Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Tax Software 2012

Tax Act 2012 Login Return UserAmending A Tax ReturnState Tax FormsNeed Help Filing A 1040xWww Irs Gov Form1040aHow To File Taxes From 2011Blank Printable 1040ez FormGov Forms 1040Free Turbo Tax Filing 2012H&r Block At Home Free2010 H R Taxes FreeHow To File Taxes From 2009E File 1040x FreeFiling State Taxes Free2012 Tax AmendmentFree Income Tax PreparationHow To File A 1040Tax Information For Students2012 1040 Income Tax FormSelf Employed TaxesWhere Can I Get 1040ez Tax Forms Free1040ez Forms And Instructions1040ez Tax Form And BookletFree Online Tax FilingNeed To File 2010 Tax ReturnHr BlockHow To File A 2011 Tax Return LateFile 2006 Taxes For Free1040nr 2012Ez Tax ReturnH And R Block Free Tax ReturnMilitary Tax Return CalculatorHow To File A Amended Tax Return For 2011Ma Taxes Ng Army MilH&r Block Free Tax ReturnsIrs Tax Return Forms 2012Download 1040xEfile Tax ExtensionFile Taxes Online For FreeFreestatetaxes

Tax Software 2012

Tax software 2012 5. Tax software 2012   Exemptions, Deductions, and Credits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Items Related to Excluded Income Exemptions Contributions to Foreign Charitable Organizations Moving ExpensesAllocation of Moving Expenses Forms To File Contributions to Individual Retirement Arrangements Taxes of Foreign Countries and U. Tax software 2012 S. Tax software 2012 PossessionsCredit for Foreign Income Taxes Deduction for Foreign Income Taxes Deduction for Other Foreign Taxes How To Report Deductions Topics - This chapter discusses: The rules concerning items related to excluded income, Exemptions, Contributions to foreign charitable organizations, Moving expenses, Contributions to individual retirement arrangements (IRAs), Taxes of foreign countries and U. Tax software 2012 S. Tax software 2012 possessions, and How to report deductions. Tax software 2012 Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States—Canada Income Tax Treaty Form (and Instructions) 1116 Foreign Tax Credit 2106 Employee Business Expenses 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 3903 Moving Expenses Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business SS-5 Application for a Social Security Card W-7 Application for IRS Individual Taxpayer Identification Number See chapter 7 for information about getting these publications and forms. Tax software 2012 Items Related to Excluded Income U. Tax software 2012 S. Tax software 2012 citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. Tax software 2012 If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Tax software 2012 This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. Tax software 2012 You can deduct only those expenses connected with earning includible income. Tax software 2012 These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. Tax software 2012 These rules do not apply to items such as: Personal exemptions, Qualified retirement contributions, Alimony payments, Charitable contributions, Medical expenses, Mortgage interest, or Real estate taxes on your personal residence. Tax software 2012 For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self- employment tax is. Tax software 2012 If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. Tax software 2012 Example. Tax software 2012 In 2012, you had $90,400 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. Tax software 2012 You did not have a housing exclusion. Tax software 2012 Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2012 return. Tax software 2012 In 2013, you received a $12,000 bonus for work you did abroad in 2012. Tax software 2012 You can exclude $4,700 of the bonus because the limit on the foreign earned income exclusion for 2012 was $95,100 and you have already excluded $90,400. Tax software 2012 Since you must include $7,300 of the bonus ($12,000 − $4,700) for work you did in 2012 in income, you can file an amended return for 2012 to claim $677 of the deductions. Tax software 2012 This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($7,300) and divided by the total foreign earned income for 2012 ($102,400). Tax software 2012 Exemptions You can claim an exemption for your nonresident alien spouse on your separate return, provided your spouse has no gross income for U. Tax software 2012 S. Tax software 2012 tax purposes and is not the dependent of another U. Tax software 2012 S. Tax software 2012 taxpayer. Tax software 2012 You also can claim exemptions for individuals who qualify as your dependents. Tax software 2012 To be your dependent, the individual must be a U. Tax software 2012 S. Tax software 2012 citizen, U. Tax software 2012 S. Tax software 2012 national, U. Tax software 2012 S. Tax software 2012 resident alien, or a resident of Canada or Mexico for some part of the calendar year in which your tax year begins. Tax software 2012 Children. Tax software 2012   Children usually are citizens or residents of the same country as their parents. Tax software 2012 If you were a U. Tax software 2012 S. Tax software 2012 citizen when your child was born, your child generally is a U. Tax software 2012 S. Tax software 2012 citizen. Tax software 2012 