure, such as a studio, workshop, garage, or barn, if you use it exclusively and regularly for your business. How to amend a tax return 2012 The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers. How to amend a tax return 2012 Example. How to amend a tax return 2012 John Berry operates a floral shop in town. How to amend a tax return 2012 He grows the plants for his shop in a greenhouse behind his home. How to amend a tax return 2012 He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses for its use, subject to certain limitations, explained later. How to amend a tax return 2012 Figuring the Deduction After you determine that you meet the tests under Qualifying for a Deduction , you can begin to figure how much you can deduct. How to amend a tax return 2012 When figuring the amount you can deduct for the business use of your home, you will use either your actual expenses or a simplified method. How to amend a tax return 2012 Electing to use the simplified method. How to amend a tax return 2012   The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. How to amend a tax return 2012 You choose whether or not to figure your deduction using the simplified method each taxable year. How to amend a tax return 2012 See Using the Simplified Method , later. How to amend a tax return 2012 Rental to employer. How to amend a tax return 2012   If you rent part of your home to your employer and you use the rented part in performing services for your employer as an employee, your deduction for the business use of your home is limited. How to amend a tax return 2012 You can deduct mortgage interest, qualified mortgage insurance premiums, real estate taxes, and personal casualty losses for the rented part, subject to any limitations. How to amend a tax return 2012 However, you cannot deduct otherwise allowable trade or business expenses, business casualty losses, or depreciation related to the use of your home (or use the simplified method as an alternative to deducting these actual expenses) in performing services for your employer. How to amend a tax return 2012 Using Actual Expenses If you do not or cannot elect to use the simplified method for a home, you will figure your deduction for that home using your actual expenses. How to amend a tax return 2012 You will also need to figure the percentage of your home used for business and the limit on the deduction. How to amend a tax return 2012 If you are an employee or a partner, or you use your home in your farming business and you file Schedule F (Form 1040), you can use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication, to help you figure your deduction. How to amend a tax return 2012 If you use your home in a trade or business and you file Schedule C (Form 1040), you will use Form 8829 to figure your deduction. How to amend a tax return 2012 Part-year use. How to amend a tax return 2012   You cannot deduct expenses for the business use of your home incurred during any part of the year you did not use your home for business purposes. How to amend a tax return 2012 For example, if you begin using part of your home for business on July 1, and you meet all the tests from that date until the end of the year, consider only your expenses for the last half of the year in figuring your allowable deduction. How to amend a tax return 2012 Expenses related to tax-exempt income. How to amend a tax return 2012   Generally, you cannot deduct expenses that are related to tax-exempt allowances. How to amend a tax return 2012 However, if you receive a tax-exempt parsonage allowance or a tax-exempt military allowance, your expenses for mortgage interest and real estate taxes are deductible under the normal rules. How to amend a tax return 2012 No deduction is allowed for other expenses related to the tax-exempt allowance. How to amend a tax return 2012   If your housing is provided free of charge and the value of the housing is tax exempt, you cannot deduct the rental value of any portion of the housing. How to amend a tax return 2012 Actual Expenses You must divide the expenses of operating your home between personal and business use. How to amend a tax return 2012 The part of a home operating expense you can use to figure your deduction depends on both of the following. How to amend a tax return 2012 Whether the expense is direct, indirect, or unrelated. How to amend a tax return 2012 The percentage of your home used for business. How to amend a tax return 2012 Table 1, next, describes the types of expenses you may have and the extent to which they are deductible. How to amend a tax return 2012 Table 1. How to amend a tax return 2012 Types of Expenses  Expense  Description  Deductibility Direct Expenses only for  the business part  of your home. How to amend a tax return 2012 Deductible in full. How to amend a tax return 2012 *   Examples:  Painting or repairs  only in the area  used for business. How to amend a tax return 2012 Exception: May be only partially  deductible in a daycare facility. How to amend a tax return 2012 See Daycare Facility , later. How to amend a tax return 2012 Indirect Expenses for  keeping up and running your  entire home. How to amend a tax return 2012 Deductible based on the percentage of your home used for business. How to amend a tax return 2012 *   Examples:  Insurance, utilities, and  general repairs. How to amend a tax return 2012   Unrelated Expenses only for  the parts of your  home not used  for business. How to amend a tax return 2012 Not deductible. How to amend a tax return 2012   Examples:  Lawn care or painting  a room not used  for business. How to amend a tax return 2012   *Subject to the deduction limit, discussed later. How to amend a tax return 2012 Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses. How to amend a tax return 2012 Certain expenses are deductible whether or not you use your home for business. How to amend a tax return 2012 If you qualify to deduct business use of the home expenses, use the business percentage of these expenses to figure your total business use of the home deduction. How to amend a tax return 2012 These expenses include the following. How to amend a tax return 2012 Real estate taxes. How to amend a tax return 2012 Qualified mortgage insurance premiums. How to amend a tax return 2012 Deductible mortgage interest. How to amend a tax return 2012 Casualty losses. How to amend a tax return 2012 Other expenses are deductible only if you use your home for business. How to amend a tax return 2012 You can use the business percentage of these expenses to figure your total business use of the home deduction. How to amend a tax return 2012 These expenses generally include (but are not limited to) the following. How to amend a tax return 2012 Depreciation (covered under Depreciating Your Home , later). How to amend a tax return 2012 Insurance. How to amend a tax return 2012 Rent paid for the use of property you do not own but use in your trade or business. How to amend a tax return 2012 Repairs. How to amend a tax return 2012 Security system. How to amend a tax return 2012 Utilities and