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State Returns

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State Returns

State returns 26. State returns   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. State returns Parking fees. State returns Advertising display on car. State returns Car pools. State returns Hauling tools or instruments. State returns Union members' trips from a union hall. State returns Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. State returns Statutory employees. State returns Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. State returns  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. State returns Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. State returns Depreciation limits on cars, trucks, and vans. State returns  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). State returns For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). State returns For more information, see Depreciation limits in Publication 463. State returns Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. State returns An ordinary expense is one that is common and accepted in your trade or business. State returns A necessary expense is one that is helpful and appropriate for your business. State returns An expense does not have to be required to be considered necessary. State returns This chapter explains the following. State returns What expenses are deductible. State returns How to report your expenses on your return. State returns What records you need to prove your expenses. State returns How to treat any expense reimbursements you may receive. State returns Who does not need to use this chapter. State returns   If you are an employee, you will not need to read this chapter if all of the following are true. State returns You fully accounted to your employer for your work-related expenses. State returns You received full reimbursement for your expenses. State returns Your employer required you to return any excess reimbursement and you did so. State returns There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. State returns If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. State returns See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. State returns    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. State returns Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. State returns This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. State returns It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. State returns Travel expenses defined. State returns   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. State returns   You will find examples of deductible travel expenses in Table 26-1 . State returns 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. State returns This rest requirement is not satisfied by merely napping in your car. State returns 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. State returns Example 1. State returns You are a railroad conductor. State returns You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. State returns 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. State returns You are considered to be away from home. State returns Example 2. State returns You are a truck driver. State returns You leave your terminal and return to it later the same day. State returns You get an hour off at your turnaround point to eat. State returns 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. State returns Members of the Armed Forces. State returns   If you are a member of the U. State returns S. State returns Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. State returns You cannot deduct your expenses for meals and lodging. State returns 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. State returns 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. State returns    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. State returns Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. State returns Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. State returns It includes the entire city or general area in which your business or work is located. State returns If you have more than one regular place of business, your tax home is your main place of business. State returns See Main place of business or work , later. State returns 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. State returns See No main place of business or work , later. State returns If you do not have a regular or a 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. State returns As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. State returns Main place of business or work. State returns   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. State returns The total time you ordinarily spend in each place. State returns The level of your business activity in each place. State returns Whether your income from each place is significant or insignificant. State returns Example. State returns You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. State returns You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. State returns Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. State returns No main place of business or work. State returns   You may have a tax home even if you do not have a regular or main place of business or work. State returns Your tax home may be the home where you regularly live. State returns Factors used to determine tax home. State returns   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. State returns 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. State returns You have living expenses at your main home that you duplicate because your business requires you to be away from that home. State returns 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. State returns   If you satisfy all three factors, your tax home is the home where you regularly live. State returns If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. State returns If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. State returns Example. State returns You are single and live in Boston in an apartment you rent. State returns You have worked for your employer in Boston for a number of years. State returns Your employer enrolls you in a 12-month executive training program. State returns You do not expect to return to work in Boston after you complete your training. State returns During your training, you do not do any work in Boston. State returns Instead, you receive classroom and on-the-job training throughout the United States. State returns You keep your apartment in Boston and return to it frequently. State returns You use your apartment to conduct your personal business. State returns You also keep up your community contacts in Boston. State returns When you complete your training, you are transferred to Los Angeles. State returns You do not satisfy factor (1) because you did not work in Boston. State returns You satisfy factor (2) because you had duplicate living expenses. State returns 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. State returns Therefore, you have a tax home in Boston. State returns Tax home different from family home. State returns   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. State returns You also cannot deduct the cost of meals and lodging while at your tax home. State returns See Example 1 . State returns   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. State returns See Example 2 . State returns Example 1. State returns You are a truck driver and you and your family live in Tucson. State returns You are employed by a trucking firm that has its terminal in Phoenix. State returns At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. State returns You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. State returns This is because Phoenix is your tax home. State returns Example 2. State returns Your family home is in Pittsburgh, where you work 12 weeks a year. State returns The rest of the year you work for the same employer in Baltimore. State returns In Baltimore, you eat in restaurants and sleep in a rooming house. State returns Your salary is