This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. Tax software 2012   If you have a legally adopted child who is not a U. Tax software 2012 S. Tax software 2012 citizen, U. Tax software 2012 S. Tax software 2012 resident, or U. Tax software 2012 S. Tax software 2012 national, the child meets the citizen requirement if you are a U. Tax software 2012 S. Tax software 2012 citizen or U. Tax software 2012 S. Tax software 2012 national and the child lived with you as a member of your household all year. Tax software 2012 Social security number. Tax software 2012   You must include on your return the social security number (SSN) of each dependent for whom you claim an exemption. Tax software 2012 To get a social security number for a dependent, apply at a Social Security office or U. Tax software 2012 S. Tax software 2012 consulate. Tax software 2012 You must provide original or certified copies of documents to verify the dependent's age, identity, and citizenship, and complete Form SS-5. Tax software 2012   If you do not have an SSN for a child who was born in 2013 and died in 2013, attach a copy of the child's birth certificate to your tax return. Tax software 2012 Print “Died” in column (2) of line 6c of your Form 1040 or Form 1040A. Tax software 2012   If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN. Tax software 2012 To apply for an ITIN, file Form W-7 with the IRS. Tax software 2012 It usually takes 6 to 10 weeks to get an ITIN. Tax software 2012 Enter your dependent's ITIN wherever an SSN is requested on your tax return. Tax software 2012 More information. Tax software 2012   For more information about exemptions, see Publication 501. Tax software 2012 Contributions to Foreign Charitable Organizations If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. Tax software 2012 Exceptions are explained under Canadian, Mexican, and Israeli charities, later. Tax software 2012 You can deduct contributions to a U. Tax software 2012 S. Tax software 2012 organization that transfers funds to a charitable foreign organization if the U. Tax software 2012 S. Tax software 2012 organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U. Tax software 2012 S. Tax software 2012 organization. Tax software 2012 Canadian, Mexican, and Israeli charities. Tax software 2012   Under the income tax treaties with Canada, Mexico and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. Tax software 2012 Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. Tax software 2012 See Publication 597, Information on the United States-Canada Income Tax Treaty, and Publication 526, Charitable Contributions, for more information. Tax software 2012 Moving Expenses If you moved to a new home in 2013 because of your job or business, you may be able to deduct the expenses of your move. Tax software 2012 Generally, to be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. Tax software 2012 See Publication 521 for a complete discussion of the deduction for moving expenses and information about moves within the United States. Tax software 2012 Foreign moves. Tax software 2012   A foreign move is a move in connection with the start of work at a new job location outside the United States and its possessions. Tax software 2012 A foreign move does not include a move back to the United States or its possessions. Tax software 2012 Allocation of Moving Expenses When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country. Tax software 2012 If you exclude all or part of the income that you earn at the new location under the foreign earned income exclusion or the foreign housing exclusion, you cannot deduct the part of your moving expense that is allocable to the excluded income. Tax software 2012 Also, you cannot deduct the part of the moving expense related to the excluded income for a move from a foreign country to the United States if you receive a reimbursement that you are able to treat as compensation for services performed in the foreign country. Tax software 2012 Year to which expense is connected. Tax software 2012   The moving expense is connected with earning the income (including reimbursements, as discussed in chapter 4 under Reimbursement of moving expenses ) either entirely in the year of the move or in 2 years. Tax software 2012 It is connected with earning the income entirely in the year of the move if you qualify for the foreign earned income exclusion under the bona fide residence test or physical presence test for at least 120 days during that tax year. Tax software 2012   If you do not qualify under either the bona fide residence test or the physical presence test for at least 120 days during the year of the move, the expense is connected with earning the income in 2 years. Tax software 2012 The moving expense is connected with the year of the move and the following year if the move is from the United States to a foreign country. Tax software 2012 The moving expense is connected with the year of the move and the preceding year if the move is from a foreign country to the United States. Tax software 2012 Amount allocable to excluded income. Tax software 2012   To figure the amount of your moving expense that is allocable to your excluded foreign earned income (and not deductible), you