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Hr block com 5. Hr block com   Manufacturers Taxes Table of Contents Importer. Hr block com Use considered sale. Hr block com Lease considered sale. Hr block com Bonus goods. Hr block com Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Hr block com Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Hr block com CoalExported. Hr block com Taxable TiresQualifying intercity or local bus. Hr block com Qualifying school bus. Hr block com Gas Guzzler TaxVehicles not subject to tax. Hr block com Imported automobiles. Hr block com VaccinesConditions to allowance. Hr block com Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. Hr block com Manufacturer. Hr block com   The term “manufacturer” includes a producer or importer. Hr block com A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. Hr block com If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. Hr block com   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. Hr block com The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. Hr block com Importer. Hr block com   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. Hr block com Sale. Hr block com   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. Hr block com Use considered sale. Hr block com   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. Hr block com Lease considered sale. Hr block com   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. Hr block com However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. Hr block com Manufacturers taxes based on sale price. Hr block com   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. Hr block com The taxes imposed on coal are based either on the sale price or the weight. Hr block com   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. Hr block com However, you include certain charges made when a taxable article is sold and you exclude others. Hr block com To figure the price on which you base the tax, use the following rules. Hr block com Include both the following charges in the price. Hr block com Any charge for coverings or containers (regardless of their nature). Hr block com Any charge incident to placing the article in a condition packed ready for shipment. Hr block com Exclude all the following amounts from the price. Hr block com The manufacturers excise tax, whether or not it is stated as a separate charge. Hr block com The transportation charges pursuant to the sale. Hr block com The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. Hr block com Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. Hr block com Discounts, rebates, and similar allowances actually granted to the purchaser. Hr block com Local advertising charges. Hr block com A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. Hr block com Charges for warranty paid at the purchaser's option. Hr block com However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. Hr block com Bonus goods. Hr block com   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. Hr block com Figure the tax only on the sale price attributable to the taxable articles. Hr block com Example. Hr block com A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. Hr block com The sale price of the shipment is $1,500. Hr block com The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Hr block com Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). Hr block com The remaining $375 is allocated to the nontaxable articles. Hr block com Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. Hr block com When the title passes depends on the intention of the parties as gathered from the contract of sale. Hr block com In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. Hr block com If the taxable article is used by the manufacturer, the tax attaches at the time use begins. Hr block com The manufacturer is liable for the tax. Hr block com Partial payments. Hr block com   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. Hr block com To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. Hr block com Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. Hr block com Sale of an article to a state or local government for the exclusive use of the state or local government. Hr block com This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Hr block com State is defined in Definitions in chapter 1. Hr block com Sale of an article to a nonprofit educational organization for its exclusive use. Hr block com This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Hr block com Nonprofit educational organization is defined under Communications Tax in chapter 4. Hr block com Sale of an article to a qualified blood collector organization. Hr block com This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Hr block com Qualified blood collector organizations are defined under Communications Tax in chapter 4. Hr block com Sale of an article for use by the purchaser as supplies for vessels. Hr block com This exemption does not apply to the taxes on coal and vaccines. Hr block com Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. Hr block com Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. Hr block com This exemption does not apply to the tax on coal and tires. Hr block com Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. Hr block com If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. Hr block com Sale of an article for export or for resale by the purchaser to a second purchaser for export. Hr block com The article may be exported to a foreign country or to a possession of the United States. Hr block com A vaccine shipped to a possession of the United States is not considered to be exported. Hr block com If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. Hr block com Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. Hr block com S. Hr block com jurisdiction in Alaska. Hr block com For tire exemptions, see section 4221(e)(2). Hr block com Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. Hr block com Registration requirements. Hr block com   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. Hr block com See the Form 637 instructions for more information. Hr block com Exceptions to registration requirements. Hr block com   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. Hr block com Certification requirement. Hr block com   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. Hr block com The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. Hr block com   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. Hr block com See Regulations section 48. Hr block com 4221-5(c) for the certificate requirements. Hr block com   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. Hr block com See Regulations section 48. Hr block com 4221-4(d) for the certificate requirements. Hr block com Proof of export requirement. Hr block com   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. Hr block com See Regulations section 48. Hr block com 4221-3(d) for evidence that qualifies as proof of exportation. Hr block com Proof of resale for further manufacture requirement. Hr block com   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. Hr block com See Regulations section 48. Hr block com 4221-2(c) for evidence that qualifies as proof of resale. Hr block com Information to be furnished to purchaser. Hr block com   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. Hr block com Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. Hr block com The claim must set forth in detail the facts upon which the claim is based. Hr block com Uses, sales, and exports. Hr block com   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). Hr block com Export. Hr block com   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. Hr