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State Tax Returns

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State Tax Returns

State tax returns 12. State tax returns   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. State tax returns Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. State tax returns  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. State tax returns 5 cents per mile. State tax returns For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. State tax returns Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. State tax returns To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. State tax returns What is the tax benefit of taking a business deduction for work-related education. State tax returns   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. State tax returns Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. State tax returns An itemized deduction reduces the amount of your income subject to tax. State tax returns   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. State tax returns This reduces the amount of your income subject to both income tax and self-employment tax. State tax returns   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. State tax returns You may qualify for these other benefits even if you do not meet the requirements listed above. State tax returns   Also, your work-related education expenses may qualify you to claim more than one tax benefit. State tax returns Generally, you may claim any number of benefits as long as you use different expenses to figure each one. State tax returns Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. State tax returns This is education that meets at least one of the following two tests. State tax returns The education is required by your employer or the law to keep your present salary, status, or job. State tax returns The required education must serve a bona fide business purpose of your employer. State tax returns The education maintains or improves skills needed in your present work. State tax returns However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. State tax returns You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. State tax returns Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. State tax returns Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. State tax returns This additional education is qualifying work-related education if all three of the following requirements are met. State tax returns It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. State tax returns When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. State tax returns See Education To Maintain or Improve Skills , later. State tax returns Example. State tax returns You are a teacher who has satisfied the minimum requirements for teaching. State tax returns Your employer requires you to take an additional college course each year to keep your teaching job. State tax returns If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. State tax returns This image is too large to be displayed in the current screen. State tax returns Please click the link to view the image. State tax returns Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. State tax returns This could include refresher courses, courses on current developments, and academic or vocational courses. State tax returns Example. State tax returns You repair televisions, radios, and stereo systems for XYZ Store. State tax returns To keep up with the latest changes, you take special courses in radio and stereo service. State tax returns These courses maintain and improve skills required in your work. State tax returns Maintaining skills vs. State tax returns qualifying for new job. State tax returns   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. State tax returns Education during temporary absence. State tax returns   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. State tax returns Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. State tax returns Example. State tax returns You quit your biology research job to become a full-time biology graduate student for 1 year. State tax returns If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. State tax returns Education during indefinite absence. State tax returns   If you stop work for more than a year, your absence from your job is considered indefinite. State tax returns Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. State tax returns Therefore, it is not qualifying work-related education. State tax returns Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. State tax returns The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. State tax returns Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. State tax returns This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. State tax returns You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. State tax returns Example 1. State tax returns You are a full-time engineering student. State tax returns Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. State tax returns Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. State tax returns The education is not qualifying work-related education. State tax returns Example 2. State tax returns You are an accountant and you have met the minimum educational requirements of your employer. State tax returns Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. State tax returns These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. State tax returns Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. State tax returns The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. State tax returns If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. State tax returns The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. State tax returns You generally will be considered a faculty member when one or more of the following occurs. State tax returns You have tenure. State tax returns Your years of service count toward obtaining tenure. State tax returns You have a vote in faculty decisions. State tax returns Your school makes contributions for you to a retirement plan other than social security or a similar program. State tax returns Example 1. State tax returns The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. State tax returns In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. State tax returns If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. State tax returns However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. State tax returns Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. State tax returns If you have all the required education except the fifth year, you have met the minimum educational requirements. State tax returns The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. State tax returns Example 2. State tax returns Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. State tax returns The additional four education courses can be qualifying work-related education. State tax returns Although you do not have all the required courses, you have already met the minimum educational requirements. State tax returns Example 3. State tax returns Assume the same facts as in Example 1 except that you are hired with only 3 years of college. State tax returns The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. State tax returns They are needed to meet