services. How to amend a tax return 2012 Real estate taxes. How to amend a tax return 2012   To figure the business part of your real estate taxes, multiply the real estate taxes paid by the percentage of your home used for business. How to amend a tax return 2012   For more information on the deduction for real estate taxes, see Publication 530, Tax Information for Homeowners. How to amend a tax return 2012 Deductible mortgage interest. How to amend a tax return 2012   To figure the business part of your deductible mortgage interest, multiply this interest by the percentage of your home used for business. How to amend a tax return 2012 You can include interest on a second mortgage in this computation. How to amend a tax return 2012 If your total mortgage debt is more than $1,000,000 or your home equity debt is more than $100,000, your deduction may be limited. How to amend a tax return 2012 For more information on what interest is deductible, see Publication 936, Home Mortgage Interest Deduction. How to amend a tax return 2012 Qualified mortgage insurance premiums. How to amend a tax return 2012   To figure the business part of your qualified mortgage insurance premiums, multiply the premiums by the percentage of your home used for business. How to amend a tax return 2012 You can include premiums for insurance on a second mortgage in this computation. How to amend a tax return 2012 If your adjusted gross income is more than $100,000 ($50,000 if your filing status is married filing separately), your deduction may be limited. How to amend a tax return 2012 For more information, see Publication 936, and Line 13 in the Instructions for Schedule A (Form 1040). How to amend a tax return 2012 Casualty losses. How to amend a tax return 2012    If you have a casualty loss on your home that you use for business, treat the casualty loss as a direct expense, an indirect expense, or an unrelated expense, depending on the property affected. How to amend a tax return 2012 A direct expense is the loss on the portion of the property you use only in your business. How to amend a tax return 2012 Use the entire loss to figure the business use of the home deduction. How to amend a tax return 2012 An indirect expense is the loss on property you use for both business and personal purposes. How to amend a tax return 2012 Use only the business portion to figure the deduction. How to amend a tax return 2012 An unrelated expense is the loss on property you do not use in your business. How to amend a tax return 2012 Do not use any of the loss to figure the deduction. How to amend a tax return 2012 Example. How to amend a tax return 2012 You meet the rules to take a deduction for an office in your home that is 10% of the total area of your house. How to amend a tax return 2012 A storm damages your roof. How to amend a tax return 2012 This is an indirect expense as the roof is part of the whole house and is considered to be used both for business and personal purposes. How to amend a tax return 2012 You would complete Form 4684, Casualties and Thefts, to report your loss. How to amend a tax return 2012 You complete both section A (Personal Use Property) and section B (Business and Income-Producing Property) as your home is used both for business and personal purposes. How to amend a tax return 2012 Since you use 90% of your home for personal purposes, use 90% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 2, 3, 5, and 6 of Form 4684. How to amend a tax return 2012 Since you use 10% of your home for business purposes, use 10% of the cost or adjusted basis of your home, insurance or other reimbursement, and fair market value, both before and after the storm, to figure the amounts to enter on lines 20, 21, 23, and 24 of Form 4684. How to amend a tax return 2012 Forms and worksheets to use. How to amend a tax return 2012   If you are filing Schedule C (Form 1040), get Form 8829 and follow the instructions for casualty losses. How to amend a tax return 2012 If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. How to amend a tax return 2012 You will also need to get Form 4684. How to amend a tax return 2012 More information. How to amend a tax return 2012   For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts. How to amend a tax return 2012 Insurance. How to amend a tax return 2012   You can deduct the cost of insurance that covers the business part of your home. How to amend a tax return 2012 However, if your insurance premium gives you coverage for a period that extends past the end of your tax year, you can deduct only the business percentage of the part of the premium that gives you coverage for your tax year. How to amend a tax return 2012 You can deduct the business percentage of the part that applies to the following year in that year. How to amend a tax return 2012 Rent. How to amend a tax return 2012   If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. How to amend a tax return 2012 To figure your deduction, multiply your rent payments by the percentage of your home used for business. How to amend a tax return 2012   If you own your home, you cannot deduct the fair rental value of your home. How to amend a tax return 2012 However, see Depreciating Your Home , later. How to amend a tax return 2012 Repairs. How to amend a tax return 2012   The cost of repairs that relate to your business, including labor (other than your own labor), is a deductible expense. How to amend a tax return 2012 For example, a furnace repair benefits the entire home. How to amend a tax return 2012 If you use 10% of your home for business, you can deduct 10% of the cost of the furnace repair. How to amend a tax return 2012   Repairs keep your home in good working order over its useful life. How to amend a tax return 2012 Examples of common repairs are patching walls and floors, painting, wallpapering, repairing roofs and gutters, and mending leaks. How to amend a tax return 2012 However, repairs are sometimes treated as a permanent improvement and are not deductible. How to amend a tax return 2012 See Permanent improvements , later, under Depreciating Your Home. How to amend a tax return 2012 Security system. How to amend a tax return 2012   If you install a security system that protects all the doors and windows in your home, you can deduct the business part of the expenses you incur to maintain and monitor the system. How to amend a tax return 2012 You also can take a depreciation deduction for the part of the cost of the security system relating to the business use of your home. How to amend a tax return 2012 Utilities and services. How to amend a tax return 2012   Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. How to amend a tax return 2012 However, if you use part of your home for business, you can deduct the business part of these expenses. How to amend a tax return 2012 Generally, the business percentage for utilities is the same as the percentage of your home used for business. How to amend a tax return 2012 Telephone. How to amend a tax return 2012   The basic local telephone service charge, including taxes, for the