block com In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. Hr block com Price readjustments. Hr block com   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. Hr block com Conditions to allowance. Hr block com   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. Hr block com The claimant sold the article at a tax-excluded price. Hr block com The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. Hr block com The person has obtained the written consent of the ultimate vendor to make the claim. Hr block com The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. Hr block com Claim for further manufacture. Hr block com   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. Hr block com The name and address of the manufacturer and the date of payment. Hr block com An identification of the article for which the credit or refund is claimed. Hr block com The amount of tax paid on the article and the date on which it was paid. Hr block com Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. Hr block com An identification of the second article. Hr block com   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. Hr block com The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. Hr block com Claim for price readjustment. Hr block com   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. Hr block com A description of the circumstances that gave rise to the price readjustment. Hr block com An identification of the article whose price was readjusted. Hr block com The price at which the article was sold. Hr block com The amount of tax paid on the article and the date on which it was paid. Hr block com The name and address of the purchaser. Hr block com The amount repaid to the purchaser or credited to the purchaser's account. Hr block com Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. Hr block com This includes any parts or accessories sold on or in connection with the sale of those articles. Hr block com Pay this tax with Form 720. Hr block com No tax deposits are required. Hr block com Sport fishing equipment includes all the following items. Hr block com Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. Hr block com Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). Hr block com The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. Hr block com Fishing tip-ups and tilts. Hr block com Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. Hr block com See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. Hr block com Fishing rods and fishing poles. Hr block com   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. Hr block com The tax is paid by the manufacturer, producer, or importer. Hr block com Fishing tackle boxes. Hr block com   The tax on fishing tackle boxes is 3% of the sales price. Hr block com The tax is paid by the manufacturer, producer, or importer. Hr block com Electric outboard boat motors. Hr block com   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. Hr block com This includes any parts or accessories sold on or in connection with the sale of those articles. Hr block com Certain equipment resale. Hr block com   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. Hr block com If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. Hr block com If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. Hr block com The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. Hr block com   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. Hr block com The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. Hr block com Related person. Hr block com   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). Hr block com Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. Hr block com 11) of the sales price. Hr block com The tax is paid by the manufacturer, producer, or importer. Hr block com It applies to bows having a peak draw weight of 30 pounds or more. Hr block com The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. Hr block com Pay this tax with Form 720. Hr block com No tax deposits are required. Hr block com Arrow Shafts The tax on arrow shafts is listed on Form 720. Hr block com The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. Hr block com It measures 18 inches or more in overall length. Hr block com It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. Hr block com Exemption for certain wooden arrows. Hr block com   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. Hr block com It measures 5/16 of an inch or less in diameter. Hr block com It is not suitable for use with a taxable bow, described earlier. Hr block com Pay this tax with Form 720. Hr block com No tax deposits are required. Hr block com Coal A tax is imposed on the first sale of coal mined in the United States. Hr block com The producer of the coal is liable for the tax. Hr block com The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Hr block com Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. Hr block com A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). Hr block com The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. Hr block com Tax rates. Hr block com   The tax on underground-mined coal is the lower of: $1. Hr block com 10 a ton, or 4. Hr block com 4% of the sale price. Hr block com   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. Hr block com 4% of the sale price. Hr block com   Coal will be taxed at the 4. Hr block com 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. Hr block com 50 a ton for surface-mined coal. Hr block com Apply the tax proportionately if a sale or use includes a portion of a ton. Hr block com Example. Hr block com If you sell 21,000 pounds (10. Hr block com 5 tons) of coal from an underground mine for $525, the price per ton is $50. Hr block com The tax is $1. Hr block com 10 × 10. Hr block com 5 tons ($11. Hr block com 55). Hr block com Coal production. Hr block com   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. Hr block com Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. Hr block com   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. Hr block com In some cases, a single mine may yield coal from both surface mining and underground mining. Hr block com Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. Hr block com Determining tonnage or selling price. Hr block com   The producer pays the tax on coal at the time of sale or use. Hr block com In figuring the selling price for applying the tax, the point of sale is f. Hr block com o. Hr block com b. Hr block com (free on board) mine or f. Hr block com o. Hr block com b. Hr block com cleaning plant if you clean the coal before selling it. Hr block com This applies even if you sell the coal for a delivered price. Hr block com The f. Hr block com o. Hr block com b. Hr block com mine or f. Hr block com o. Hr block com b. Hr block com cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. Hr block com 4% rate. Hr block com   The tax applies to the full amount of coal sold. Hr block com However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. Hr block com Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. Hr block com   Do not include in the sales price the excise tax imposed on coal. Hr block com Coal used by the producer. Hr block com   The tax on coal applies if the coal is used by the producer in other than a mining process. Hr block com A mining process means the same for this purpose as for percentage depletion. Hr block com For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. Hr block com In this case, the tax applies only when you sell the coal. Hr block com The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. Hr block com However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. Hr block com   You