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Senior Tax Filing

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Senior Tax Filing

Senior tax filing 1. Senior tax filing   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). Senior tax filing  You can set up and make contributions to an IRA if you receive taxable compensation. Senior tax filing Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. Senior tax filing For more information about IRAs, see Publication 590. Senior tax filing Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. Senior tax filing The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Senior tax filing Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. Senior tax filing Many types of educational assistance are tax free if they meet the requirements discussed here. Senior tax filing Special rules apply to U. Senior tax filing S. Senior tax filing citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. Senior tax filing For information about these rules, see Publication 54, Tax Guide for U. Senior tax filing S. Senior tax filing Citizens and Resident Aliens Abroad. Senior tax filing Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. Senior tax filing A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Senior tax filing Amount of scholarship or fellowship. Senior tax filing   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. Senior tax filing This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. Senior tax filing The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. Senior tax filing Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. Senior tax filing Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. Senior tax filing A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. Senior tax filing (But for exceptions, see Payment for services,later. Senior tax filing Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. Senior tax filing Candidate for a degree. Senior tax filing   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. Senior tax filing Eligible educational institution. Senior tax filing   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Senior tax filing Qualified education expenses. Senior tax filing   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Senior tax filing These items must be required of all students in your course of instruction. Senior tax filing Expenses that do not qualify. Senior tax filing   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Senior tax filing Payment for services. Senior tax filing   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. Senior tax filing This applies even if all candidates for a degree must perform the services to receive the degree. Senior tax filing (See exceptions next. Senior tax filing ) Exceptions. Senior tax filing   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Senior tax filing Example 1. Senior tax filing You received a scholarship of $2,500. Senior tax filing The scholarship was not received under either of the exceptions mentioned above. Senior tax filing As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Senior tax filing Of the $2,500 scholarship, $1,000 represents payment for teaching. Senior tax filing The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Senior tax filing Your qualified education expenses were at least $1,500. Senior tax filing Assuming that all other conditions are met, $1,500 of your scholarship is tax free. Senior tax filing The $1,000 you received for teaching is taxable. Senior tax filing Example 2. Senior tax filing You are a candidate for a degree at a medical school. Senior tax filing You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. Senior tax filing The terms of your scholarship require you to perform future services. Senior tax filing A substantial penalty applies if you do not comply. Senior tax filing The entire amount of your grant is taxable as payment for services in the year it is received. Senior tax filing Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. Senior tax filing Worksheet 1-1. Senior tax filing    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. Senior tax filing    Worksheet 1-1. Senior tax filing Taxable Scholarship and Fellowship Income 1. Senior tax filing Enter the total amount of any scholarship or fellowship for 2013. Senior tax filing See Amount of scholarship or fellowship, earlier. Senior tax filing 1. Senior tax filing       If you are a degree candidate at an eligible educational institution, go to line 2. Senior tax filing If you are not a degree candidate at an eligible educational institution, stop here. Senior tax filing The entire amount is taxable. Senior tax filing For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. Senior tax filing       2. Senior tax filing Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. Senior tax filing (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. Senior tax filing ) 2. Senior tax filing     3. Senior tax filing Subtract line 2 from line 1 3. Senior tax filing     4. Senior tax filing Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. Senior tax filing     5. Senior tax filing Subtract line 4 from line 3 5. Senior tax filing     6. Senior tax filing Enter the amount of your qualified education expenses 6. Senior tax filing     7. Senior tax filing Enter the smaller of line 5 or line 6. Senior tax filing This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. Senior tax filing     8. Senior tax filing Subtract line 7 from line 5 8. Senior tax filing     9. Senior tax filing Taxable part. Senior tax filing Add lines 2, 4, and 8. Senior tax filing See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. Senior tax filing     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. Senior tax filing You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. Senior tax filing Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. Senior tax filing If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. Senior tax filing If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. Senior tax filing You must report the taxable amount whether or not you received a Form W-2. Senior tax filing If you receive an incorrect Form W-2, ask the payer for a corrected one. Senior tax filing