first telephone line into your home (i. How to amend a tax return 2012 e. How to amend a tax return 2012 , landline) is a nondeductible personal expense. How to amend a tax return 2012 However, charges for business long-distance phone calls on that line, as well as the cost of a second line into your home used exclusively for business, are deductible business expenses. How to amend a tax return 2012 Do not include these expenses as a cost of using your home for business. How to amend a tax return 2012 Deduct these charges separately on the appropriate form or schedule. How to amend a tax return 2012 For example, if you file Schedule C (Form 1040), deduct these expenses on line 25, Utilities (instead of line 30, Expenses for business use of your home). How to amend a tax return 2012 Depreciating Your Home If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. How to amend a tax return 2012 Depreciation is an allowance for the wear and tear on the part of your home used for business. How to amend a tax return 2012 You cannot depreciate the cost or value of the land. How to amend a tax return 2012 You recover its cost when you sell or otherwise dispose of the property. How to amend a tax return 2012 Before you figure your depreciation deduction, you need to know the following information. How to amend a tax return 2012 The month and year you started using your home for business. How to amend a tax return 2012 The adjusted basis and fair market value of your home (excluding land) at the time you began using it for business. How to amend a tax return 2012 The cost of any improvements before and after you began using the property for business. How to amend a tax return 2012 The percentage of your home used for business. How to amend a tax return 2012 See Business Percentage , later. How to amend a tax return 2012 Adjusted basis defined. How to amend a tax return 2012   The adjusted basis of your home is generally its cost, plus the cost of any permanent improvements you made to it, minus any casualty losses or depreciation deducted in earlier tax years. How to amend a tax return 2012 For a discussion of adjusted basis, see Publication 551. How to amend a tax return 2012 Permanent improvements. How to amend a tax return 2012   A permanent improvement increases the value of property, adds to its life, or gives it a new or different use. How to amend a tax return 2012 Examples of improvements are replacing electric wiring or plumbing, adding a new roof or addition, paneling, or remodeling. How to amend a tax return 2012    You must carefully distinguish between repairs and improvements. How to amend a tax return 2012 See Repairs , earlier, under Actual Expenses. How to amend a tax return 2012 You also must keep accurate records of these expenses. How to amend a tax return 2012 These records will help you decide whether an expense is a deductible or a capital (added to the basis) expense. How to amend a tax return 2012 However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an improvement. How to amend a tax return 2012 Example. How to amend a tax return 2012 You buy an older home and fix up two rooms as a beauty salon. How to amend a tax return 2012 You patch the plaster on the ceilings and walls, paint, repair the floor, install an outside door, and install new wiring, plumbing, and other equipment. How to amend a tax return 2012 Normally, the patching, painting, and floor work are repairs and the other expenses are permanent improvements. How to amend a tax return 2012 However, because the work gives your property a new use, the entire remodeling job is a permanent improvement and its cost is added to the basis of the property. How to amend a tax return 2012 You cannot deduct any portion of it as a repair expense. How to amend a tax return 2012 Adjusting for depreciation deducted in earlier years. How to amend a tax return 2012   Decrease the basis of your property by the depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you properly selected. How to amend a tax return 2012 If you deducted less depreciation than you could have under the method you selected, decrease the basis by the amount you could have deducted under that method. How to amend a tax return 2012 If you did not deduct any depreciation, decrease the basis by the amount you could have deducted. How to amend a tax return 2012   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted, plus the part of the excess depreciation you deducted that actually decreased your tax liability for any year. How to amend a tax return 2012   If you deducted the incorrect amount of depreciation, see Publication 946. How to amend a tax return 2012 Fair market value defined. How to amend a tax return 2012   The fair market value of your home is the price at which the property would change hands between a buyer and a seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. How to amend a tax return 2012 Sales of similar property, on or about the date you begin using your home for business, may be helpful in determining the property's fair market value. How to amend a tax return 2012 Figuring the depreciation deduction for the current year. How to amend a tax return 2012   If you began using your home for business before 2013, continue to use the same depreciation method you used in past tax years. How to amend a tax return 2012   If you began using your home for business for the first time in 2013, depreciate the business part as nonresidential real property under the modified accelerated cost recovery system (MACRS). How to amend a tax return 2012 Under MACRS, nonresidential real property is depreciated using the straight line method over 39 years. How to amend a tax return 2012 For more information on MACRS and other methods of depreciation, see Publication 946. How to amend a tax return 2012   To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). How to amend a tax return 2012 The depreciable basis is figured by multiplying the percentage of your home used for business by the smaller of the following. How to amend a tax return 2012 The adjusted basis of your home (excluding land) on the date you began using your home for business. How to amend a tax return 2012 The fair market value of your home (excluding land) on the date you began using your home for business. How to amend a tax return 2012 Depreciation table. How to amend a tax return 2012   If 2013 was the first year you used your home for business, you can figure your 2013 depreciation for the business part of your home by using the appropriate percentage from the following table. How to amend a tax return 2012 Table 2. How to amend a tax return 2012 MACRS Percentage Table for 39-Year Nonresidential Real Property Month First Used for Business Percentage To Use 1 2. How to amend a tax return 2012 461% 2 2. How to amend a tax return 2012 247% 3 2. How to amend a tax return 2012 033% 4 1. How to amend a tax return 2012 819% 5 1. How to amend a tax return 2012 605% 6 1. How to amend a tax return 2012 391% 7 1. How to amend a tax return 2012 177% 8 0. How to amend a tax return 2012 963% 9 0. How