must use a constructive sale price to figure the tax under the 4. Hr block com 4% rate if you use the coal in other than a mining process. Hr block com Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. Hr block com o. Hr block com b. Hr block com mine or cleaning plant. Hr block com Normally, you use the same constructive price used to figure your percentage depletion deduction. Hr block com Blending. Hr block com   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. Hr block com Figure the tax separately for each type of coal in the blend. Hr block com Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. Hr block com Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. Hr block com However, the tax is limited to 4. Hr block com 4% of the sale price per ton of the blended coal. Hr block com Exemption from tax. Hr block com   The tax does not apply to sales of lignite and imported coal. Hr block com The only other exemption from the tax on the sale of coal is for coal exported as discussed next. Hr block com Exported. Hr block com   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. Hr block com   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. Hr block com For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. Hr block com   Proof of export includes any of the following items. Hr block com A copy of the export bill of lading issued by the delivering carrier. Hr block com A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. Hr block com A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. Hr block com If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. Hr block com Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. Hr block com A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. Hr block com 0945 ($. Hr block com 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. Hr block com The three categories for reporting the tax and the tax rate are listed below. Hr block com Taxable tires other than biasply or super single tires at $. Hr block com 0945. Hr block com Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. Hr block com 04725. Hr block com Taxable tires, super single tires designed for steering at $. Hr block com 0945. Hr block com A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. Hr block com A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. Hr block com A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Hr block com Special rule, manufacturer's retail stores. Hr block com   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. Hr block com Tires on imported articles. Hr block com   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). Hr block com Tires exempt from tax. Hr block com   The tax on taxable tires does not apply to the following items. Hr block com Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. Hr block com Tire carcasses not suitable for commercial use. Hr block com Tires for use on qualifying intercity, local, and school buses. Hr block com For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. Hr block com Tires sold for the exclusive use of the Department of Defense or the Coast Guard. Hr block com Tires of a type used exclusively on mobile machinery. Hr block com A taxable tire used on mobile machinery is not exempt from tax. Hr block com Qualifying intercity or local bus. Hr block com   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). Hr block com Qualifying school bus. Hr block com   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. Hr block com Credit or refund. Hr block com   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. Hr block com   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. Hr block com   The person who paid the tax is eligible to make the claim. Hr block com Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. Hr block com 5 miles per gallon. Hr block com If you import an automobile for personal use, you may be liable for this tax. Hr block com Figure the tax on Form 6197, as discussed later. Hr block com The tax rate is based on fuel economy rating. Hr block com The tax rates for the gas guzzler tax are shown on Form 6197. Hr block com A person that lengthens an existing automobile is the manufacturer of an automobile. Hr block com Automobiles. Hr block com   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. Hr block com Vehicles not subject to tax. Hr block com   For the gas guzzler tax, the following vehicles are not considered automobiles. Hr block com Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. Hr block com Vehicles operated exclusively on a rail or rails. Hr block com Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. Hr block com Vehicles treated under 49 U. Hr block com S. Hr block com C. Hr block com 32901 (1978) as non-passenger automobiles. Hr block com This includes limousines manufactured primarily to transport more than 10 persons. Hr block com   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. Hr block com   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. Hr block com Model type. Hr block com   Model type is a particular class of automobile as determined by EPA regulations. Hr block com Fuel economy. Hr block com   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. Hr block com 1 mile as figured by the EPA. Hr block com Imported automobiles. Hr block com   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. Hr block com An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. Hr block com   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. Hr block com   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. Hr block com A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). Hr block com   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. Hr block com Exemptions. Hr block com   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. Hr block com However, see Vehicles not subject to tax, earlier. Hr block com Form 6197. Hr block com   Use Form 6197 to figure your tax liability for each quarter. Hr block com Attach Form 6197 to your Form 720 for the quarter. Hr block com See the Form 6197 instructions for more information and the one-time filing rules. Hr block com Credit or refund. Hr block com   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. Hr block com For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Hr block com Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. Hr block com A taxable vaccine means any of the following vaccines. Hr block com Any vaccine containing diphtheria toxoid. Hr block com Any vaccine containing tetanus toxoid. Hr block com Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. Hr block com Any vaccine containing polio virus. Hr block com Any vaccine against measles. Hr block com Any vaccine against mumps. Hr block com Any vaccine against rubella. Hr block com Any vaccine against hepatitis A. Hr block com Any vaccine against hepatitis B. Hr block com Any vaccine against chicken pox. Hr block com Any vaccine against rotavirus gastroenteritis. Hr block com Any HIB vaccine. Hr block com Any conjugate vaccine against streptococcus pneumoniae. Hr block com Any trivalent vaccine against influenza or any other vaccine against influenza. Hr block com Any meningococcal vaccine. Hr block com Any vaccine against the human papillomavirus. Hr block com The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. Hr block com The tax is $. Hr block com 75 per dose of each taxable vaccine. Hr block com The tax per dose on a vaccine that contains more than one taxable vaccine is $. Hr block com 75 times the number of taxable vaccines. Hr block com Taxable use. Hr block com   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. Hr block com Credit or refund. Hr block com   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. Hr