For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. Senior tax filing How To Report How you report any taxable scholarship or fellowship income depends on which return you file. Senior tax filing Form 1040EZ. Senior tax filing   If you file Form 1040EZ, include the taxable amount in the total on line 1. Senior tax filing If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. Senior tax filing Form 1040A. Senior tax filing   If you file Form 1040A, include the taxable amount in the total on line 7. Senior tax filing If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. Senior tax filing Form 1040. Senior tax filing   If you file Form 1040, include the taxable amount in the total on line 7. Senior tax filing If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. Senior tax filing Schedule SE (Form 1040). Senior tax filing   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. Senior tax filing If your net earnings are $400 or more, you must pay self-employment tax. Senior tax filing Use Schedule SE, Self-Employment Tax, to figure this tax. Senior tax filing Form 1040NR. Senior tax filing   If you file Form 1040NR, report the taxable amount on line 12. Senior tax filing Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. Senior tax filing S. Senior tax filing Source Income Subject to Withholding. Senior tax filing See the Instructions for Form 1040NR for more information. Senior tax filing Form 1040NR-EZ. Senior tax filing   If you file Form 1040NR-EZ, report the taxable amount on line 5. Senior tax filing Generally, you must report the amount shown in box 2 of Form(s) 1042-S. Senior tax filing See the Instructions for Form 1040NR-EZ for more information. Senior tax filing Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. Senior tax filing Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. Senior tax filing Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. Senior tax filing They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. Senior tax filing Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. Senior tax filing Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. Senior tax filing Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. Senior tax filing Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Senior tax filing Do not include these payments as income on your federal tax return. Senior tax filing If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. Senior tax filing This applies only to the part of your VA payments that is required to be used for education expenses. Senior tax filing You may want to visit the Veteran's Administration website at www. Senior tax filing gibill. Senior tax filing va. Senior tax filing gov for specific information about the various VA benefits for education. Senior tax filing Example. Senior tax filing You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Senior tax filing Neither of these benefits is taxable and you do not report them on your tax return. Senior tax filing You also want to claim an American opportunity credit on your return. Senior tax filing You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). Senior tax filing To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. Senior tax filing You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. Senior tax filing Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. Senior tax filing This is called a “tuition reduction. Senior tax filing ” You do not have to include a qualified tuition reduction in your income. Senior tax filing A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. Senior tax filing You do not have to use the tuition reduction at the eligible educational institution from which you received it. Senior tax filing In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. Senior tax filing The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. Senior tax filing You must include in your income any tuition reduction you receive that is payment for your services. Senior tax filing Eligible educational institution. Senior tax filing   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Senior tax filing Officers, owners, and highly compensated employees. Senior tax filing   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. Senior tax filing This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. Senior tax filing The group must be defined under a reasonable classification set up by the employer. Senior tax filing The classification must not discriminate in favor of owners, officers, or highly compensated employees. Senior tax filing Payment for services. Senior tax filing   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. Senior tax filing This applies even if all candidates for a degree must perform the services to receive the degree. Senior tax filing (See below for exceptions. Senior tax filing ) Exceptions. Senior tax filing   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Senior tax filing Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. Senior tax filing You are an employee of the eligible educational institution. Senior tax filing You were an employee of the eligible educational institution, but you retired or left on disability. Senior tax filing You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. Senior tax filing You are the dependent child or spouse of an individual described in (1) through (3), above. Senior tax filing Child of deceased parents. Senior tax filing   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. Senior tax filing Child of divorced parents. Senior tax filing   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. Senior tax filing Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. Senior tax filing It is provided by an eligible educational institution. Senior tax filing You are a graduate student who performs teaching or research activities for the educational institution. Senior tax filing You must include in income any other tuition reductions for graduate education that you receive. Senior tax filing How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Senior tax filing Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Senior tax filing Prev  Up  Next   Home   More Online Publications
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Understanding Your CP01A Notice