must multiply your total moving expense deduction by a fraction. Tax software 2012 The numerator (top number) of the fraction is the total of your excluded foreign earned income and housing amounts for both years and the denominator (bottom number) of the fraction is your total foreign earned income for both years. Tax software 2012 Example. Tax software 2012 On November 1, 2012, you transfer to Monaco. Tax software 2012 Your tax home is in Monaco, and you are a bona fide resident of Monaco for the entire tax year 2013. Tax software 2012 In 2012, you paid $6,000 for allowable moving expenses for your move from the United States to Monaco. Tax software 2012 You were fully reimbursed (under a nonaccountable plan) for these expenses in the same year. Tax software 2012 The reimbursement is included in your income. Tax software 2012 Your only other income consists of $16,000 wages earned in 2012 after the date of your move, and $100,100 wages earned in Monaco for 2013. Tax software 2012 Because you did not meet the bona fide residence test for at least 120 days during 2012, the year of the move, the moving expenses are for services you performed in both 2012 and the following year, 2013. Tax software 2012 Your total foreign earned income for both years is $122,100, consisting of $16,000 wages for 2012, $100,100 wages for 2013, and $6,000 moving expense reimbursement for both years. Tax software 2012 You have no housing exclusion. Tax software 2012 The total amount you can exclude is $113,190, consisting of the $97,600 full-year exclusion for 2013 and a $15,590 part-year exclusion for 2012 ($95,100 times the fraction of 60 qualifying bona fide residence days over 366 total days in the year). Tax software 2012 To find the part of your moving expenses that is not deductible, multiply your $6,000 total expenses by the fraction $113,190 over $122,100. Tax software 2012 The result, $5,562, is your nondeductible amount. Tax software 2012    You must report the full amount of the moving expense reimbursement in the year in which you received the reimbursement. Tax software 2012 In the preceding example, this year was 2012. Tax software 2012 You attribute the reimbursement to both 2012 and 2013 only to figure the amount of foreign earned income eligible for exclusion for each year. Tax software 2012 Move between foreign countries. Tax software 2012   If you move between foreign countries, your moving expense is allocable to income earned in the year of the move if you qualified under either the bona fide residence test or the physical presence test for a period that includes at least 120 days in the year of the move. Tax software 2012 New place of work in U. Tax software 2012 S. Tax software 2012   If your new place of work is in the United States, the deductible moving expenses are directly connected with the income earned in the United States. Tax software 2012 If you treat a reimbursement from your employer as foreign earned income (see the discussion in chapter 4), you must allocate deductible moving expenses to foreign earned income. Tax software 2012 Storage expenses. Tax software 2012   These expenses are attributable to work you do during the year in which you incur the storage expenses. Tax software 2012 You cannot deduct the amount allocable to excluded income. Tax software 2012 Moving Expense Attributable to Foreign Earnings in 2 Years If your moving expense deduction is attributable to your foreign earnings in 2 years (the year of the move and the following year), you should request an extension of time to file your return for the year of the move until after the end of the second year. Tax software 2012 By then, you should have all the information needed to properly figure the moving expense deduction. Tax software 2012 See Extensions under When To File and Pay in chapter 1. Tax software 2012 If you do not request an extension, you should figure the part of the moving expense that you cannot deduct because it is allocable to the foreign earned income you are excluding. Tax software 2012 You do this by multiplying the moving expense by a fraction, the numerator (top number) of which is your excluded foreign earned income for the year of the move, and the denominator (bottom number) of which is your total foreign earned income for the year of the move. Tax software 2012 Once you know your foreign earnings and exclusion for the following year, you must either: Adjust the moving expense deduction by filing an amended return for the year of the move, or Recapture any additional unallowable amount as income on your return for the following year. Tax software 2012 If, after you make the final computation, you have an additional amount of allowable moving expense deduction, you can claim this only on an amended return for the year of the move. Tax software 2012 You cannot claim it on the return for the second year. Tax software 2012 Forms To File Report your moving expenses on Form 3903. Tax software 2012 Report your moving expense deduction on line 26 of Form 1040. Tax software 2012 If you must reduce your moving expenses by the amount allocable to excluded income (as explained later under How To Report Deductions ), attach a statement to your return showing how