block com The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. Hr block com Conditions to allowance. Hr block com   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. Hr block com Taxable Medical Devices Taxable medical devices. Hr block com   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. Hr block com 3% (. Hr block com 023) of the sales price. Hr block com A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. Hr block com There are specific exemptions for eyeglasses, contact lenses, and hearing aids. Hr block com There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). Hr block com See T. Hr block com D. Hr block com 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. Hr block com More information. Hr block com   For more information on the medical device tax, see section 4191, T. Hr block com D. Hr block com 9604, and Notice 2012-77. Hr block com You can find T. Hr block com D. Hr block com 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. Hr block com R. Hr block com B. Hr block com 2012-52 at www. Hr block com irs. Hr block com gov/pub/irs-irbs/irb12-52. Hr block com pdf. Hr block com Prev  Up  Next   Home   More Online Publications
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Hr block com 1. Hr block com   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. Hr block com Business associate. Hr block com Bona fide business purpose. Hr block com Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. Hr block com This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. Hr block com It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. Hr block com Travel expenses defined. Hr block com   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Hr block com   An ordinary expense is one that is common and accepted in your trade or business. Hr block com A necessary expense is one that is helpful and appropriate for your business. Hr block com An expense does not have to be required to be considered necessary. Hr block com   You will find examples of deductible travel expenses in Table 1-1 , later. Hr block com Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. Hr block com This rest requirement is not satisfied by merely napping in your car. Hr block com You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Hr block com Example 1. Hr block com You are a railroad conductor. Hr block com You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Hr block com During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. Hr block com You are considered to be away from home. Hr block com Example 2. Hr block com You are a truck driver. Hr block com You leave your terminal and return to it later the same day. Hr block com You get an hour off at your turnaround point to eat. Hr block com Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. Hr block com Members of the Armed Forces. Hr block com   If you are a member of the U. Hr block com S. Hr block com Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Hr block com You cannot deduct your expenses for meals and lodging. Hr block com You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Hr block com If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. Hr block com   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. Hr block com Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Hr block com Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Hr block com It includes the entire city or general area in which your business or work is located. Hr block com If you have more than one regular place of business, your tax home is your main place of business. Hr block com See Main place of business or work , later. Hr block com If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. Hr block com See No main place of business or work , later. Hr block com If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. Hr block com As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Hr block com Main place of business or work. Hr block com   If you have more than one place of work, consider the following when determining which one is your main place of business or work. Hr block com The total time you ordinarily spend in each place. Hr block com The level of your business activity in each place. Hr block com Whether your income from each place is significant or insignificant. Hr block com Example. Hr block com You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Hr block com You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Hr block com Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Hr block com No main place of business or work. Hr block com   You may have a tax home even if you do not have a regular or main place of work. Hr block com Your tax home may be the home where you regularly live. Hr block com Factors used to determine tax home. Hr block com   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. Hr block com You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. Hr block com You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Hr block com You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. Hr block com   If you satisfy all three factors, your tax home is the home where you regularly live. Hr block com If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Hr block com If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Hr block com Example 1. Hr block com You are single and live in Boston in an apartment you rent. Hr block com You have worked for your employer in Boston for a number of years. Hr block com Your employer enrolls you in a 12-month executive training program. Hr block com You do not expect to return to work in Boston after you complete your training. Hr block com During your training, you do not do any work in Boston. Hr block com Instead, you receive classroom and on-the-job training throughout the United States. Hr block com You keep your apartment in Boston and return to it frequently. Hr block com You use your apartment to conduct your personal business. Hr block com You also keep up your community contacts in Boston. Hr block com When you complete your training, you are transferred to Los Angeles. Hr block com You do not satisfy factor (1) because you did not work in Boston. Hr block com You satisfy factor (2) because you had duplicate living expenses. Hr block com You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Hr block com Therefore, you have a tax home in Boston. Hr block com Example 2. Hr block com You are an outside salesperson with a sales territory covering several states. Hr block com Your employer's main office is in Newark, but you do not conduct any business there. Hr block com Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. Hr block com You have a room in your married sister's house in Dayton. Hr block com You stay there for one or two weekends a year, but you do no work in the area. Hr block com You do not pay your sister for the use of the room. Hr block com You do not satisfy any of the three factors listed earlier. Hr block com You are an itinerant and have no tax home. Hr block com Tax Home Different From Family Home If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. Hr block com You also cannot deduct the cost of meals and lodging while at your tax home. Hr block com See Example 1 , later. Hr block com If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Hr block com See Example 2 , later. Hr block com Example 1. Hr block com You are a truck driver and you and your family live in Tucson. Hr block com You are employed by a trucking firm that has its terminal in Phoenix. Hr block com At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Hr block com You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Hr block com This is because Phoenix is your tax home. Hr