to amend a tax return 2012 749% 10 0. How to amend a tax return 2012 535% 11 0. How to amend a tax return 2012 321% 12 0. How to amend a tax return 2012 107%   Multiply the depreciable basis of the business part of your home by the percentage from the table for the first month you use your home for business. How to amend a tax return 2012 See Publication 946 for the percentages for the remaining tax years of the recovery period. How to amend a tax return 2012 Example. How to amend a tax return 2012 In May, George Miller began to use one room in his home exclusively and regularly to meet clients. How to amend a tax return 2012 This room is 8% of the square footage of his home. How to amend a tax return 2012 He bought the home in 2003 for $125,000. How to amend a tax return 2012 He determined from his property tax records that his adjusted basis in the house (exclusive of land) is $115,000. How to amend a tax return 2012 In May, the house had a fair market value of $165,000. How to amend a tax return 2012 He multiplies his adjusted basis of $115,000 (which is less than the fair market value) by 8%. How to amend a tax return 2012 The result is $9,200, his depreciable basis for the business part of the house. How to amend a tax return 2012 George files his return based on the calendar year. How to amend a tax return 2012 May is the 5th month of his tax year. How to amend a tax return 2012 He multiplies his depreciable basis of $9,200 by 1. How to amend a tax return 2012 605% (. How to amend a tax return 2012 01605), the percentage from the table for the 5th month. How to amend a tax return 2012 His depreciation deduction is $147. How to amend a tax return 2012 66. How to amend a tax return 2012 Depreciating permanent improvements. How to amend a tax return 2012   Add the costs of permanent improvements made before you began using your home for business to the basis of your property. How to amend a tax return 2012 Depreciate these costs as part of the cost of your home as explained earlier. How to amend a tax return 2012 The costs of improvements made after you begin using your home for business (that affect the business part of your home, such as a new roof) are depreciated separately. How to amend a tax return 2012 Multiply the cost of the improvement by the business-use percentage and depreciate the result over the recovery period that would apply to your home if you began using it for business at the same time as the improvement. How to amend a tax return 2012 For improvements made this year, the recovery period is 39 years. How to amend a tax return 2012 For the percentage to use for the first year, see Table 2, earlier. How to amend a tax return 2012 For more information on recovery periods, see Publication 946. How to amend a tax return 2012 Business Percentage To find the business percentage, compare the size of the part of your home that you use for business to your whole house. How to amend a tax return 2012 Use the resulting percentage to figure the business part of the expenses for operating your entire home. How to amend a tax return 2012 You can use any reasonable method to determine the business percentage. How to amend a tax return 2012 The following are two commonly used methods for figuring the percentage. How to amend a tax return 2012 Divide the area (length multiplied by the width) used for business by the total area of your home. How to amend a tax return 2012 If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 Your office is 240 square feet (12 feet × 20 feet). How to amend a tax return 2012 Your home is 1,200 square feet. How to amend a tax return 2012 Your office is 20% (240 ÷ 1,200) of the total area of your home. How to amend a tax return 2012 Your business percentage is 20%. How to amend a tax return 2012 Example 2. How to amend a tax return 2012 You use one room in your home for business. How to amend a tax return 2012 Your home has 10 rooms, all about equal size. How to amend a tax return 2012 Your office is 10% (1 ÷ 10) of the total area of your home. How to amend a tax return 2012 Your business percentage is 10%. How to amend a tax return 2012 Use lines 1-7 of Form 8829, or lines 1-3 on the Worksheet To Figure the Deduction for Business Use of Your Home (near the end of this publication) to figure your business percentage. How to amend a tax return 2012 Deduction Limit If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home. How to amend a tax return 2012 If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home is limited. How to amend a tax return 2012 Your deduction of otherwise nondeductible expenses, such as insurance, utilities, and depreciation of your home (with depreciation of your home taken last), that are allocable to the business, is limited to the gross income from the business use of your home minus the sum of the following. How to amend a tax return 2012 The business part of expenses you could deduct even if you did not use your home for business (such as mortgage interest, real estate taxes, and casualty and theft losses that are allowable as itemized deductions on Schedule A (Form 1040)). How to amend a tax return 2012 These expenses are discussed in detail under Actual Expenses , earlier. How to amend a tax return 2012 The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment), but not to the use of the home itself. How to amend a tax return 2012 If you are self-employed, do not include in (2) above your deduction for one-half of your self-employment tax. How to amend a tax return 2012 Carryover of unallowed expenses. How to amend a tax return 2012   If your deductions are greater than the current year's limit, you can carry over the excess to the next year in which you use actual expenses. How to amend a tax return 2012 They are subject to the deduction limit for that year, whether or not you live in the same home during that year. How to amend a tax return 2012 Figuring the deduction limit and carryover. How to amend a tax return 2012   If you are an employee or a partner, or you file Schedule F (Form 1040), use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication. How to amend a tax return 2012 If you file Schedule C (Form 1040), figure your deduction limit and carryover on Form 8829. How to amend a tax return 2012 Example. How to amend a tax return 2012 You meet the requirements for deducting expenses for the business use of your home. How to amend a tax return 2012 You use 20% of your home for business. How to amend a tax return 2012 In 2013, your business expenses and the expenses for the business use of your home are deducted from your gross income in the following order. How to amend a tax return 2012    Gross income from business $6,000 Minus:   Deductible mortgage interest and real estate taxes (20%) 3,000 Business expenses not related to the use of your home (100%) (business phone, supplies, and depreciation on equipment) 2,000 Deduction limit $1,000 Minus other expenses allocable to business use of home:   Maintenance, insurance, and utilities (20%) 800 Depreciation allowed (20% = $1,600 allowable, but subject to balance