This notice tells you about the Identity Protection Personal Identification Number (IP PIN) we sent you.


What you need to do

  • Forms 1040, 1040A, 1040EZ and 1040 PR/SS
    Be sure to enter your IP PIN in the correct place when you file your 2013 federal tax return:
    • Electronic Returns (Caution: see new joint filing rules below)
      • Your tax software or practitioner will tell you when and where to enter the IP PIN.
      • If you can’t find where to enter your IP PIN, search within your software on Identity Protection PIN or IP PIN or contact the software provider’s help desk. Due to software variations, the IRS doesn't know the location of the IP PIN within each package.
    • Paper Returns
      • Enter your IP PIN in the gray box marked “Identity Protection PIN” to the right of “Spouse’s signature and occupation”.
  • Amended Returns, Extensions and Installment Agreements
    An IP PIN is not required to file:
    • Form 1040X, Amended U.S. Individual Income Tax Return ,
    • Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, or
    • Form 433-D, Installment Agreement

If you are filing a joint return

  • Electronic Returns
    • Each taxpayer who receives an IP PIN must enter it on their tax return when filing as the primary (first SSN on the tax form) or secondary taxpayer.
      • If only one taxpayer receives an IP PIN, you must enter it with the taxpayer’s SSN to whom it belongs.
      • If both taxpayers receive an IP PIN, both taxpayers must enter the IP PIN that goes with their SSN.
  • Paper Returns
    • Only the primary taxpayer should enter their IP PIN on the tax return. The secondary taxpayer must not enter their IP PIN even if they received one
    • Note: The secondary taxpayer’s IP PIN still provides protection by preventing the fraudulent use of your SSN as the primary or secondary SSN on an e-filed return or as the primary SSN on a paper return

Important things to remember about your IP PIN

  • Store this letter with your tax records
  • A new IP PIN is assigned to you each year
  • The latest IP PIN assigned to you is your IP PIN of record and you should destroy all prior IP PINs securely
  • Do not reveal your IP PIN to anyone other than your tax preparer. Reveal it only when you are ready to sign and submit your federal income tax return
  • Use your IP PIN on your 2013 federal income tax return
    • Electronic Returns: We will reject your return if you fail to use your IP PIN.
    • Paper Returns: A significant delay processing your return and any refund you may be due will occur if you fail to use the primary taxpayer’s IP PIN.
  • Your IP PIN is not used on your state income tax return

Use on prior year returns

You must use your latest IP PIN on any delinquent 2012 or 2011 Forms 1040. 1040A, 1040EZ or 1040PR/SS returns you may file in calendar year 2014.


If you misplaced your IP PIN

Visit the Lost or Misplaced IP PINs page for instructions on how to recover your original IP PIN or request a replacement.


Answers to Common Questions

We have complete answers to questions you might have about the IP PIN process on our Frequently Asked Questions about the IP PIN page.

Page Last Reviewed or Updated: 19-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Senior Tax Filing