block com Example 2. Hr block com Your family home is in Pittsburgh, where you work 12 weeks a year. Hr block com The rest of the year you work for the same employer in Baltimore. Hr block com In Baltimore, you eat in restaurants and sleep in a rooming house. Hr block com Your salary is the same whether you are in Pittsburgh or Baltimore. Hr block com Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Hr block com You cannot deduct any expenses you have for meals and lodging there. Hr block com However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Hr block com You can deduct the cost of your round trip between Baltimore and Pittsburgh. Hr block com You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Hr block com Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Hr block com It may not be practical to return to your tax home from this other location at the end of each work day. Hr block com Temporary assignment vs. Hr block com indefinite assignment. Hr block com   If your assignment or job away from your main place of work is temporary, your tax home does not change. Hr block com You are considered to be away from home for the whole period you are away from your main place of work. Hr block com You can deduct your travel expenses if they otherwise qualify for deduction. Hr block com Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Hr block com    However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Hr block com An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. Hr block com   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. Hr block com You may be able to deduct the cost of relocating to your new tax home as a moving expense. Hr block com See Publication 521 for more information. Hr block com Exception for federal crime investigations or prosecutions. Hr block com   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Hr block com This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility. Hr block com   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. Hr block com Determining temporary or indefinite. Hr block com   You must determine whether your assignment is temporary or indefinite when you start work. Hr block com If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Hr block com An assignment or job that is initially temporary may become indefinite due to changed circumstances. Hr block com A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Hr block com   The following examples illustrate whether an assignment or job is temporary or indefinite. Hr block com Example 1. Hr block com You are a construction worker. Hr block com You live and regularly work in Los Angeles. Hr block com You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Hr block com Your tax home is Los Angeles. Hr block com Because of a shortage of work, you took a job on a construction project in Fresno. Hr block com Your job was scheduled to end in 8 months. Hr block com The job actually lasted 10 months. Hr block com You realistically expected the job in Fresno to last 8 months. Hr block com The job actually did last less than 1 year. Hr block com The job is temporary and your tax home is still in Los Angeles. Hr block com Example 2. Hr block com The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. Hr block com The job actually was completed in 10 months. Hr block com Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. Hr block com You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. Hr block com Example 3. Hr block com The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. Hr block com After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). Hr block com Initially, you realistically expected the job in Fresno to last for only 9 months. Hr block com However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. Hr block com You can only deduct your travel expenses for the first 8 months. Hr block com You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. Hr block com Going home on days off. Hr block com   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. Hr block com You cannot deduct the cost of your meals and lodging there. Hr block com However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Hr block com You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Hr block com   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Hr block com In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. Hr block com Probationary work period. Hr block com   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. Hr block com You cannot deduct any of your expenses for meals and lodging during the probationary period. Hr block com What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Hr block com You can deduct ordinary and necessary expenses you have when you travel away from home on business. Hr block com The type of expense you can deduct depends on the facts and your circumstances. Hr block com Table 1-1 summarizes travel expenses you may be able to deduct. Hr block com You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Hr block com When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. Hr block com You can use a log, diary, notebook, or any other written record to keep track of your expenses. Hr block com The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). Hr block com Separating costs. Hr block com   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. Hr block com You must have a reasonable basis for making this allocation. Hr block com For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Hr block com Travel expenses for another individual. Hr block com    If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. Hr block com Employee. Hr block com   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. Hr block com Business associate. Hr block com   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. Hr block com A business associate is someone with whom you could reasonably expect to actively conduct business. Hr block com A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Hr block com Bona fide business purpose. Hr block com   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Hr block com Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Hr block com Table 1-1. Hr block com Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. Hr block com IF you have expenses for. Hr block com . Hr block com . Hr block com THEN you can deduct the cost of. Hr block com . Hr block com . Hr block com transportation travel by airplane, train, bus, or car between your home and your business destination. Hr block com If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Hr block com If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. Hr block com taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. Hr block com baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Hr block com car operating and maintaining your car when traveling away from home on business. Hr block com You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. Hr block com If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Hr block com lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Hr block com Meals include amounts spent for food, beverages, taxes, and related tips. Hr block com See Meals for additional rules and limits. Hr block com cleaning dry cleaning and laundry. Hr block com telephone business calls while on your business trip. Hr block com This includes business communication by fax machine or other communication devices. Hr block com tips tips you pay for any expenses in this chart. Hr block com other other similar ordinary and necessary expenses related to your business travel. Hr block com These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. Hr block com Example. Hr block