of deduction limit) 200 Other expenses up to the deduction limit $1,000 Depreciation carryover to 2014 ($1,600 − $200) (subject to deduction limit in 2014) $1,400   You can deduct all of the business part of your deductible mortgage interest and real estate taxes ($3,000). How to amend a tax return 2012 You also can deduct all of your business expenses not related to the use of your home ($2,000). How to amend a tax return 2012 Additionally, you can deduct all of the business part of your expenses for maintenance, insurance, and utilities, because the total ($800) is less than the $1,000 deduction limit. How to amend a tax return 2012 Your deduction for depreciation for the business use of your home is limited to $200 ($1,000 minus $800) because of the deduction limit. How to amend a tax return 2012 You can carry over the $1,400 balance and add it to your depreciation for 2014, subject to your deduction limit in 2014. How to amend a tax return 2012 More than one place of business. How to amend a tax return 2012   If part of the gross income from your trade or business is from the business use of part of your home and part is from a place other than your home, you must determine the part of your gross income from the business use of your home before you figure the deduction limit. How to amend a tax return 2012 In making this determination, consider the time you spend at each location, the business investment in each location, and any other relevant facts and circumstances. How to amend a tax return 2012 If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. How to amend a tax return 2012 For more information on transportation costs, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. How to amend a tax return 2012 Using the Simplified Method The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. How to amend a tax return 2012 In most cases, you will figure your deduction by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. How to amend a tax return 2012 The area you use to figure your deduction is limited to 300 square feet. How to amend a tax return 2012 See Simplified Amount , later, for information about figuring the amount of the deduction. How to amend a tax return 2012 For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06 I. How to amend a tax return 2012 R. How to amend a tax return 2012 B. How to amend a tax return 2012 478, available at www. How to amend a tax return 2012 irs. How to amend a tax return 2012 gov/irb/2013-06_IRB/ar09. How to amend a tax return 2012 html. How to amend a tax return 2012 Actual expenses and depreciation of your home. How to amend a tax return 2012   If you elect to use the simplified method, you cannot deduct any actual expenses for the business except for business expenses that are not related to the use of the home. How to amend a tax return 2012 You also cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for the portion of the home that is used for a qualified business use. How to amend a tax return 2012 The depreciation deduction allowable for that portion of the home is deemed to be zero for a year you use the simplified method. How to amend a tax return 2012 If you figure your deduction for business use of the home using actual expenses in a subsequent year, you will have to use the appropriate optional depreciation table for MACRS to figure your depreciation. How to amend a tax return 2012 More information. How to amend a tax return 2012   For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I. How to amend a tax return 2012 R. How to amend a tax return 2012 B. How to amend a tax return 2012 478, available at www. How to amend a tax return 2012 irs. How to amend a tax return 2012 gov/irb/2013-06_IRB/ar09. How to amend a tax return 2012 html. How to amend a tax return 2012 See Publication 946 for the optional depreciation tables Although you cannot deduct any depreciation or section 179 expense for the portion of your home used for a qualified business use, you may still claim depreciation or the section 179 expense deduction on other assets used in the business (for example, furniture and equipment). How to amend a tax return 2012 Expenses deductible without regard to business use. How to amend a tax return 2012   When using the simplified method, treat as personal expenses those business expenses related to the use of the home that are deductible without regard to whether there is a qualified business use of the home. How to amend a tax return 2012 These expenses include mortgage interest, real estate taxes, and casualty losses, subject to any limitations. How to amend a tax return 2012 See Where To Deduct , later. How to amend a tax return 2012 If you also rent part of your home, you must still allocate these expenses between rental use and personal use (for this purpose, personal use includes business use reported using the simplified method). How to amend a tax return 2012 No deduction of carryover of actual expenses. How to amend a tax return 2012   If you used actual expenses to figure your deduction for business use of the home in a prior year and your deduction was limited, you cannot deduct the disallowed amount carried over from the prior year during a year you figure your deduction using the simplified method. How to amend a tax return 2012 Instead, you will continue to carry over the disallowed amount to the next year that you use actual expenses to figure your deduction. How to amend a tax return 2012 Electing the Simplified Method You choose whether or not to figure your deduction using the simplified method each taxable year. How to amend a tax return 2012 Make the election for a home by using the simplified method to figure the deduction for the qualified business use of that home on a timely filed, original federal income tax return. How to amend a tax return 2012 An election for a taxable year, once made, is irrevocable. How to amend a tax return 2012 A change from using the simplified method in one year to actual expenses in a succeeding taxable year, or vice-versa, is not a change in method of accounting and does not require the consent of the Commissioner. How to amend a tax return 2012 Shared use. How to amend a tax return 2012   If you share your home with someone else who also uses the home in a business that qualifies for this deduction, each of you make your own election. How to amend a tax return 2012 More than one qualified business use. How to amend a tax return 2012   If you conduct more than one business that qualifies for this deduction in your home, your election to use the simplified method applies to all your qualified business uses of that home. How to amend a tax return 2012 More than one home. How to amend a tax return 2012   If you used more than one home during the year (for example, you moved during the year), you can elect to use the simplified method for only one of the homes. How to amend a tax return 2012 You must figure the deduction for any other home using actual expenses. How to amend a tax return 2012 Simplified Amount Your deduction for the qualified business use of a home is the sum