Senior tax filing 1. Senior tax filing   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. Senior tax filing Business associate. Senior tax filing Bona fide business purpose. Senior tax filing 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. Senior tax filing This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. Senior tax filing It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. Senior tax filing Travel expenses defined. Senior tax filing   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Senior tax filing   An ordinary expense is one that is common and accepted in your trade or business. Senior tax filing A necessary expense is one that is helpful and appropriate for your business. Senior tax filing An expense does not have to be required to be considered necessary. Senior tax filing   You will find examples of deductible travel expenses in Table 1-1 , later. Senior tax filing 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. Senior tax filing This rest requirement is not satisfied by merely napping in your car. Senior tax filing 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. Senior tax filing Example 1. Senior tax filing You are a railroad conductor. Senior tax filing You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Senior tax filing 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. Senior tax filing You are considered to be away from home. Senior tax filing Example 2. Senior tax filing You are a truck driver. Senior tax filing You leave your terminal and return to it later the same day. Senior tax filing You get an hour off at your turnaround point to eat. Senior tax filing 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. Senior tax filing Members of the Armed Forces. Senior tax filing   If you are a member of the U. Senior tax filing S. Senior tax filing Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Senior tax filing You cannot deduct your expenses for meals and lodging. Senior tax filing 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. Senior tax filing 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. Senior tax filing   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. Senior tax filing Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Senior tax filing Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Senior tax filing It includes the entire city or general area in which your business or work is located. Senior tax filing If you have more than one regular place of business, your tax home is your main place of business. Senior tax filing See Main place of business or work , later. Senior tax filing 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. Senior tax filing See No main place of business or work , later. Senior tax filing 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. Senior tax filing As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Senior tax filing Main place of business or work. Senior tax filing   If you have more than one place of work, consider the following when determining which one is your main place of business or work. Senior tax filing The total time you ordinarily spend in each place. Senior tax filing The level of your business activity in each place. Senior tax filing Whether your income from each place is significant or insignificant. Senior tax filing Example. Senior tax filing You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Senior tax filing You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Senior tax filing Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Senior tax filing No main place of business or work. Senior tax filing   You may have a tax home even if you do not have a regular or main place of work. Senior tax filing Your tax home may be the home where you regularly live. Senior tax filing Factors used to determine tax home. Senior tax filing   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. Senior tax filing 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. Senior tax filing You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Senior tax filing 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. Senior tax filing   If you satisfy all three factors, your tax home is the home where you regularly live. Senior tax filing If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Senior tax filing If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Senior tax filing Example 1. Senior tax filing You are single and live in Boston in an apartment you rent. Senior tax filing You have worked for your employer in Boston for a number of years. Senior tax filing Your employer enrolls you in a 12-month executive training program. Senior tax filing You do not expect to return to work in Boston after you complete your training. Senior tax filing During your training, you do not do any work in Boston. Senior tax filing Instead, you receive classroom and on-the-job training throughout the United States. Senior tax filing You keep your apartment in Boston and return to it frequently. Senior tax filing You use your apartment to conduct your personal business. Senior tax filing You also keep up your community contacts in Boston. Senior tax filing When you complete your training, you are transferred to Los Angeles. Senior tax filing You do not satisfy factor (1) because you did not work in Boston. Senior tax filing You satisfy factor (2) because you had duplicate living expenses. Senior tax filing 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. Senior tax filing Therefore, you have a tax home in Boston. Senior tax filing Example 2. Senior tax filing You are an outside salesperson with a sales territory covering several states. Senior tax filing Your employer's main office is in Newark, but you do not conduct any business there. Senior tax filing Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. Senior tax filing You have a room in your married sister's house in Dayton. Senior tax filing You stay there for one or two weekends a year, but you do no work in the area. Senior tax filing You do not pay your sister for the use of the room. Senior tax filing You do not satisfy any of the three factors listed earlier. Senior tax filing You are an itinerant and have no tax home. Senior tax filing 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. Senior tax filing You also cannot deduct the cost of meals and lodging while at your tax home. Senior tax filing See Example 1 , later. Senior tax filing If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Senior tax filing See Example 2 , later. Senior tax filing Example 1. Senior tax filing You are a truck driver and you and your family live in Tucson. Senior tax filing You are employed by a trucking firm that has its terminal in Phoenix. Senior tax filing At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Senior tax filing You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Senior tax filing This is because Phoenix is your tax home. Senior tax filing Example 2. Senior tax filing Your family home is in Pittsburgh, where you work 12 weeks a year. Senior tax filing The rest of the year you work for the same employer in Baltimore. Senior tax filing In Baltimore, you eat in restaurants and sleep in a rooming house. Senior tax filing Your salary is the same whether you are in Pittsburgh or Baltimore. Senior tax filing Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Senior tax filing You cannot deduct any expenses you have for meals and lodging there. Senior tax filing However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Senior tax filing You can deduct the cost of your round trip between Baltimore and Pittsburgh. Senior tax filing You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Senior tax filing Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Senior tax filing It may not be practical to return to your tax home from this other location at the end of each work day. Senior tax filing Temporary assignment vs. Senior tax filing indefinite assignment. Senior tax filing   If your assignment or