com Jerry drives to Chicago on business and takes his wife, Linda, with him. Hr block com Linda is not Jerry's employee. Hr block com Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Hr block com The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Hr block com Her expenses are not deductible. Hr block com Jerry pays $199 a day for a double room. Hr block com A single room costs $149 a day. Hr block com He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Hr block com If he uses public transportation, he can deduct only his fare. Hr block com Meals You can deduct the cost of meals in either of the following situations. Hr block com It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Hr block com The meal is business-related entertainment. Hr block com Business-related entertainment is discussed in chapter 2 . Hr block com The following discussion deals only with meals that are not business-related entertainment. Hr block com Lavish or extravagant. Hr block com   You cannot deduct expenses for meals that are lavish or extravagant. Hr block com An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Hr block com Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Hr block com 50% limit on meals. Hr block com   You can figure your meals expense using either of the following methods. Hr block com Actual cost. Hr block com The standard meal allowance. Hr block com Both of these methods are explained below. Hr block com But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Hr block com   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. Hr block com If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Hr block com Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. Hr block com Actual Cost You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. Hr block com If you use this method, you must keep records of your actual cost. Hr block com Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Hr block com It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. Hr block com The set amount varies depending on where and when you travel. Hr block com In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Hr block com If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Hr block com See the recordkeeping rules for travel in chapter 5 . Hr block com Incidental expenses. Hr block com   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Hr block com   Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. Hr block com Incidental-expenses-only method. Hr block com   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Hr block com The amount of the deduction is $5 a day. Hr block com You can use this method only if you did not pay or incur any meal expenses. Hr block com You cannot use this method on any day that you use the standard meal allowance. Hr block com This method is subject to the proration rules for partial days. Hr block com See Travel for days you depart and return , later in this chapter. Hr block com Note. Hr block com The incidental-expenses-only method is not subject to the 50% limit discussed below. Hr block com Federal employees should refer to the Federal Travel Regulations at www. Hr block com gsa. Hr block com gov. Hr block com Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Hr block com 50% limit may apply. Hr block com   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. Hr block com If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. Hr block com The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. Hr block com There is no optional standard lodging amount similar to the standard meal allowance. Hr block com Your allowable lodging expense deduction is your actual cost. Hr block com Who can use the standard meal allowance. Hr block com   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. Hr block com Use of the standard meal allowance for other travel. Hr block com   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Hr block com You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Hr block com You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Hr block com Amount of standard meal allowance. Hr block com   The standard meal allowance is the federal M&IE rate. Hr block com For travel in 2013, the rate for most small localities in the United States is $46 a day. Hr block com    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Hr block com    You can find this information (organized by state) on the Internet at www. Hr block com gsa. Hr block com gov/perdiem. Hr block com Enter a zip code or select a city and state for the per diem rates for the current fiscal year. Hr block com Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. Hr block com ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. Hr block com You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. Hr block com   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. Hr block com If you work in the transportation industry, however, see Special rate for transportation workers , later. Hr block com Standard meal allowance for areas outside the continental United States. Hr block com   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Hr block com The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Hr block com S. Hr block com Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Hr block com The Department of State establishes per diem rates for all other foreign areas. Hr block com    You can access per diem rates for non-foreign areas outside the continental United States at: www. Hr block com defensetravel. Hr block com dod. Hr block com mil/site/perdiemCalc. Hr block com cfm. Hr block com You can access all other foreign per diem rates at: www. Hr block com state. Hr block com gov/travel/. Hr block com Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. Hr block com Special rate for transportation workers. Hr block com   You can use a special standard meal allowance if you work in the transportation industry. Hr block com You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. Hr block com If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). Hr block com   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. Hr block com If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. Hr block com Travel for days you depart and return. Hr block com   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). Hr block com You can do so by one of two methods. Hr block com Method 1: You can claim 3/4 of the standard meal allowance. Hr block com Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Hr block com Example. Hr block com Jen is employed in New Orleans as a convention planner. Hr block com In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Hr block com She left her home in New Orleans at 10 a. Hr block com m. Hr block com on Wednesday and arrived in Washington, DC, at 5:30 p. Hr block com m. Hr block com After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Hr block com m. Hr block com Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Hr block com Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. Hr block com Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Hr block com For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. Hr block com Travel in the United States The following discussion applies to travel in the United States. Hr block com For this purpose, the United States includes the 50 states and the District of Columbia. Hr block com The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. Hr block com See Part of Trip Outside the United States , later. Hr block com Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. Hr block com If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. Hr block com These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Hr block com