you figured this amount. Tax software 2012 For more information about figuring moving expenses, see Publication 521. Tax software 2012 Contributions to Individual Retirement Arrangements Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $5,500 ($6,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. Tax software 2012 In determining compensation for this purpose, do not take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. Tax software 2012 Do not reduce your compensation by the foreign housing deduction. Tax software 2012 If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. Tax software 2012 This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Tax software 2012 Other modifications are also required. Tax software 2012 For more information on IRAs, see Publication 590. Tax software 2012 Taxes of Foreign Countries and U. Tax software 2012 S. Tax software 2012 Possessions You can take either a credit or a deduction for income taxes paid to a foreign country or a U. Tax software 2012 S. Tax software 2012 possession. Tax software 2012 Taken as a deduction, foreign income taxes reduce your taxable income. Tax software 2012 Taken as a credit, foreign income taxes reduce your tax liability. Tax software 2012 You must treat all foreign income taxes the same way. Tax software 2012 If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. Tax software 2012 However, you may be able to deduct other foreign taxes. Tax software 2012 See Deduction for Other Foreign Taxes, later. Tax software 2012 There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. Tax software 2012 In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U. Tax software 2012 S. Tax software 2012 tax liability, rather than as a deduction in figuring taxable income. Tax software 2012 However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U. Tax software 2012 S. Tax software 2012 income is small, a lower final tax may result from deducting the foreign income taxes. Tax software 2012 In any event, you should figure your tax liability both ways and then use the one that is better for you. Tax software 2012 You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit. Tax software 2012 Foreign income taxes. Tax software 2012   These are generally income taxes you pay to any foreign country or possession of the United States. Tax software 2012 Foreign income taxes on U. Tax software 2012 S. Tax software 2012 return. Tax software 2012   Foreign income taxes can only be taken as a credit on Form 1040, line 47, or as an itemized deduction on Schedule A. Tax software 2012 These amounts cannot be included as withheld income taxes on Form 1040, line 62. Tax software 2012 Foreign taxes paid on excluded income. Tax software 2012   You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following. Tax software 2012 Foreign earned income exclusion. Tax software 2012 Foreign housing exclusion. Tax software 2012 Possession exclusion. Tax software 2012 If your wages are completely excluded, you cannot deduct or take a credit for any of the foreign taxes paid on your wages. Tax software 2012   If only part of your wages is excluded, you cannot deduct or take a credit for the foreign income taxes allocable to the excluded part. Tax software 2012 You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. Tax software 2012 The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). Tax software 2012 The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). Tax software 2012   If foreign law taxes both earned income and some other type of income and the taxes on the other type cannot be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income. Tax software 2012    If you take a foreign tax credit for tax on income you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices may be considered revoked. Tax software 2012 Credit for Foreign Income Taxes If you take the foreign tax credit, you may have to file Form 1116 with Form 1040. Tax software 2012 Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. Tax software 2012 Do not include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040, line 62. Tax software 2012 The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. Tax software 2012 The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. Tax software 2012 You cannot take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund. Tax software 2012 Subsidies. Tax software 2012   If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. Tax software 2012 This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax. Tax software 2012   Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. Tax software 2012 A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you. Tax software 2012 Limit The foreign tax credit is limited to the part of your total U. Tax software 2012 S. Tax software 2012 tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. Tax software 2012 The allowable foreign tax credit cannot be more than your actual foreign tax liability. Tax software 2012 Exemption from limit. Tax software 2012   You will not be subject to this limit and will not have to file Form 1116 if you meet all three of the following requirements. Tax software 2012 Your only foreign source income for the year is