job away from your main place of work is temporary, your tax home does not change. Senior tax filing You are considered to be away from home for the whole period you are away from your main place of work. Senior tax filing You can deduct your travel expenses if they otherwise qualify for deduction. Senior tax filing 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. Senior tax filing    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. Senior tax filing 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. Senior tax filing   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. Senior tax filing You may be able to deduct the cost of relocating to your new tax home as a moving expense. Senior tax filing See Publication 521 for more information. Senior tax filing Exception for federal crime investigations or prosecutions. Senior tax filing   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Senior tax filing 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. Senior tax filing   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. Senior tax filing Determining temporary or indefinite. Senior tax filing   You must determine whether your assignment is temporary or indefinite when you start work. Senior tax filing 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. Senior tax filing An assignment or job that is initially temporary may become indefinite due to changed circumstances. Senior tax filing 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. Senior tax filing   The following examples illustrate whether an assignment or job is temporary or indefinite. Senior tax filing Example 1. Senior tax filing You are a construction worker. Senior tax filing You live and regularly work in Los Angeles. Senior tax filing You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Senior tax filing Your tax home is Los Angeles. Senior tax filing Because of a shortage of work, you took a job on a construction project in Fresno. Senior tax filing Your job was scheduled to end in 8 months. Senior tax filing The job actually lasted 10 months. Senior tax filing You realistically expected the job in Fresno to last 8 months. Senior tax filing The job actually did last less than 1 year. Senior tax filing The job is temporary and your tax home is still in Los Angeles. Senior tax filing Example 2. Senior tax filing The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. Senior tax filing The job actually was completed in 10 months. Senior tax filing 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. Senior tax filing You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. Senior tax filing Example 3. Senior tax filing The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. Senior tax filing After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). Senior tax filing Initially, you realistically expected the job in Fresno to last for only 9 months. Senior tax filing 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. Senior tax filing You can only deduct your travel expenses for the first 8 months. Senior tax filing You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. Senior tax filing Going home on days off. Senior tax filing   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. Senior tax filing You cannot deduct the cost of your meals and lodging there. Senior tax filing However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Senior tax filing You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Senior tax filing   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Senior tax filing 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. Senior tax filing Probationary work period. Senior tax filing   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. Senior tax filing You cannot deduct any of your expenses for meals and lodging during the probationary period. Senior tax filing 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. Senior tax filing You can deduct ordinary and necessary expenses you have when you travel away from home on business. Senior tax filing The type of expense you can deduct depends on the facts and your circumstances. Senior tax filing Table 1-1 summarizes travel expenses you may be able to deduct. Senior tax filing You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Senior tax filing 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. Senior tax filing You can use a log, diary, notebook, or any other written record to keep track of your expenses. Senior tax filing The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). Senior tax filing Separating costs. Senior tax filing   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. Senior tax filing You must have a reasonable basis for making this allocation. Senior tax filing For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Senior tax filing Travel expenses for another individual. Senior tax filing    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. Senior tax filing Employee. Senior tax filing   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. Senior tax filing Business associate. Senior tax filing   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. Senior tax filing A business associate is someone with whom you could reasonably expect to actively conduct business. Senior tax filing A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Senior tax filing Bona fide business purpose. Senior tax filing   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Senior tax filing Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Senior tax filing Table 1-1. Senior tax filing Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. Senior tax filing IF you have expenses for. Senior tax filing . Senior tax filing . Senior tax filing THEN you can deduct the cost of. Senior tax filing . Senior tax filing . Senior tax filing transportation travel by airplane, train, bus, or car between your home and your business destination. Senior tax filing 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. Senior tax filing If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. Senior tax filing 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. Senior tax filing baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Senior tax filing car operating and maintaining your car when traveling away from home on business. Senior tax filing You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. Senior tax filing If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Senior tax filing 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. Senior tax filing Meals include amounts spent for food, beverages, taxes, and related tips. Senior tax filing See Meals for additional rules and limits. Senior tax filing cleaning dry cleaning and laundry. Senior tax filing telephone business calls while on your business trip. Senior tax filing This includes business communication by fax machine or other communication devices. Senior tax filing tips tips you pay for any expenses in this chart. Senior tax filing other other similar ordinary and necessary expenses related to your business travel. Senior tax filing 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. Senior tax filing Example. Senior tax filing Jerry drives to Chicago on business and takes his wife, Linda, with him. Senior tax filing Linda is not Jerry's employee. Senior tax filing Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Senior tax filing The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Senior tax filing Her expenses are not deductible. Senior tax filing Jerry pays $199 a day for a double room. Senior tax filing A single room costs $149 a day. Senior tax filing He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Senior tax filing If he uses public transportation, he can deduct only his fare. Senior tax filing Meals You can deduct the cost of meals in either of the following situations. Senior tax filing It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Senior tax filing The meal is business-related entertainment. Senior