Example. Hr block com You work in Atlanta and take a business trip to New Orleans in May. Hr block com Your business travel totals 850 miles round trip. Hr block com On your way, you stop in Mobile to visit your parents. Hr block com You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Hr block com If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. Hr block com You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. Hr block com The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Hr block com Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Hr block com However, you can deduct any expenses you have while at your destination that are directly related to your business. Hr block com A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. Hr block com The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. Hr block com Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. Hr block com For the part of your trip that is inside the United States, use the rules for travel in the United States. Hr block com Travel outside the United States does not include travel from one point in the United States to another point in the United States. Hr block com The following discussion can help you determine whether your trip was entirely within the United States. Hr block com Public transportation. Hr block com   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Hr block com Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . Hr block com Example. Hr block com You fly from New York to Puerto Rico with a scheduled stop in Miami. Hr block com You return to New York nonstop. Hr block com The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Hr block com Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Hr block com Private car. Hr block com   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. Hr block com Example. Hr block com You travel by car from Denver to Mexico City and return. Hr block com Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. Hr block com The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Hr block com Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. Hr block com For this purpose, the United States includes the 50 states and the District of Columbia. Hr block com How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. Hr block com Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. Hr block com Travel entirely for business. Hr block com   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Hr block com Travel considered entirely for business. Hr block com   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. Hr block com Exception 1 - No substantial control. Hr block com   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Hr block com The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Hr block com   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. Hr block com    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . Hr block com   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. Hr block com   A self-employed person generally has substantial control over arranging business trips. Hr block com Exception 2 - Outside United States no more than a week. Hr block com   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Hr block com One week means 7 consecutive days. Hr block com In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. Hr block com Example. Hr block com You traveled to Brussels primarily for business. Hr block com You left Denver on Tuesday and flew to New York. Hr block com On Wednesday, you flew from New York to Brussels, arriving the next morning. Hr block com On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. Hr block com You flew back to New York, arriving Wednesday afternoon. Hr block com On Thursday, you flew back to Denver. Hr block com Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. Hr block com This is because the day you depart does not count as a day outside the United States. Hr block com You can deduct your cost of the round-trip flight between Denver and Brussels. Hr block com You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. Hr block com However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. Hr block com Exception 3 - Less than 25% of time on personal activities. Hr block com   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. Hr block com For this purpose, count both the day your trip began and the day it ended. Hr block com Example. Hr block com You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. Hr block com You then flew back to Seattle. Hr block com You spent 1 day flying in each direction. Hr block com Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. Hr block com The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. Hr block com Exception 4 - Vacation not a major consideration. Hr block com   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. Hr block com Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. Hr block com You can only deduct the business portion of your cost of getting to and from your destination. Hr block com You must allocate the costs between your business and other activities to determine your deductible amount. Hr block com See Travel allocation rules , later. Hr block com You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . Hr block com In those cases, you can deduct the total cost of getting to and from your destination. Hr block com Travel allocation rules. Hr block com   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. Hr block com The days you depart from and return to the United States are both counted as days outside the United States. Hr block com   To figure the deductible amount of your round-trip travel expenses, use the following fraction. Hr block com The numerator (top number) is the total number of business days outside the United States. Hr block com The denominator (bottom number) is the total number of business and nonbusiness days of travel. Hr block com Counting business days. Hr block com   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. Hr block com Transportation day. Hr block com   Count as a business day any day you spend traveling to or from a business destination. Hr block com However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. Hr block com Extra days for side trips or nonbusiness activities cannot be counted as business days. Hr block com Presence required. Hr block com   Count as a business day any day your presence is required at a particular place for a specific business purpose. Hr block com Count it as a business day even if you spend most of the day on nonbusiness activities. Hr block com Day spent on business. Hr block com   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Hr block com Also, count as a business day any day you are prevented from working because of circumstances beyond your control. Hr block com Certain weekends and holidays. Hr block com   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. Hr block com But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. Hr block com Example 1. Hr block com Your tax home is New York City. Hr block com You travel to Quebec, where you have a business appointment on Friday. Hr block com You have another appointment on the following Monday. Hr block com Because your presence was required on both Friday and Monday, they are business days. Hr block com Because the weekend is between business days, Saturday and Sunday are counted as business days. Hr block com This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. Hr block com Example 2. Hr block com If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. Hr block com Nonbusiness activity on the way to or from your business destination. Hr block com   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Hr