the minimum educational requirements for employment as a teacher. State tax returns Example 4. State tax returns You have a bachelor's degree and you work as a temporary instructor at a university. State tax returns At the same time, you take graduate courses toward an advanced degree. State tax returns The rules of the university state that you can become a faculty member only if you get a graduate degree. State tax returns Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. State tax returns You have not met the minimum educational requirements to qualify you as a faculty member. State tax returns The graduate courses are not qualifying work-related education. State tax returns Certification in a new state. State tax returns   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. State tax returns This is true even if you must get additional education to be certified in another state. State tax returns Any additional education you need is qualifying work-related education. State tax returns You have already met the minimum requirements for teaching. State tax returns Teaching in another state is not a new trade or business. State tax returns Example. State tax returns You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. State tax returns You move to State B and are promptly hired as a teacher. State tax returns You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. State tax returns These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. State tax returns Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. State tax returns This is true even if you do not plan to enter that trade or business. State tax returns If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. State tax returns Example 1. State tax returns You are an accountant. State tax returns Your employer requires you to get a law degree at your own expense. State tax returns You register at a law school for the regular curriculum that leads to a law degree. State tax returns Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. State tax returns Example 2. State tax returns You are a general practitioner of medicine. State tax returns You take a 2-week course to review developments in several specialized fields of medicine. State tax returns The course does not qualify you for a new profession. State tax returns It is qualifying work- related education because it maintains or improves skills required in your present profession. State tax returns Example 3. State tax returns While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. State tax returns The program will lead to qualifying you to practice psychoanalysis. State tax returns The psychoanalytic training does not qualify you for a new profession. State tax returns It is qualifying work-related education because it maintains or improves skills required in your present profession. State tax returns Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. State tax returns They are part of a program of study that can qualify you for a new profession. State tax returns Teaching and Related Duties All teaching and related duties are considered the same general kind of work. State tax returns A change in duties in any of the following ways is not considered a change to a new business. State tax returns Elementary school teacher to secondary school teacher. State tax returns Teacher of one subject, such as biology, to teacher of another subject, such as art. State tax returns Classroom teacher to guidance counselor. State tax returns Classroom teacher to school administrator. State tax returns What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. State tax returns If you are not self-employed, you can deduct business expenses only if you itemize your deductions. State tax returns You cannot deduct expenses related to tax-exempt and excluded income. State tax returns Deductible expenses. State tax returns   The following education expenses can be deducted. State tax returns Tuition, books, supplies, lab fees, and similar items. State tax returns Certain transportation and travel costs. State tax returns Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. State tax returns Nondeductible expenses. State tax returns   You cannot deduct personal or capital expenses. State tax returns For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. State tax returns This amount is a personal expense. State tax returns Unclaimed reimbursement. State tax returns   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. State tax returns Example. State tax returns Your employer agrees to pay your education expenses if you file a voucher showing your expenses. State tax returns You do not file a voucher and you do not get reimbursed. State tax returns Because you did not file a voucher, you cannot deduct the expenses on your tax return. State tax returns Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. State tax returns If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. State tax returns Temporary basis. State tax returns   You go to school on a temporary basis if either of the following situations applies to you. State tax returns Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. State tax returns Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. State tax returns Your attendance is temporary up to the date you determine it will last more than 1 year. State tax returns If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. State tax returns Attendance not on a temporary basis. State tax returns   You do not go to school on a temporary basis if either of the following situations apply to you. State tax returns Your attendance at school is realistically expected to last more than 1 year. State tax returns It does not matter how long you actually attend. State tax returns Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. State tax returns Your attendance is not temporary after the date you determine it will last more than 1 year. State tax returns Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. State tax returns This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. State tax returns Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. State tax returns Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. State tax returns Example 1. State tax returns You regularly work in a nearby town, and go directly from work to home. State tax returns You also attend school every work night for 3 months to take a course that improves your job skills. State tax returns Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. State tax returns This is true regardless of the distance traveled. State tax returns Example 2. State tax returns Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. State tax returns You can deduct your transportation expenses from your regular work site to school and then home. State tax returns Example 3. State tax returns Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. State tax returns Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. State tax returns Example 4. State tax returns Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. State tax returns Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. State tax returns If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. State tax returns If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. State tax returns Using your car. State tax returns    