the same whether you are in Pittsburgh or Baltimore. State returns Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. State returns You cannot deduct any expenses you have for meals and lodging there. State returns However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. State returns You can deduct the cost of your round trip between Baltimore and Pittsburgh. State returns You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. State returns Temporary Assignment or Job You may regularly work at your tax home and also work at another location. State returns It may not be practical to return to your tax home from this other location at the end of each work day. State returns Temporary assignment vs. State returns indefinite assignment. State returns   If your assignment or job away from your main place of work is temporary, your tax home does not change. State returns You are considered to be away from home for the whole period you are away from your main place of work. State returns You can deduct your travel expenses if they otherwise qualify for deduction. State returns 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. State returns   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. State returns 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. State returns   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. State returns You may be able to deduct the cost of relocating to your new tax home as a moving expense. State returns See Publication 521 for more information. State returns Exception for federal crime investigations or prosecutions. State returns   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. State returns 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. State returns   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 or prosecute, or provide support services for the investigation or prosecution of a federal crime. State returns Determining temporary or indefinite. State returns   You must determine whether your assignment is temporary or indefinite when you start work. State returns 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. State returns An assignment or job that is initially temporary may become indefinite due to changed circumstances. State returns 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. State returns Going home on days off. State returns   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. State returns You cannot deduct the cost of your meals and lodging there. State returns However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. State returns You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. State returns   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. State returns 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. State returns Probationary work period. State returns   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. State returns You cannot deduct any of your expenses for meals and lodging during the probationary period. State returns 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. State returns You can deduct ordinary and necessary expenses you have when you travel away from home on business. State returns The type of expense you can deduct depends on the facts and your circumstances. State returns Table 26-1 summarizes travel expenses you may be able to deduct. State returns You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. State returns 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. State returns You can use a log, diary, notebook, or any other written record to keep track of your expenses. State returns The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. State returns Separating costs. State returns   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. State returns You must have a reasonable basis for making this allocation. State returns For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. State returns Travel expenses for another individual. State returns   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. State returns Employee. State returns   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. State returns Business associate. State returns   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. State returns A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. State returns A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. State returns Bona fide business purpose. State returns   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. State returns Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. State returns Example. State returns Jerry drives to Chicago on business and takes his wife, Linda, with him. State returns Linda is not Jerry's employee. State returns Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. State returns The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. State returns Her expenses are not deductible. State returns Jerry pays $199 a day for a double room. State returns A single room costs $149 a day. State returns He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. State returns If he uses public transportation, he can deduct only his fare. State returns Table 26-1. State returns Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. State returns IF you have expenses for. State returns . State returns . State returns THEN you can deduct the cost of. State returns . State returns . State returns transportation travel by airplane, train, bus, or car between your home and your business destination. State returns If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. State returns If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. State returns 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. State returns baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. State returns car operating and maintaining your car when traveling away from home on business. State returns You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. State returns If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. State returns 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. State returns Meals include amounts spent for food, beverages, taxes, and related tips. State returns See Meals and Incidental Expenses for additional rules and limits. State returns cleaning dry cleaning and laundry. State returns telephone business calls while on your business trip. State returns This includes business communication by fax machine or other communication devices. State returns tips tips you pay for any expenses in this chart. State returns other other similar ordinary and necessary expenses related to your business travel. State returns 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. State returns Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. State returns It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. State returns The meal is business-related entertainment. State returns Business-related entertainment is discussed under Entertainment Expenses , later. State returns The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. State returns Lavish or extravagant. State returns   You cannot deduct expenses for meals that are lavish or extravagant. State returns An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. State returns 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. State returns 50% limit on meals. State returns   You can figure your meal expenses using either of the following methods. State returns Actual cost. State returns The standard meal allowance. State returns Both of these methods are explained below. State returns But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. State returns   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. State returns If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. State returns The 50% limit is explained later under Entertainment Expenses . State returns Accountable and nonaccountable plans are discussed later under Reimbursements . State returns Actual cost. State returns   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. State returns If you use this method, you must keep records of your actual cost. State returns Standard meal allowance. State