passive income (dividends, interest, royalties, etc. Tax software 2012 ) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT). Tax software 2012 Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement. Tax software 2012 You elect this procedure. Tax software 2012 If you make this election, you cannot carry back or carry over any unused foreign tax to or from this year. Tax software 2012 Separate limit. Tax software 2012   You must figure the limit on a separate basis with regard to “passive category income” and “general category income” (see the instructions for Form 1116). Tax software 2012 Figuring the limit. Tax software 2012   In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. Tax software 2012 Do not take any excluded amount into account. Tax software 2012   To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income. Tax software 2012   Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. Tax software 2012 The numerator (top number) of the fraction is your gross foreign income in the separate limit category. Tax software 2012 The denominator (bottom number) of the fraction is your gross income from all sources. Tax software 2012 For this purpose, gross income includes income that is excluded under the foreign earned income provisions but does not include any other exempt income. Tax software 2012 You must use special rules for deducting interest expenses. Tax software 2012 For more information on allocating and apportioning your deductions, see Publication 514. Tax software 2012 Exemptions. Tax software 2012   Do not take the deduction for exemptions for yourself, your spouse, or your dependents in figuring taxable income for purposes of the limit. Tax software 2012 Recapture of foreign losses. Tax software 2012   If you have an overall foreign loss and the loss reduces your U. Tax software 2012 S. Tax software 2012 source income (resulting in a reduction of your U. Tax software 2012 S. Tax software 2012 tax liability), you must recapture the loss in later years when you have taxable income from foreign sources. Tax software 2012 This is done by treating a part of your taxable income from foreign sources in later years as U. Tax software 2012 S. Tax software 2012 source income. Tax software 2012 This reduces the numerator of the limiting fraction and the resulting foreign tax credit limit. Tax software 2012 Recapture of domestic losses. Tax software 2012   If you have an overall domestic loss (resulting in no U. Tax software 2012 S. Tax software 2012 tax liability), you cannot claim a foreign tax credit for taxes paid during that year. Tax software 2012 You must recapture the loss in later years when you have U. Tax software 2012 S. Tax software 2012 source taxable income. Tax software 2012 This is done by treating a part of your taxable income from U. Tax software 2012 S. Tax software 2012 sources in later years as foreign source income. Tax software 2012 This increases the numerator of the limiting fraction and the resulting foreign tax credit limit. Tax software 2012 Foreign tax credit carryback and carryover. Tax software 2012   The amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried forward 10 years. Tax software 2012   More information on figuring the foreign tax credit can be found in Publication 514. Tax software 2012 Deduction for Foreign Income Taxes Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule A (Form 1040). Tax software 2012 You can deduct only foreign income taxes paid on income that is subject to U. Tax software 2012 S. Tax software 2012 tax. Tax software 2012 You cannot deduct foreign taxes paid on earnings you exclude from tax under any of the following. Tax software 2012 Foreign earned income exclusion. Tax software 2012 Foreign housing exclusion. Tax software 2012 Possession exclusion. Tax software 2012 Example. Tax software 2012 You are a U. Tax software 2012 S. Tax software 2012 citizen and qualify to exclude your foreign earned income. Tax software 2012 Your excluded wages in Country X are $70,000 on which you paid income tax of $10,000. Tax software 2012 You received dividends from Country X of $2,000 on which you paid income tax of $600. Tax software 2012 You can deduct the $600 tax payment because the dividends relating to it are subject to U. Tax software 2012 S. Tax software 2012 tax. Tax software 2012 Because you exclude your wages, you cannot deduct the income tax of $10,000. Tax software 2012 If you exclude only a part of your wages, see the earlier discussion under Foreign taxes paid on excluded income. Tax software 2012 Deduction for Other Foreign Taxes You can deduct real property taxes you pay that are imposed on you by a foreign country. Tax software 2012 You take this deduction on Schedule A (Form 1040). Tax software 2012 You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. Tax software 2012 On the other hand, you generally can deduct personal property taxes when you pay them to U. Tax software 2012 S. Tax software 2012 possessions. Tax software 2012 But if you claim the possession exclusion, see Publication 570. Tax software 2012 The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. Tax software 2012 You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes imposed by a