tax filing Business-related entertainment is discussed in chapter 2 . Senior tax filing The following discussion deals only with meals that are not business-related entertainment. Senior tax filing Lavish or extravagant. Senior tax filing   You cannot deduct expenses for meals that are lavish or extravagant. Senior tax filing An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Senior tax filing 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. Senior tax filing 50% limit on meals. Senior tax filing   You can figure your meals expense using either of the following methods. Senior tax filing Actual cost. Senior tax filing The standard meal allowance. Senior tax filing Both of these methods are explained below. Senior tax filing But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Senior tax filing   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. Senior tax filing If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Senior tax filing Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. Senior tax filing 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. Senior tax filing If you use this method, you must keep records of your actual cost. Senior tax filing Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Senior tax filing 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. Senior tax filing The set amount varies depending on where and when you travel. Senior tax filing In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Senior tax filing If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Senior tax filing See the recordkeeping rules for travel in chapter 5 . Senior tax filing Incidental expenses. Senior tax filing   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Senior tax filing   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. Senior tax filing Incidental-expenses-only method. Senior tax filing   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Senior tax filing The amount of the deduction is $5 a day. Senior tax filing You can use this method only if you did not pay or incur any meal expenses. Senior tax filing You cannot use this method on any day that you use the standard meal allowance. Senior tax filing This method is subject to the proration rules for partial days. Senior tax filing See Travel for days you depart and return , later in this chapter. Senior tax filing Note. Senior tax filing The incidental-expenses-only method is not subject to the 50% limit discussed below. Senior tax filing Federal employees should refer to the Federal Travel Regulations at www. Senior tax filing gsa. Senior tax filing gov. Senior tax filing 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. Senior tax filing 50% limit may apply. Senior tax filing   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. Senior tax filing 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. Senior tax filing The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. Senior tax filing There is no optional standard lodging amount similar to the standard meal allowance. Senior tax filing Your allowable lodging expense deduction is your actual cost. Senior tax filing Who can use the standard meal allowance. Senior tax filing   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. Senior tax filing Use of the standard meal allowance for other travel. Senior tax filing   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Senior tax filing You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Senior tax filing You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Senior tax filing Amount of standard meal allowance. Senior tax filing   The standard meal allowance is the federal M&IE rate. Senior tax filing For travel in 2013, the rate for most small localities in the United States is $46 a day. Senior tax filing    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Senior tax filing    You can find this information (organized by state) on the Internet at www. Senior tax filing gsa. Senior tax filing gov/perdiem. Senior tax filing Enter a zip code or select a city and state for the per diem rates for the current fiscal year. Senior tax filing Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. Senior tax filing ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. Senior tax filing 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. Senior tax filing   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. Senior tax filing If you work in the transportation industry, however, see Special rate for transportation workers , later. Senior tax filing Standard meal allowance for areas outside the continental United States. Senior tax filing   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Senior tax filing The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Senior tax filing S. Senior tax filing Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Senior tax filing The Department of State establishes per diem rates for all other foreign areas. Senior tax filing    You can access per diem rates for non-foreign areas outside the continental United States at: www. Senior tax filing defensetravel. Senior tax filing dod. Senior tax filing mil/site/perdiemCalc. Senior tax filing cfm. Senior tax filing You can access all other foreign per diem rates at: www. Senior tax filing state. Senior tax filing gov/travel/. Senior tax filing Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. Senior tax filing Special rate for transportation workers. Senior tax filing   You can use a special standard meal allowance if you work in the transportation industry. Senior tax filing 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. Senior tax filing If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). Senior tax filing   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. Senior tax filing 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. Senior tax filing Travel for days you depart and return. Senior tax filing   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). Senior tax filing You can do so by one of two methods. Senior tax filing Method 1: You can claim 3/4 of the standard meal allowance. Senior tax filing Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Senior tax filing Example. Senior tax filing Jen is employed in New Orleans as a convention planner. Senior tax filing In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Senior tax filing She left her home in New Orleans at 10 a. Senior tax filing m. Senior tax filing on Wednesday and arrived in Washington, DC, at 5:30 p. Senior tax filing m. Senior tax filing After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Senior tax filing m. Senior tax filing Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Senior tax filing 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. Senior tax filing Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Senior tax filing 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. Senior tax filing Travel in the United States The following discussion applies to travel in the United States. Senior tax filing For this purpose, the United States includes the 50 states and the District of Columbia. Senior tax filing 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. Senior tax filing See Part of Trip Outside the United States , later. Senior tax filing Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. Senior tax filing 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. Senior tax filing These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Senior tax filing Example. Senior tax filing You work in Atlanta and take a business trip to New Orleans in May. Senior tax filing Your business travel totals 850 miles round trip. Senior tax filing On your way, you stop in Mobile to visit your parents. Senior tax filing You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Senior tax filing If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. Senior tax filing You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. Senior tax filing The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Senior