returns   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. State returns 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. State returns The set amount varies depending on where and when you travel. State returns In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . State returns If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. State returns See Recordkeeping , later. State returns Incidental expenses. State returns   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. State returns 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. State returns Incidental expenses only method. State returns   You can use an optional method (instead of actual cost) for deducting incidental expenses only. State returns The amount of the deduction is $5 a day. State returns You can use this method only if you did not pay or incur any meal expenses. State returns You cannot use this method on any day that you use the standard meal allowance. State returns    Federal employees should refer to the Federal Travel Regulations at  www. State returns gsa. State returns gov. State returns Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. State returns 50% limit may apply. State returns   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. State returns 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. State returns The 50% limit is explained later under Entertainment Expenses . State returns Accountable and nonaccountable plans are discussed later under Reimbursements . State returns There is no optional standard lodging amount similar to the standard meal allowance. State returns Your allowable lodging expense deduction is your actual cost. State returns Who can use the standard meal allowance. State returns   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. State returns   Use of the standard meal allowance for other travel. State returns    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. State returns You can also use it to figure your meal expenses when you travel for qualifying educational purposes. State returns You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. State returns Amount of standard meal allowance. State returns   The standard meal allowance is the federal M&IE rate. State returns For travel in 2013, the daily rate for most small localities in the United States is $46. State returns   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. State returns You can find this information (organized by state) on the Internet at www. State returns gsa. State returns gov. State returns Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. State returns However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. State returns You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. State returns   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. State returns If you work in the transportation industry, however, see Special rate for transportation workers , later. State returns Standard meal allowance for areas outside the continental United States. State returns    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. State returns The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. State returns S. State returns Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. State returns The Department of State establishes per diem rates for all other foreign areas. State returns    You can access per diem rates for non-foreign areas outside the continental United States at: www. State returns defensetravel. State returns dod. State returns mil/site/perdiemCalc. State returns cfm. State returns You can access all other foreign per diem rates at www. State returns state. State returns gov/travel/. State returns Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. State returns Special rate for transportation workers. State returns   You can use a special standard meal allowance if you work in the transportation industry. State returns 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. State returns If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). State returns   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. State returns 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. State returns Travel for days you depart and return. State returns   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). State returns You can do so by one of two methods. State returns Method 1: You can claim 3/4 of the standard meal allowance. State returns Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. State returns Example. State returns Jen is employed in New Orleans as a convention planner. State returns In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. State returns She left her home in New Orleans at 10 a. State returns m. State returns on Wednesday and arrived in Washington, DC, at 5:30 p. State returns m. State returns After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. State returns m. State returns Jen's employer gave her a flat amount to cover her expenses and included it with her wages. State returns 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. State returns Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. State returns 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. State returns Travel in the United States The following discussion applies to travel in the United States. State returns For this purpose, the United States includes only the 50 states and the District of Columbia. State returns 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. State returns See Part of Trip Outside the United States , later. State returns Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. State returns 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 your business-related travel expenses. State returns These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. State returns Example. State returns You work in Atlanta and take a business trip to New Orleans in May. State returns On your way home, you stop in Mobile to visit your parents. State returns You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. State returns If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. State returns You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. State returns The deduction for your meals is subject to the 50% limit on meals mentioned earlier. State returns 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. State returns However, you can deduct any expenses you have while at your destination that are directly related to your business. State returns 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. State returns 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. State returns Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. State returns For the part of your trip that is inside the United States, use the rules for travel in the United States. State returns Travel outside the United States does not include travel from one point in the United States to another point in the United States. State returns The following discussion can help you determine whether your trip was entirely within the United States. State returns Public transportation. State returns   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. State returns 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 . State returns Example. State returns You fly from New York to Puerto Rico with a scheduled stop in Miami. State returns You return to New York nonstop. State returns 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. State returns Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. State returns Private car. State returns   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. State returns Example. State returns You travel by car from Denver to Mexico City and return. State returns 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. State returns The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. State returns 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. State returns For this purpose, the United States includes only the 50 states and the District of Columbia. State returns 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. State returns See chapter 