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. State tax returns The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. State tax returns 5 cents per mile. State tax returns Whichever method you use, you can also deduct parking fees and tolls. State tax returns See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. State tax returns Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. State tax returns Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. State tax returns For more information, see chapter 1 of Publication 463. State tax returns You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. State tax returns Mainly personal travel. State tax returns   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. State tax returns You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. State tax returns   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. State tax returns An important factor is the comparison of time spent on personal activities with time spent on educational activities. State tax returns If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. State tax returns Example 1. State tax returns John works in Newark, New Jersey. State tax returns He traveled to Chicago to take a deductible 1-week course at the request of his employer. State tax returns His main reason for going to Chicago was to take the course. State tax returns While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. State tax returns Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. State tax returns He cannot deduct his transportation expenses of going to Pleasantville. State tax returns He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. State tax returns Example 2. State tax returns Sue works in Boston. State tax returns She went to a university in Michigan to take a course for work. State tax returns The course is qualifying work-related education. State tax returns She took one course, which is one-fourth of a full course load of study. State tax returns She spent the rest of the time on personal activities. State tax returns Her reasons for taking the course in Michigan were all personal. State tax returns Sue's trip is mainly personal because three-fourths of her time is considered personal time. State tax returns She cannot deduct the cost of her round-trip train ticket to Michigan. State tax returns She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. State tax returns Example 3. State tax returns Dave works in Nashville and recently traveled to California to take a 2-week seminar. State tax returns The seminar is qualifying work-related education. State tax returns While there, he spent an extra 8 weeks on personal activities. State tax returns The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. State tax returns Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. State tax returns He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. State tax returns Cruises and conventions. State tax returns   Certain cruises and conventions offer seminars or courses as part of their itinerary. State tax returns Even if the seminars or courses are work related, your deduction for travel may be limited. State tax returns This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. State tax returns   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. State tax returns 50% limit on meals. State tax returns   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. State tax returns If you were reimbursed for the meals, see How To Treat Reimbursements , later. State tax returns   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. State tax returns Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. State tax returns Example. State tax returns You are a French language teacher. State tax returns While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. State tax returns You chose your itinerary and most of your activities to improve your French language skills. State tax returns You cannot deduct your travel expenses as education expenses. State tax returns This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. State tax returns No Double Benefit Allowed You cannot do either of the following. State tax returns Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. State tax returns Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. State tax returns See Adjustments to Qualifying Work-Related Education Expenses, next. State tax returns Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. State tax returns You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. State tax returns Tax-free educational assistance. State tax returns   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). State tax returns Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. State tax returns Amounts that do not reduce qualifying work-related education expenses. State tax returns   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. State tax returns Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. State tax returns How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. State tax returns There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. State tax returns You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. State tax returns Note. State tax returns The following rules about reimbursement arrangements also apply to expense allowances received from your employer. State tax returns Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. State tax returns Your expenses must have a business connection. State tax returns This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. State tax returns You must adequately account to your employer for your expenses within a reasonable period of time. State tax returns You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. State tax returns If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. State tax returns If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. State tax returns Accountable plan rules not met. State tax returns   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. State tax returns Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). State tax returns Expenses equal reimbursement. State tax returns   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. State tax returns Because your expenses and reimbursements are equal, you do not have a deduction. State tax returns Excess expenses. State tax returns   If your expenses are more than your reimbursement, you can deduct your excess expenses. State tax returns This is discussed later, under Deducting Business Expenses . State tax returns Allocating your reimbursements for meals. State tax returns   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. State tax returns If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. State tax returns Make the allocation as follows. State tax returns Divide your meal expenses by your total expenses. State tax returns Multiply your total reimbursement by the result from (1). State tax returns This is the allocated reimbursement for your meal expenses. State tax returns Subtract the amount figured in (2) from your total reimbursement. State tax returns The difference is the allocated reimbursement for your other expenses of qualifying work-related education. State tax returns Example. State tax returns Your employer paid you an expense allowance of $2,000 under an accountable plan. State