of each amount you figure for a separate qualified business use of your home. How to amend a tax return 2012 To figure your deduction for the business use of a home using the simplified method, you will need to know the following information for each qualified business use of the home. How to amend a tax return 2012 The allowable area of your home used in conducting the business. How to amend a tax return 2012 If you did not conduct the business for the entire year in the home or the area changed during the year, you will need to know the allowable area you used and the number of days you conducted the business for each month. How to amend a tax return 2012 The gross income from the business use of your home. How to amend a tax return 2012 The amount of the business expenses that are not related to the use of your home. How to amend a tax return 2012 If the qualified business use is for a daycare facility that uses space in your home on a regular (but not exclusive) basis, you will also need to know the percentage of time that part of your home is used for daycare. How to amend a tax return 2012 To figure the amount you can deduct for qualified business use of your home using the simplified method, follow these 3 steps. How to amend a tax return 2012 Multiply the allowable area by $5 (or less than $5 if the qualified business use is for a daycare that uses space in your home on a regular, but not exclusive, basis). How to amend a tax return 2012 See Allowable area and Space used regularly for daycare , later. How to amend a tax return 2012 Subtract the expenses from the business that are not related to the use of the home from the gross income related to the business use of the home. How to amend a tax return 2012 If these expenses are greater than the gross income from the business use of the home, then you cannot take a deduction for this business use of the home. How to amend a tax return 2012 See Gross income limitation , later. How to amend a tax return 2012 Take the smaller of the amounts from (1) and (2). How to amend a tax return 2012 This is the amount you can deduct for this qualified business use of your home using the simplified method. How to amend a tax return 2012 If you are an employee or a partner, or you use your home in your farming business and file Schedule F (Form 1040), you can use the Simplified Method Worksheet, near the end of this publication, to help you figure your deduction. How to amend a tax return 2012 If you use your home in a trade or business and you file Schedule C (Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction. How to amend a tax return 2012 Allowable area. How to amend a tax return 2012   In most cases, the allowable area is the smaller of the actual area (in square feet) of your home used in conducting the business and 300 square feet. How to amend a tax return 2012 Your allowable area may be smaller if you conducted the business as a qualified joint venture with your spouse, the area used by the business was shared with another qualified business use, you used the home for the business for only part of the year, or the area used by the business changed during the year. How to amend a tax return 2012 You can use the Area Adjustment Worksheet (for simplified method), near the end of this publication, to help you figure your allowable area for a qualified business use. How to amend a tax return 2012 Area used by a qualified joint venture. How to amend a tax return 2012   If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the business use separately. How to amend a tax return 2012 Split the actual area used in conducting business between you and your spouse in the same manner you split your other tax attributes. How to amend a tax return 2012 Then, each spouse will figure the allowable area separately. How to amend a tax return 2012 For more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C. How to amend a tax return 2012 Shared use. How to amend a tax return 2012   If you share your home with someone else who uses the home to conduct business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. How to amend a tax return 2012 You must allocate the shared space between you and the other person in a reasonable manner. How to amend a tax return 2012 Example. How to amend a tax return 2012 Kristin and Lindsey are roommates. How to amend a tax return 2012 Kristin uses 300 square feet of their home for a qualified business use. How to amend a tax return 2012 Lindsey uses 200 square feet of their home for a separate qualified business use. How to amend a tax return 2012 The qualified business uses share 100 square feet. How to amend a tax return 2012 In addition to the portion that they do not share, Kristin and Lindsey can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. How to amend a tax return 2012 If divided evenly, Kristin could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. How to amend a tax return 2012 More than one qualified business use. How to amend a tax return 2012   If you conduct more than one business qualifying for the deduction, you are limited to a maximum of 300 square feet for all of the businesses. How to amend a tax return 2012 Allocate the actual square footage used (up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. How to amend a tax return 2012 However, do not allocate more square feet to a qualified business use than you actually use for that business. How to amend a tax return 2012 Rental use. How to amend a tax return 2012   The simplified method does not apply to rental use. How to amend a tax return 2012 A rental use that qualifies for the deduction must be figured using actual expenses. How to amend a tax return 2012 If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses. How to amend a tax return 2012 You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use. How to amend a tax return 2012 Part-year use or area changes. How to amend a tax return 2012   If your qualified business use was for a portion of the taxable year (for example, a seasonal business or a business that begins during the taxable year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. How to amend a tax return 2012 You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. How to amend a tax return 2012 When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. How to amend a tax return 2012 Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 Andy files his federal income tax return on a calendar year basis. How to amend a tax return 2012 On July 20, he began using 420 square feet of his home for a qualified business use. How to amend a tax return 2012 He continued to use the 420 square feet until the end of the year. How to amend a tax return 2012 His average monthly allowable square footage is 125 square feet, which is figured using 300 square feet for each month August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12). How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Amy files her federal income tax return on a calendar year basis. How to amend a tax return 2012 On April 20, she began using 100 square feet