tax filing 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. Senior tax filing However, you can deduct any expenses you have while at your destination that are directly related to your business. Senior tax filing 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. Senior tax filing 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. Senior tax filing 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. Senior tax filing For the part of your trip that is inside the United States, use the rules for travel in the United States. Senior tax filing Travel outside the United States does not include travel from one point in the United States to another point in the United States. Senior tax filing The following discussion can help you determine whether your trip was entirely within the United States. Senior tax filing Public transportation. Senior tax filing   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. Senior tax filing 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 . Senior tax filing Example. Senior tax filing You fly from New York to Puerto Rico with a scheduled stop in Miami. Senior tax filing You return to New York nonstop. Senior tax filing 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. Senior tax filing Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Senior tax filing Private car. Senior tax filing   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. Senior tax filing Example. Senior tax filing You travel by car from Denver to Mexico City and return. Senior tax filing 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. Senior tax filing The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Senior tax filing 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. Senior tax filing For this purpose, the United States includes the 50 states and the District of Columbia. Senior tax filing 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. Senior tax filing 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. Senior tax filing Travel entirely for business. Senior tax filing   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Senior tax filing Travel considered entirely for business. Senior tax filing   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. Senior tax filing Exception 1 - No substantial control. Senior tax filing   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Senior tax filing The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Senior tax filing   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. Senior tax filing    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . Senior tax filing   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. Senior tax filing   A self-employed person generally has substantial control over arranging business trips. Senior tax filing Exception 2 - Outside United States no more than a week. Senior tax filing   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Senior tax filing One week means 7 consecutive days. Senior tax filing 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. Senior tax filing Example. Senior tax filing You traveled to Brussels primarily for business. Senior tax filing You left Denver on Tuesday and flew to New York. Senior tax filing On Wednesday, you flew from New York to Brussels, arriving the next morning. Senior tax filing On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. Senior tax filing You flew back to New York, arriving Wednesday afternoon. Senior tax filing On Thursday, you flew back to Denver. Senior tax filing 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. Senior tax filing This is because the day you depart does not count as a day outside the United States. Senior tax filing You can deduct your cost of the round-trip flight between Denver and Brussels. Senior tax filing You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. Senior tax filing However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. Senior tax filing Exception 3 - Less than 25% of time on personal activities. Senior tax filing   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. Senior tax filing For this purpose, count both the day your trip began and the day it ended. Senior tax filing Example. Senior tax filing You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. Senior tax filing You then flew back to Seattle. Senior tax filing You spent 1 day flying in each direction. Senior tax filing 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. Senior tax filing 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. Senior tax filing Exception 4 - Vacation not a major consideration. Senior tax filing   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. Senior tax filing 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. Senior tax filing You can only deduct the business portion of your cost of getting to and from your destination. Senior tax filing You must allocate the costs between your business and other activities to determine your deductible amount. Senior tax filing See Travel allocation rules , later. Senior tax filing 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 . Senior tax filing In those cases, you can deduct the total cost of getting to and from your destination. Senior tax filing Travel allocation rules. Senior tax filing   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. Senior tax filing The days you depart from and return to the United States are both counted as days outside the United States. Senior tax filing   To figure the deductible amount of your round-trip travel expenses, use the following fraction. Senior tax filing The numerator (top number) is the total number of business days outside the United States. Senior tax filing The denominator (bottom number) is the total number of business and nonbusiness days of travel. Senior tax filing Counting business days. Senior tax filing   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. Senior tax filing Transportation day. Senior tax filing   Count as a business day any day you spend traveling to or from a business destination. Senior tax filing 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. Senior tax filing Extra days for side trips or nonbusiness activities cannot be counted as business days. Senior tax filing Presence required. Senior tax filing   Count as a business day any day your presence is required at a particular place for a specific business purpose. Senior tax filing Count it as a business day even if you spend most of the day on nonbusiness activities. Senior tax filing Day spent on business. Senior tax filing   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Senior tax filing Also, count as a business day any day you are prevented from working because of circumstances beyond your control. Senior tax filing Certain weekends and holidays. Senior tax filing   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. Senior tax filing 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. Senior tax filing Example 1. Senior tax filing Your tax home is New York City. Senior tax filing You travel to Quebec, where you have a business appointment on Friday. Senior tax filing You have another appointment on the following Monday. Senior tax filing Because your presence was required on both Friday and Monday, they are business days. Senior tax filing Because the weekend is between business days, Saturday and Sunday are counted as business days. Senior tax filing This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. Senior tax filing Example 2. Senior tax filing 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. Senior tax filing Nonbusiness activity on the way to or from your business destination. Senior tax filing   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. Senior tax filing   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. Senior tax filing   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Senior tax filing 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. Senior tax filing Example. Senior tax