tax returns The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. State tax returns There was no indication of how much of the reimbursement was for each type of expense. State tax returns Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). State tax returns Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. State tax returns   1. State tax returns $425 meal expenses  $2,500 total expenses = . State tax returns 17   2. State tax returns $2,000 (reimbursement)×. State tax returns 17     =$340 (allocated reimbursement for meal expenses)   3. State tax returns $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). State tax returns After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). State tax returns Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. State tax returns You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. State tax returns This is discussed later under Deducting Business Expenses . State tax returns An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. State tax returns Reimbursements for nondeductible expenses. State tax returns   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. State tax returns You must include them in your income. State tax returns For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. State tax returns   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. State tax returns Deducting Business Expenses Self-employed persons and employees report their business expenses differently. State tax returns The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. State tax returns Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). State tax returns If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. State tax returns See the instructions for the form you file for information on how to complete it. State tax returns Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. State tax returns If either (1) or (2) applies, you can deduct the total qualifying cost. State tax returns If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. State tax returns In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. State tax returns (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. State tax returns ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. State tax returns Form 2106 or 2106-EZ. State tax returns   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. State tax returns Form not required. State tax returns   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. State tax returns   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. State tax returns (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. State tax returns ) Using Form 2106-EZ. State tax returns   This form is shorter and easier to use than Form 2106. State tax returns Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. State tax returns   If you do not meet both of these requirements, use Form 2106. State tax returns Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. State tax returns Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. State tax returns You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. State tax returns You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . State tax returns For more information on qualified performing artists, see chapter 6 of Publication 463. State tax returns Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. State tax returns They are not subject to the 2%-of-adjusted-gross-income limit. State tax returns To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . State tax returns For more information on impairment-related work expenses, see chapter 6 of Publication 463. State tax returns Recordkeeping You must keep records as proof of any deduction claimed on your tax return. State tax returns Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. State tax returns If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. State tax returns However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. State tax returns Examples of records to keep. State tax returns   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. State tax returns You should keep adequate records or have sufficient evidence that will support your expenses. State tax returns Estimates or approximations do not qualify as proof of an expense. State tax returns Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. State tax returns , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. State tax returns Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. State tax returns Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. State tax returns Complete information about any scholarship or fellowship grants, including amounts you received during the year. State tax returns Illustrated Example Victor Jones teaches math at a private high school in North Carolina. State tax returns He was selected to attend a 3-week math seminar at a university in California. State tax returns The seminar will improve his skills in his current job and is qualifying work-related education. State tax returns He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. State tax returns Victor will file Form 1040. State tax returns His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. State tax returns He shows his expenses for the seminar in Part I of the form. State tax returns He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. State tax returns He enters $400 on line 4 for his tuition and books. State tax returns On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. State tax returns He multiplies that amount by 50% and enters the result, $263, on line 5. State tax returns On line 6, Victor totals the amounts from lines 3 through 5. State tax returns He carries the total, $2,313, to Schedule A (Form 1040), line 21. State tax returns Since he does not claim any vehicle expenses, Victor leaves Part II blank. State tax returns His filled-in form is shown on the next page. State tax returns This image is too large to be displayed in the current screen. State tax returns Please click the link to view the image. State tax returns Form 2106-EZ for V. State tax returns Jones Prev  Up  Next   Home   More Online Publications
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State tax returns Publication 225 - Introductory Material Table of Contents IntroductionOrdering forms and publications. State tax returns Tax questions. State tax returns Future Developments What's New for 2013 What's New for 2014 Reminders Introduction You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as owner or tenant. State tax returns A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. State tax returns It also includes plantations, ranches, ranges, and orchards. State tax returns This publication explains how the federal tax laws apply to farming. State tax returns Use this publication as a guide to figure your taxes and complete your farm tax return. State tax returns If you need more information on a subject, get the specific IRS tax publication covering that subject. State tax returns We refer to many of these free publications throughout this publication. State tax returns See chapter 16 for information on ordering these publications. State tax returns The explanations and examples in this publication reflect the Internal Revenue Service's interpretation of tax laws enacted by Congress, Treasury regulations, and court decisions. State