1 of Publication 463 for information on luxury water travel. State returns 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. State returns Travel entirely for business. State returns   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. State returns Travel considered entirely for business. State returns   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. State returns Exception 1 - No substantial control. State returns   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. State returns The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. State returns   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. State returns    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . State returns   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. State returns    A self-employed person generally has substantial control over arranging business trips. State returns Exception 2 - Outside United States no more than a week. State returns   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. State returns One week means 7 consecutive days. State returns 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. State returns Exception 3 - Less than 25% of time on personal activities. State returns   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. State returns For this purpose, count both the day your trip began and the day it ended. State returns Exception 4 - Vacation not a major consideration. State returns   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. State returns Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. State returns You can only deduct the business portion of your cost of getting to and from your destination. State returns You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. State returns These travel allocation rules are discussed in chapter 1 of Publication 463. State returns You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. State returns In those cases, you can deduct the total cost of getting to and from your destination. State returns 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. State returns 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. State returns Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. State returns You cannot deduct the travel expenses for your family. State returns If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. State returns Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. State returns You can deduct your travel expenses only if your attendance is connected to your own trade or business. State returns Convention agenda. State returns   The convention agenda or program generally shows the purpose of the convention. State returns 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. State returns 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. State returns Conventions held outside the North American area. State returns    See chapter 1 of Publication 463 for information on conventions held outside the North American area. State returns Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. State returns You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. State returns Directly-related test. State returns Associated test. State returns Both of these tests are explained in chapter 2 of Publication 463. State returns The amount you can deduct for entertainment expenses may be limited. State returns Generally, you can deduct only 50% of your unreimbursed entertainment expenses. State returns This limit is discussed next. State returns 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. State returns (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. State returns See Individuals subject to “hours of service” limits , later. State returns ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. State returns Figure 26-A summarizes the general rules explained in this section. State returns The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. State returns Included expenses. State returns   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. State returns However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. State returns Application of 50% limit. State returns   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. State returns   The 50% limit also applies to certain meal and entertainment expenses that are not business related. State returns It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. State returns It also applies to the cost of meals included in deductible educational expenses. State returns When to apply the 50% limit. State returns   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. State returns You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. State returns Example 1. State returns You spend $200 for a business-related meal. State returns If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. State returns Your deduction cannot be more than $45 (. State returns 50 × $90). State returns Example 2. State returns You purchase two tickets to a concert and give them to a client. State returns You purchased the tickets through a ticket agent. State returns You paid $200 for the two tickets, which had a face value of $80 each ($160 total). State returns Your deduction cannot be more than $80 (. State returns 50 × $160). State returns Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. State returns Figure 26-A can help you determine if the 50% limit applies to you. State returns Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. State returns Employee's reimbursed expenses. State returns   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. State returns Accountable plans are discussed later under Reimbursements . State returns Individuals subject to “hours of service” limits. State returns   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. State returns The percentage is 80%. State returns   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. State returns Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. State returns Interstate truck operators and bus drivers who are under Department of Transportation regulations. State returns Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. State returns Certain merchant mariners who are under Coast Guard regulations. State returns Other exceptions. State returns   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. State returns These are discussed in Publication 463. State returns Figure 26-A. State returns Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. State returns See Exceptions to the 50% Limit . State returns Please click here for the text description of the image. State returns Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. State returns Entertainment. State returns    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. State returns Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. State returns A meal as a form of entertainment. State returns   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. State returns A meal expense includes the cost of food, beverages, taxes, and tips for the meal. State returns To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. State returns You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. State returns Separating costs. State returns   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. State returns You must have a reasonable basis for making this allocation. State returns For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. State returns Taking turns paying for meals or entertainment. State returns   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. State returns Lavish or extravagant expenses. State returns   You cannot deduct expenses for entertainment that are lavish or extravagant. State returns An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. State returns Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. State returns Trade association meetings. State returns    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. State returns These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. State returns Entertainment tickets. State returns   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. State returns