of her home for a qualified business use. How to amend a tax return 2012 On August 5, she expanded the area of her qualified use to 330 square feet. How to amend a tax return 2012 Amy continued to use the 330 square feet until the end of the year. How to amend a tax return 2012 Her average monthly allowable square footage is 150 square feet, which is figured using 100 square feet for May through July and 300 square feet for August through December divided by the number of months in the taxable year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12). How to amend a tax return 2012 Gross income limitation. How to amend a tax return 2012   Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home. How to amend a tax return 2012 If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home. How to amend a tax return 2012 Business expenses not related to use of the home. How to amend a tax return 2012   These expenses relate to the business activity in the home, but not to the use of the home itself. How to amend a tax return 2012 You can still deduct business expenses that are unrelated to the use of the home. How to amend a tax return 2012 See Where To Deduct , later. How to amend a tax return 2012 Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. How to amend a tax return 2012 Space used regularly for daycare. How to amend a tax return 2012   If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction. How to amend a tax return 2012 The reduced rate will equal the prescribed rate times a fraction. How to amend a tax return 2012 The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses. How to amend a tax return 2012 You can use the Daycare Facility Worksheet (for simplified method), near the end of this publication, to help you figure the reduced rate. How to amend a tax return 2012    If you used at least 300 square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet. How to amend a tax return 2012 Daycare Facility If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes. How to amend a tax return 2012 To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. How to amend a tax return 2012 You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves. How to amend a tax return 2012 You must have applied for, been granted, or be exempt from having, a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law. How to amend a tax return 2012 You do not meet this requirement if your application was rejected or your license or other authorization was revoked. How to amend a tax return 2012 Figuring the deduction. How to amend a tax return 2012   If you elect to use the simplified method for your home, figure your deduction as described earlier in Using the Simplified Method under Figuring the Deduction. How to amend a tax return 2012    If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, figure what part is used for daycare, as explained in Business Percentage , earlier, under Figuring the Deduction. How to amend a tax return 2012 If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. How to amend a tax return 2012   If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. How to amend a tax return 2012 A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day. How to amend a tax return 2012 You do not have to keep records to show the specific hours the area was used for business. How to amend a tax return 2012 You can use the area occasionally for personal reasons. How to amend a tax return 2012 However, a room you use only occasionally for business does not qualify for the deduction. How to amend a tax return 2012 To find the percentage of time you actually use your home for business, compare the total time used for business to the total time that part of your home can be used for all purposes. How to amend a tax return 2012 You can compare the hours of business use in a week with the number of hours in a week (168). How to amend a tax return 2012 Or you can compare the hours of business use for the year with the number of hours in the year (8,760 in 2013). How to amend a tax return 2012 If you started or stopped using your home for daycare in 2013, you must prorate the number of hours based on the number of days the home was available for daycare. How to amend a tax return 2012 Example 1. How to amend a tax return 2012 Mary Lake used her basement to operate a daycare business for children. How to amend a tax return 2012 She figures the business percentage of the basement as follows. How to amend a tax return 2012 Square footage of the basement Square footage of her home = 1,600 3,200 = 50%           She used the basement for daycare an average of 12 hours a day, 5 days a week, for 50 weeks a year. How to amend a tax return 2012 During the other 12 hours a day, the family could use the basement. How to amend a tax return 2012 She figures the percentage of time the basement was used for daycare as follows. How to amend a tax return 2012 Number of hours used for daycare (12 x 5 x 50) Total number of hours in the year (24 x 365) = 3,000 8,760 = 34. How to amend a tax return 2012 25%           Mary can deduct 34. How to amend a tax return 2012 25% of any direct expenses for the basement. How to amend a tax return 2012 However, because her indirect expenses are for the entire house, she can deduct only 17. How to amend a tax return 2012 13% of the indirect expenses. How to amend a tax return 2012 She figures the percentage for her indirect expenses as follows. How to amend a tax return 2012 Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 34. How to amend a tax return 2012 25% Percentage for indirect expenses 17. How to amend a tax return 2012 13% Mary completes Form 8829, Part I, figuring the percentage of her home used for business, including the percentage of time the basement was used. How to amend a tax return 2012 In Part II, Mary figures her deductible expenses. How to amend a tax return 2012 She uses the following information to complete Part II. How to amend a tax return 2012 Gross income from her daycare business $50,000 Expenses not related to the business use of the home $25,000 Tentative profit $25,000 Rent $8,400 Utilities $850 Painting the basement $500 Mary enters her tentative profit, $25,000, on line 8. How to amend a tax return 2012 (This figure is the same as the amount on line 29 of her Schedule C (Form 1040). How to amend a tax return 2012 ) The expenses she paid for rent and utilities relate to her entire home. How to amend a tax return 2012 Therefore, she enters the amount paid for rent on line 18, column (b), and the amount paid for utilities on line 20, column (b). How to amend a tax return 2012 She shows the total of these expenses on line 22, column (b). How to amend a tax return 2012 For line 23, she multiplies the amount on line 22, column (b) by the percentage on line 7 and enters the result, $1,585. How to amend a tax return 2012 Mary paid $500 to have the basement painted. How to amend a tax return 2012 The painting is a direct expense. How to amend a tax return 2012 However, because she did not use the basement exclusively for daycare, she must multiply $500 by the percentage of time the basement was used for daycare (34. How to amend a tax return 2012 25% – line 6). How to amend a tax return 2012 She enters $171 (34. How to amend a tax return 2012 25% × $500) on line 19, column (a). How to amend a tax return 2012 She adds line 22, column (a), and line 23 and enters $1,756 ($171 + $1,585) on line 25. How to amend a tax return 2012 This is less than her deduction limit (line 15), so she can deduct the entire amount. How to amend a tax return 2012 She follows the instructions to complete the rest of Part II and enters $1,756 on lines 33 and 35. How to amend a tax return 2012 She then carries the $1,756 to line 30 of her Schedule C (Form 1040). How to amend a tax return 2012 Example 2. How to amend a tax return 2012 Assume the same facts as in Example 1 except that Mary also has another room that was available each business day for children to take naps in. How to amend a tax return 2012 Although she did not keep a record of the number of hours the room was actually used for naps, it was used for part of each business day. How to amend a tax return 2012 Since the room was available for business use during regular operating hours each business day and was used regularly in the business, it is considered used for daycare throughout each business day. How to amend a tax return 2012 The basement and room are 60% of the total area of her home. How to amend a tax return 2012 In figuring her expenses, 34. How to amend a tax return 2012 25% of any direct expenses for the basement and room are deductible. How to amend a tax return 2012 In addition, 20. How to amend a tax return 2012 55% (34. How to amend a tax return 2012 25% × 60%) of her indirect expenses are deductible. How to amend a tax return 2012 Example 3. How to amend a tax return 2012 Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, 2013. How to amend a tax return 2012 She used the basement for daycare an average of 12 hours a day, 5 days a week, but for only 25 weeks of the year. How to amend a tax return 2012 During the other 12 hours a day, the family could still use the basement. How to amend a tax return 2012 She figures the percentage of time the basement was used for business as follows. How to amend a tax return 2012 Number of hours used for daycare (12 x 5 x 25) Total number of hours during period used (24 x 175) = 1,500 4,200 = 35. How to amend a tax return 2012 71%           Mary can deduct 35. How to amend a tax return 2012 71% of any direct expenses for the basement. How to amend a tax return 2012 However, because her indirect expenses are for the entire house, she can deduct only 17. How to amend a tax return 2012 86% of the indirect expenses. How to amend a tax return 2012 She figures the percentage for her indirect expenses as follows. How to amend a tax return 2012 Business percentage of the basement 50% Multiplied by: Percentage of time used for daycare × 35. How to amend a tax return 2012 71% Percentage for indirect expenses 17. How to amend a tax return 2012 86% Meals. How to amend a tax return 2012   If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. How to amend a tax return 2012 Claim it as a separate deduction on your Schedule C (Form 1040). How to amend a tax return 2012 You can never deduct the cost of food consumed by you or your family. How to amend a tax return 2012 You can deduct as a business expense 100% of the actual cost of food consumed by your daycare recipients (see Standard meal and snack rates , later, for an optional method for eligible children) and generally only 50% of the cost of food consumed by your employees. How to amend a tax return 2012 However, you can deduct 100% of the cost of food consumed by your employees if its value can be excluded from their wages as a de minimis fringe benefit. How to amend a tax return 2012 For more information on meals that meet these requirements, see Meals in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. How to amend a tax return 2012   If you deduct the actual cost of food for your daycare business, keep a separate record (with receipts) of your family's food costs. How to amend a tax return 2012   Reimbursements you receive from a sponsor under the Child and Adult Care Food Program of the Department of Agriculture are taxable only to the extent they exceed your expenses for food for eligible children. How to amend a tax return 2012 If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). How to amend a tax return 2012 If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C (Form 1040). How to amend a tax return 2012 Do not include payments or expenses for your own children if they are eligible for the program. How to amend a tax return 2012 Follow this procedure even if you receive a Form 1099-MISC, Miscellaneous Income, reporting a payment from the sponsor. How to amend a tax return 2012 Standard meal and snack rates. How to amend a tax return 2012   If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. How to amend a tax return 2012 For these purposes: A family daycare provider is a person engaged in the business of providing family daycare. How to amend a tax return 2012 Family daycare is childcare provided to eligible children in the home of the family daycare provider. How to amend a tax return 2012 The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day. How to amend a tax return 2012 Eligible children are minor children receiving family daycare in the home of the family daycare provider. How to amend a tax return 2012 Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home. How to amend a tax return 2012 Eligible children do not include children who receive daycare services for personal reasons of the provider. How to amend a tax return 2012 For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. How to amend a tax return 2012   You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown in Table 3, later. How to amend a tax return 2012 You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. How to amend a tax return 2012 If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement. How to amend a tax return 2012   You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. How to amend a tax return 2012 If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year. How to amend a tax return 2012 However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year. How to amend a tax return 2012   If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. How to amend a tax return 2012 The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. How to amend a tax return 2012 This information can be recorded in a log similar to the one shown in Exhibit A, near the end of this publication. How to amend a tax return 2012   The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils. How to amend a tax return 2012 These expenses can be claimed as a separate deduction on your Schedule C (Form 1040). How to amend a tax return 2012     Table 3. How to amend a tax return 2012 Standard Meal and Snack Rates1 Location of Family Daycare Provider Breakfast Lunch Dinner Snack States other than Alaska an