tax returns However, the information given does not cover every situation and is not intended to replace the law or change its meaning. State tax returns This publication covers subjects on which a court may have made a decision more favorable to taxpayers than the interpretation of the Service. State tax returns Until these differing interpretations are resolved by higher court decisions, or in some other way, this publication will continue to present the interpretation of the Service. State tax returns The IRS Mission. State tax returns   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. State tax returns Comments and suggestions. State tax returns   We welcome your comments about this publication and your suggestions for future editions. State tax returns   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. State tax returns NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. State tax returns Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. State tax returns   You can email us at taxforms@irs. State tax returns gov. State tax returns Please put “Publications Comment” on the subject line. State tax returns You can also send us comments from www. State tax returns irs. State tax returns gov/formspubs/, select “Comment on Tax Forms and Publications” under “More Information. State tax returns ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. State tax returns Ordering forms and publications. State tax returns   Visit www. State tax returns irs. State tax returns gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. State tax returns Internal Revenue Service 1201 N. State tax returns Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. State tax returns   If you have a tax question, check the information available on IRS. State tax returns gov or call 1-800-829-1040. State tax returns We cannot answer tax questions sent to either of the above addresses. State tax returns Comments on IRS enforcement actions. State tax returns   The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about federal agency enforcement actions. State tax returns The Ombudsman will annually evaluate the enforcement activities of each agency and rate its responsiveness to small business. State tax returns If you wish to comment on the enforcement actions of the IRS, you can: Call 1-888-734-3247, Fax your comments to 202-481-5719, Write to Office of the National Ombudsman U. State tax returns S. State tax returns Small Business Administration 409 3rd Street, S. State tax returns W. State tax returns  Washington, DC 20416 Send an email to ombudsman@sba. State tax returns gov, or Download the appraisal form at  www. State tax returns sba. State tax returns gov/ombudsman. State tax returns Treasury Inspector General for Tax Administration. State tax returns   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (1-800-877-8339 for TTY/TDD users). State tax returns You can remain anonymous. State tax returns Farm tax classes. State tax returns   Many state Cooperative Extension Services conduct farm tax workshops in conjunction with the IRS. State tax returns Contact your county extension office for more information. State tax returns Rural tax education website. State tax returns   The Rural Tax Education website is a source for information concerning agriculturally related income and deductions and self-employment tax. State tax returns The website is available for farmers and ranchers, other agricultural producers, Extension educators, and any one interested in learning about the tax side of the agricultural community. State tax returns Members of the National Farm Income Tax Extension Committee are contributors for the website and the website is hosted by Utah State University Cooperative Extension. State tax returns You can visit the website at www. State tax returns ruraltax. State tax returns org. State tax returns Future Developments The IRS has created a page on IRS. State tax returns gov for information about Publication 225, at  www. State tax returns irs. State tax returns gov/pub225. State tax returns Information about recent developments affecting Publication 225 will be posted on that page. State tax returns What's New for 2013 The following items highlight a number of administrative and tax law changes for 2013. State tax returns They are discussed in more detail throughout the publication. State tax returns Standard mileage rate. State tax returns  For 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56. State tax returns 5 cents. State tax returns See chapter 4. State tax returns Simplified method for business use of home deduction. State tax returns  The IRS now provides a simplified method to determine your expenses for business use of your home. State tax returns For more information, see Schedule C (Form 1040), Part II, and its instructions. State tax returns See chapter 4. State tax returns Increased section 179 expense deduction dollar limits. State tax returns  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. State tax returns This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. State tax returns See chapter 7. State tax returns Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. State tax returns  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. State tax returns See chapter 7. State tax returns Expiration of the 3-year recovery period for certain race horses. State tax returns . State tax returns  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. State tax returns See chapter 7. State tax returns Tax rates. State tax returns  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. State tax returns 4% to 12. State tax returns 4%. State tax returns As a result, the self-employment tax is increased from 13. State tax returns 3% to 15. State tax returns 3%. State tax returns See chapter 12. State tax returns Maximum net earnings. State tax returns  The maximum net self-employment earnings subject to the social security part (12. State tax returns 4%) of the self-employment tax increased to $113,700 for 2013. State tax returns There is no maximum limit on earnings subject to the Medicare part (2. State tax returns 9%). State tax returns See chapter 12. State tax returns Net investment income tax. State tax returns  For tax years beginning in 2013, individuals, estates, and trusts may be subject to the net investment income tax (NIIT). State tax returns If you are a trader in financial instruments and commodities and required to file Schedule C (Form 1040), your investment income (for purposes of the NIIT) may be reduced by your interest and other investment expenses to the extent those expenses are not used to reduce your self-employment income. State tax returns For information about NIIT and the special rule for traders in financial instruments and commodities, see the Instructions for Form 8960. State tax returns Social Security and Medicare Tax for 2013. State tax returns  The employee tax rate for social security is 6. State tax returns 2%. State tax returns The employer tax rate for social security remains unchanged at 6. State tax returns 2%. State tax returns The social security wage base limit is $113,700. State tax returns The Medicare tax rate is 1. State tax returns 45% each for the employee and employer, unchanged from 2012. State tax returns There is no wage base limit for Medicare tax. State tax returns See chapter 