For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. State returns What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. State returns Club dues and membership fees. State returns   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. State returns This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. State returns   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. State returns You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. State returns Entertainment facilities. State returns   Generally, you cannot deduct any expense for the use of an entertainment facility. State returns This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. State returns   An entertainment facility is any property you own, rent, or use for entertainment. State returns Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. State returns Out-of-pocket expenses. State returns   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. State returns These are not expenses for the use of an entertainment facility. State returns However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. State returns Additional information. State returns   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. State returns Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. State returns This section explains the limits and rules for deducting the costs of gifts. State returns $25 limit. State returns   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. State returns A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. State returns   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. State returns This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. State returns   If you and your spouse both give gifts, both of you are treated as one taxpayer. State returns It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. State returns If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. State returns Incidental costs. State returns   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. State returns   A cost is incidental only if it does not add substantial value to the gift. State returns For example, the cost of customary gift wrapping is an incidental cost. State returns However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. State returns Exceptions. State returns   The following items are not considered gifts for purposes of the $25 limit. State returns An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. State returns Examples include pens, desk sets, and plastic bags and cases. State returns Signs, display racks, or other promotional material to be used on the business premises of the recipient. State returns Gift or entertainment. State returns   Any item that might be considered either a gift or entertainment generally will be considered entertainment. State returns However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. State returns    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. State returns You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. State returns    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. State returns You cannot choose, in this case, to treat the cost of the tickets as a gift expense. State returns Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . State returns These expenses include the cost of transportation by air, rail, bus, taxi, etc. State returns , and the cost of driving and maintaining your car. State returns Transportation expenses include the ordinary and necessary costs of all of the following. State returns Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. State returns (Tax home is defined earlier under Travel Expenses . State returns ) Visiting clients or customers. State returns Going to a business meeting away from your regular workplace. State returns Getting from your home to a temporary workplace when you have one or more regular places of work. State returns These temporary workplaces can be either within the area of your tax home or outside that area. State returns Transportation expenses do not include expenses you have while traveling away from home overnight. State returns Those expenses are travel expenses, discussed earlier. State returns However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. State returns See Car Expenses , later. State returns Illustration of transportation expenses. State returns    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. State returns You may want to refer to it when deciding whether you can deduct your transportation expenses. State returns Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. State returns However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. State returns Temporary work location. State returns   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. State returns   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. State returns   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. State returns   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. State returns It will not be treated as temporary after the date you determine it will last more than 1 year. State returns   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. State returns You may have deductible travel expenses as discussed earlier in this chapter. State returns No regular place of work. State returns   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. State returns   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. State returns   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. State returns These are nondeductible commuting expenses. State returns Two places of work. State returns   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. State returns However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. State returns   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. State returns You cannot deduct them. State returns Armed Forces reservists. State returns   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. State returns You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. State returns   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. State returns In this case, your transportation generally is a nondeductible commuting expense. State returns However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. State returns   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. State returns   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. State returns These expenses are discussed earlier under Travel Expenses . State returns   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. State returns See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. State returns Commuting expenses. State returns   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. State returns These costs are personal commuting expenses. State returns You cannot deduct commuting expenses no matter how far your home is from your regular place of work. State returns You cannot deduct commuting expenses even if you work during the commuting trip. State returns Example. State returns You sometimes use your cell phone to make business calls while commuting to and from work. State returns Sometimes business associates ride with you to and from work, and you have a business discussion in the car. State returns These activities do not change the trip from personal to business. State returns You cannot deduct your commuting expenses. State returns Parking fees. State returns   Fees you pay to park your car at your place of business are nondeductible commuting expenses. State returns You can, however, deduct business-related parking fees when visiting a customer or client. State returns Advertising display on car. State returns   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. State returns If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. State returns Car pools. State returns   You cannot deduct the cost of using your car in a nonprofit car pool. State returns Do not include payments you receive from the passengers in your income. State returns These payments are considered reimbursements of your expenses. State returns However, if you operate a car pool for a profit, you must include