block com   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. Hr block com   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Hr block com The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Hr block com Example. Hr block com You live in New York. Hr block com On May 4 you flew to Paris to attend a business conference that began on May 5. Hr block com The conference ended at noon on May 14. Hr block com That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. Hr block com The primary purpose for the trip was to attend the conference. Hr block com If you had not stopped in Dublin, you would have arrived home the evening of May 14. Hr block com You do not meet any of the exceptions that would allow you to consider your travel entirely for business. Hr block com May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. Hr block com You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. Hr block com You cannot deduct your expenses while in Dublin. Hr block com You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. Hr block com You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. Hr block com Round-trip airfare from New York to Dublin would have been $1,250. Hr block com You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). Hr block com Your deductible air travel expense is $1,364 ($1,850 − $486). Hr block com Nonbusiness activity at, near, or beyond business destination. Hr block com   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Hr block com   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. Hr block com   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Hr block com The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Hr block com   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. Hr block com Example. Hr block com Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. Hr block com You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. Hr block com In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. Hr block com You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. Hr block com (Assume these expenses total $4,939. Hr block com ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. Hr block com Other methods. Hr block com   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. Hr block com Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. Hr block com However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. Hr block com Example. Hr block com The university from which you graduated has a continuing education program for members of its alumni association. Hr block com This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. Hr block com However, none of the conferences are directed toward specific occupations or professions. Hr block com It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. Hr block com Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. Hr block com These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Hr block com Professional conference directors schedule and conduct the sessions. Hr block com Participants can choose those sessions they wish to attend. Hr block com You can participate in this program since you are a member of the alumni association. Hr block com You and your family take one of the trips. Hr block com You spend about 2 hours at each of the planned sessions. Hr block com The rest of the time you go touring and sightseeing with your family. Hr block com The trip lasts less than 1 week. Hr block com Your travel expenses for the trip are not deductible since the trip was primarily a vacation. Hr block com However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. Hr block com These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. Hr block com Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. Hr block com The limit is twice the highest federal per diem rate allowable at the time of your travel. Hr block com (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. Hr block com ) Daily limit on luxury water travel. Hr block com   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. Hr block com   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. Hr block com 1 – Mar. Hr block com 31 $367 $734   Apr. Hr block com 1 – June 30 312 624   July 1 – Aug. Hr block com 31 310 620   Sept. Hr block com 1 – Sept. Hr block com 30 366 732   Oct. Hr block com 1 – Dec. Hr block com 31 374 748 Example. Hr block com Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Hr block com Her expense for the 6-day cruise was $5,200. Hr block com Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). Hr block com Meals and entertainment. Hr block com   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. Hr block com For a discussion of the 50% Limit , see chapter 2. Hr block com Example. Hr block com In the previous example, Caroline's luxury water travel had a total cost of $5,200. Hr block com Of that amount, $3,700 was separately stated as meals and entertainment. Hr block com Caroline, who is self-employed, is not reimbursed for any of her travel expenses. Hr block com Caroline figures her deductible travel expenses as follows. Hr block com Meals and entertainment $3,700   50% limit × . Hr block com 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. Hr block com Not separately stated. Hr block com   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. Hr block com Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. Hr block com See Cruise Ships under Conventions. Hr block com Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Hr block com You cannot deduct the travel expenses for your family. Hr block com If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Hr block com Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Hr block com You can deduct your travel expenses only if your attendance is connected to your own trade or business. Hr block com Convention agenda. Hr block com   The convention agenda or program generally shows the purpose of the convention. Hr block com You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. Hr block com The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. Hr block com Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. Hr block com See Reasonableness test , later. Hr block com If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . Hr block com North American area. Hr block com   The North American area includes the following locations. Hr block com American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. Hr block com S. Hr block com Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. Hr block com S. Hr block com islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. Hr block com Reasonableness test. Hr block com   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. Hr block com The purpose of the meeting and the activities taking place at the meeting. Hr block com The purposes and activities of the sponsoring organizations or groups. Hr block com The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. Hr block com Other relevant factors you may present. Hr block com Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. Hr block com All ships that sail are considered cruise ships. Hr block com You can deduct these expenses only if all of the following requirements are met. Hr block com The convention, seminar, or meeting is directly related to your trade or business. Hr block com The cruise ship is a vessel registered in the United States. Hr block com All of the cruise ship's ports of call are in the United States or in possessions of the United States. Hr block com You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. Hr block com You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. Hr block com Prev  Up  Next   Home   More Online Publications