13. State tax returns Additional Medicare Tax. State tax returns  For tax years beginning in 2013, a 0. State tax returns 9% Additional Medicare Tax applies to your Medicare wages, Railroad Tax Act (RRTA) compensation, and self-employment income above a threshold amount. State tax returns Use Form 8959, Additional Medicare Tax, to figure this tax. State tax returns For more information, see the Instructions for Form 8959 and the Instructions for Schedule SE (Form 1040). State tax returns In addition to withholding Medicare tax at 1. State tax returns 45%, you must withhold a 0. State tax returns 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. State tax returns You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. State tax returns Additional Medicare Tax is only imposed on the employee. State tax returns There is no employer share of Additional Medicare Tax. State tax returns All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. State tax returns For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. State tax returns For more information on Additional Medicare Tax, visit IRS. State tax returns gov and enter “Additional Medicare Tax” in the search box. State tax returns See chapter 13. State tax returns Leave-Based donation programs to aid victims of Hurricane Sandy. State tax returns  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. State tax returns The donated leave will not be included in the income or wages of the employee. State tax returns The employer may deduct the cash payments as business expenses or charitable contributions. State tax returns See chapter 13. State tax returns Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. State tax returns  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. State tax returns Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. State tax returns For more information, visit IRS. State tax returns gov and enter “work opportunity credit” in the search box. State tax returns See chapter 13. State tax returns Estimated tax. State tax returns  For tax years beginning in 2013, the Net Investment Income Tax (NIIT) may need to be included when calculating your estimated tax. State tax returns Also, when figuring your estimated tax, you may need to include the 0. State tax returns 9% Additional Medicare Tax applicable to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above the threshold amount based on your filing status. State tax returns For more information, see Publication 505. State tax returns What's New for 2014 Maximum net earnings. State tax returns  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. State tax returns See chapter 12. State tax returns Social security and Medicare tax for 2014. State tax returns  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). State tax returns The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). State tax returns There is no limit on the amount of wages subject to Medicare tax. State tax returns See chapter 13. State tax returns Reminders The following reminders and other items may help you file your tax return. State tax returns   IRS e-file (Electronic Filing) You can file your tax returns electronically using an IRS e-file option. State tax returns The benefits of IRS e-file include faster refunds, increased accuracy, and acknowledgment of IRS receipt of your return. State tax returns You can use one of the following IRS e-file options. State tax returns Use an authorized IRS e-file provider. State tax returns Use a personal computer. State tax returns Visit a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site. State tax returns For details on these fast filing methods, see your income tax package. State tax returns Principal agricultural activity codes. State tax returns  You must enter on line B of Schedule F (Form 1040) a code that identifies your principal agricultural activity. State tax returns It is important to use the correct code because this information will identify market segments of the public for IRS Taxpayer Education programs. State tax returns The U. State tax returns S. State tax returns Census Bureau also uses this information for its economic census. State tax returns See the list of Principal Agricultural Activity Codes on page 2 of Schedule F (Form 1040). State tax returns Publication on employer identification numbers (EIN). State tax returns  Publication 1635, Understanding Your Employer Identification Number, provides general information on employer identification numbers. State tax returns Topics include how to apply for an EIN and how to complete Form SS-4. State tax returns Change of address. State tax returns  If you change your home address, you should use Form 8822, Change of Addres, to notify the IRS. State tax returns If you change your business address, you should use Form 8822-B, Change of Address or Responsible Party — Business, to notify the IRS. State tax returns Be sure to include your suite, room, or other unit number. State tax returns Reportable transactions. State tax returns  You must file Form 8886, Reportable Transaction Disclosure Statement, to report certain transactions. State tax returns You may have to pay a penalty if you are required to file Form 8886 but do not do so. State tax returns Reportable transactions include (1) transactions the same as or substantially similar to tax avoidance transactions identified by the IRS, (2) transactions offered to you under conditions of confidentiality and for which you paid an advisor a minimum fee, (3) transactions for which you have or a related party has a right to a full or partial refund of fees if all or part of the intended tax consequences from the transaction are not sustained, (4) transactions that result in losses of at least $2 million in any single year or $4 million in any combination of years, and (5) transactions with asset holding periods of 45 days or less and that result in a tax credit of more than $250,000. State tax returns For more information, see the Instructions for Form 8886. State tax returns Form W-4 for 2014. State tax returns  You should make new Forms W-4 available to your employees and encourage them to check their income tax withholding for 2014. State tax returns Those employees who owed a large amount of tax or received a large refund for 2013 may need to submit a new Form W-4. State tax returns See Publication 919, How Do I Adjust My Tax Withholding. State tax returns Form 1099-MISC. State tax returns  Generally, file Form 1099-MISC if you pay at least $600 in rents, services, and other miscellaneous payments in your farming business to an individual (for example, an accountant, an attorney, or a veterinarian) who is not your employee. State tax returns Limited Liability Company (LLC). State tax returns  For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. State tax returns Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. State tax returns An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. State tax returns 7701-3. State tax returns See Publication 3402 for more details. State tax returns Photographs of missing children. State tax returns  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. State tax returns Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. State tax returns You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. State tax returns Prev  Up  Next   Home   More Online Publications