payments from passengers in your income. State returns You can then deduct your car expenses (using the rules in this chapter). State returns Hauling tools or instruments. State returns   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. State returns However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). State returns Union members' trips from a union hall. State returns   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. State returns Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. State returns Office in the home. State returns   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. State returns (See chapter 28 for information on determining if your home office qualifies as a principal place of business. State returns ) Figure 26-B. State returns When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. State returns (Do not use this chart if your home is your principal place of business. State returns See Office in the home . State returns ) Please click here for the text description of the image. State returns Figure 26-B. State returns Local Transportation Examples of deductible transportation. State returns   The following examples show when you can deduct transportation expenses based on the location of your work and your home. State returns Example 1. State returns You regularly work in an office in the city where you live. State returns Your employer sends you to a 1-week training session at a different office in the same city. State returns You travel directly from your home to the training location and return each day. State returns You can deduct the cost of your daily round-trip transportation between your home and the training location. State returns Example 2. State returns Your principal place of business is in your home. State returns You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. State returns Example 3. State returns You have no regular office, and you do not have an office in your home. State returns In this case, the location of your first business contact inside the metropolitan area is considered your office. State returns Transportation expenses between your home and this first contact are nondeductible commuting expenses. State returns Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. State returns While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. State returns With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. State returns Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. State returns You generally can use one of the two following methods to figure your deductible expenses. State returns Standard mileage rate. State returns Actual car expenses. State returns If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. State returns See Leasing a car under Actual Car Expenses, later. State returns In this chapter, “car” includes a van, pickup, or panel truck. State returns Rural mail carriers. State returns   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. State returns Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. State returns   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). State returns You must complete Form 2106 and attach it to your Form 1040. State returns   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. State returns It is given as an equipment maintenance allowance (EMA) to employees of the U. State returns S. State returns Postal Service. State returns It is at the rate contained in the 1991 collective bargaining agreement. State returns Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. State returns See your employer for information on your reimbursement. State returns If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. State returns Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. State returns For 2013, the standard mileage rate for business use is 56½ cents per mile. State returns If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. State returns You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. State returns See Reimbursements under How To Report, later. State returns Choosing the standard mileage rate. State returns   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. State returns Then in later years, you can choose to use either the standard mileage rate or actual expenses. State returns   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. State returns   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. State returns You cannot revoke the choice. State returns However, in a later year, you can switch from the standard mileage rate to the actual expenses method. State returns If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. State returns Example. State returns Larry is an employee who occasionally uses his own car for business purposes. State returns He purchased the car in 2011, but he did not claim any unreimburse
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The State Returns

State returns 3. State returns   Gifts Table of Contents If you give gifts in the course of your trade or business, you can deduct all or part of the cost. State returns This chapter explains the limits and rules for deducting the costs of gifts. State returns $25 limit. State returns   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. State returns A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. State returns   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. State returns This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use. State returns   If you and your spouse both give gifts, both of you are treated as one taxpayer. State returns It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. State returns If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. State returns Example. State returns Bob Jones sells products to Local Company. State returns He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. State returns They paid $80 for each gift basket, or $240 total. State returns Three of Local Company's executives took the gift baskets home for their families' use. State returns Bob and Jan have no independent business relationship with any of the executives' other family members. State returns They can deduct a total of $75 ($25 limit × 3) for the gift baskets. State returns Incidental costs. State returns   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. State returns   A cost is incidental only if it does not add substantial value to the gift. State returns For example, the cost of gift wrapping is an incidental cost. State returns However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. State returns Exceptions. State returns   The following items are not considered gifts for purposes of the $25 limit. State returns An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. State returns Examples include pens, desk sets, and plastic bags and cases. State returns Signs, display racks, or other promotional material to be used on the business premises of the recipient. State returns    Figure B. State returns When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. State returns (Do not use this chart if your home is your principal place of business. State returns See Office in the home . State returns ) Please click here for the text description of the image. State returns Figure B. State returns When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1. State returns 162-1(a); RR 55–109; RR 94–47 Gift or entertainment. State returns   Any item that might be considered either a gift or entertainment generally will be considered entertainment. State returns However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. State returns    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. State returns You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. State returns   You can change your treatment of the tickets at a later date by filing an amended return. State returns Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. State returns    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. State returns You cannot choose, in this case, to treat the cost of the tickets as a gift expense. State returns Prev  Up  Next   Home   More Online Publications