filing You live in New York. Senior tax filing On May 4 you flew to Paris to attend a business conference that began on May 5. Senior tax filing The conference ended at noon on May 14. Senior tax filing 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. Senior tax filing The primary purpose for the trip was to attend the conference. Senior tax filing If you had not stopped in Dublin, you would have arrived home the evening of May 14. Senior tax filing You do not meet any of the exceptions that would allow you to consider your travel entirely for business. Senior tax filing May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. Senior tax filing You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. Senior tax filing You cannot deduct your expenses while in Dublin. Senior tax filing You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. Senior tax filing 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. Senior tax filing Round-trip airfare from New York to Dublin would have been $1,250. Senior tax filing 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). Senior tax filing Your deductible air travel expense is $1,364 ($1,850 − $486). Senior tax filing Nonbusiness activity at, near, or beyond business destination. Senior tax filing   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. Senior tax filing   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. Senior tax filing   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Senior tax filing 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. Senior tax filing   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. Senior tax filing Example. Senior tax filing 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. Senior tax filing You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. Senior tax filing In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. Senior tax filing 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. Senior tax filing (Assume these expenses total $4,939. Senior tax filing ) 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. Senior tax filing Other methods. Senior tax filing   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. Senior tax filing 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. Senior tax filing 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. Senior tax filing Example. Senior tax filing The university from which you graduated has a continuing education program for members of its alumni association. Senior tax filing 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. Senior tax filing However, none of the conferences are directed toward specific occupations or professions. Senior tax filing It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. Senior tax filing 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. Senior tax filing These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Senior tax filing Professional conference directors schedule and conduct the sessions. Senior tax filing Participants can choose those sessions they wish to attend. Senior tax filing You can participate in this program since you are a member of the alumni association. Senior tax filing You and your family take one of the trips. Senior tax filing You spend about 2 hours at each of the planned sessions. Senior tax filing The rest of the time you go touring and sightseeing with your family. Senior tax filing The trip lasts less than 1 week. Senior tax filing Your travel expenses for the trip are not deductible since the trip was primarily a vacation. Senior tax filing 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. Senior tax filing These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. Senior tax filing 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. Senior tax filing The limit is twice the highest federal per diem rate allowable at the time of your travel. Senior tax filing (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. Senior tax filing ) Daily limit on luxury water travel. Senior tax filing   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. Senior tax filing   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. Senior tax filing 1 – Mar. Senior tax filing 31 $367 $734   Apr. Senior tax filing 1 – June 30 312 624   July 1 – Aug. Senior tax filing 31 310 620   Sept. Senior tax filing 1 – Sept. Senior tax filing 30 366 732   Oct. Senior tax filing 1 – Dec. Senior tax filing 31 374 748 Example. Senior tax filing Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Senior tax filing Her expense for the 6-day cruise was $5,200. Senior tax filing Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). Senior tax filing Meals and entertainment. Senior tax filing   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. Senior tax filing For a discussion of the 50% Limit , see chapter 2. Senior tax filing Example. Senior tax filing In the previous example, Caroline's luxury water travel had a total cost of $5,200. Senior tax filing Of that amount, $3,700 was separately stated as meals and entertainment. Senior tax filing Caroline, who is self-employed, is not reimbursed for any of her travel expenses. Senior tax filing Caroline figures her deductible travel expenses as follows. Senior tax filing Meals and entertainment $3,700   50% limit × . Senior tax filing 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. Senior tax filing Not separately stated. Senior tax filing   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. Senior tax filing 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. Senior tax filing See Cruise Ships under Conventions. Senior tax filing Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Senior tax filing You cannot deduct the travel expenses for your family. Senior tax filing If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Senior tax filing Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Senior tax filing You can deduct your travel expenses only if your attendance is connected to your own trade or business. Senior tax filing Convention agenda. Senior tax filing   The convention agenda or program generally shows the purpose of the convention. Senior tax filing 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. Senior tax filing 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. Senior tax filing 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. Senior tax filing See Reasonableness test , later. Senior tax filing 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 . Senior tax filing North American area. Senior tax filing   The North American area includes the following locations. Senior tax filing 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. Senior tax filing S. Senior tax filing Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. Senior tax filing S. Senior tax filing islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. Senior tax filing Reasonableness test. Senior tax filing   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. Senior tax filing The purpose of the meeting and the activities taking place at the meeting. Senior tax filing The purposes and activities of the sponsoring organizations or groups. Senior tax filing 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. Senior tax filing Other relevant factors you may present. Senior tax filing 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. Senior tax filing All ships that sail are considered cruise ships. Senior tax filing You can deduct these expenses only if all of the following requirements are met. Senior tax filing The convention, seminar, or meeting is directly related to your trade or business. Senior tax filing The cruise ship is a vessel registered in the United States. Senior tax filing All of the cruise ship's ports of call are in the United States or in possessions of the United States. Senior tax filing 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. Senior tax filing 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. Senior tax filing Prev  Up  Next   Home   More Online Publications