foreign country. Tax software 2012 How To Report Deductions If you exclude foreign earned income or housing amounts, how you show your deductions on your tax return and how you figure the amount allocable to your excluded income depends on whether the expenses are used in figuring adjusted gross income (Form 1040, line 38) or are itemized deductions. Tax software 2012 If you have deductions used in figuring adjusted gross income, enter the total amount for each of these items on the appropriate lines and schedules of Form 1040. Tax software 2012 Generally, you figure the amount of a deduction related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Tax software 2012 Enter the amount of the deduction(s) related to excluded income on line 44 of Form 2555. Tax software 2012 If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not related to excluded income. Tax software 2012 You figure that amount by subtracting from the total deduction the amount related to excluded income. Tax software 2012 Generally, you figure the amount that is related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Tax software 2012 Attach a statement to your return showing how you figured the deductible amount. Tax software 2012 Example 1. Tax software 2012 You are a U. Tax software 2012 S. Tax software 2012 citizen employed as an accountant. Tax software 2012 Your tax home is in Germany for the entire tax year. Tax software 2012 You meet the physical presence test. Tax software 2012 Your foreign earned income for the year was $122,000 and your investment income was $10,380. Tax software 2012 After excluding $97,600, your AGI is $34,780. Tax software 2012 You had unreimbursed business expenses of $2,500 for travel and entertainment in earning your foreign income, of which $500 was for meals and entertainment. Tax software 2012 These expenses are deductible only as miscellaneous deductions on Schedule A (Form 1040). Tax software 2012 You also have $500 of miscellaneous expenses that are not related to your foreign income that you enter on line 23 of Schedule A. Tax software 2012 You must fill out Form 2106. Tax software 2012 On that form, reduce your deductible meal and entertainment expenses by 50% ($250). Tax software 2012 You must reduce the remaining $2,250 of travel and entertainment expenses by 80% ($1,800) because you excluded 80% ($97,600/$122,000) of your foreign earned income. Tax software 2012 You carry the remaining total of $450 to line 21 of Schedule A. Tax software 2012 Add the $450 to the $500 that you have on line 23 and enter the total ($950) on line 24. Tax software 2012 On line 26 of Schedule A, enter $696, which is 2% of your adjusted gross income of $34,780 (line 38, Form 1040) and subtract it from the amount on line 24. Tax software 2012 Enter $254 on line 27 of Schedule A. Tax software 2012 Example 2. Tax software 2012 You are a U. Tax software 2012 S. Tax software 2012 citizen, have a tax home in Spain, and meet the physical presence test. Tax software 2012 You are self-employed and personal services produce the business income. Tax software 2012 Your gross income was $116,931, business expenses $66,895, and net income (profit) $50,036. Tax software 2012 You choose the foreign earned income exclusion and exclude $97,600 of your gross income. Tax software 2012 Since your excluded income is 83. Tax software 2012 47% of your total income, 83. Tax software 2012 47% of your business expenses are not deductible. Tax software 2012 Report your total income and expenses on Schedule C (Form 1040). Tax software 2012 On Form 2555 you will show the following: Line 20a, $116,931, gross income, Lines 42 and 43, $97,600, foreign earned income exclusion, and Line 44, $55,837 (83. Tax software 2012 47% × $66,895) business expenses attributable to the exclusion. Tax software 2012 In this situation (Example 2), you cannot use Form 2555-EZ since you had self-employment income and business expenses. Tax software 2012 Example 3. Tax software 2012 Assume in Example 2 that both capital and personal services combine to produce the business income. Tax software 2012 No more than 30% of your net income, or $15,011, assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. Tax software 2012 Your exclusion of $15,011 is 12. Tax software 2012 84% of your gross income ($15,011 ÷ $116,931). Tax software 2012 Because you excluded 12. Tax software 2012 84% of your total income, $8,589 (. Tax software 2012 1284 x $66,895) of your business expenses is attributable to the excluded income and is not deductible. Tax software 2012 Example 4. Tax software 2012 You are a U. Tax software 2012 S. Tax software 2012 citizen, have a tax home in Brazil, and meet the physical presence test. Tax software 2012 You are self-employed and both capital and personal services combine to produce business income. Tax software 2012 Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. Tax software 2012 A reasonable allowance for the services you performed for the business is $77,000. Tax software 2012 Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. Tax software 2012 The $77,000 is foreign earned income. Tax software 2012 If you choose to exclude the $77,000, you exclude 52. Tax software 2012 74% of your gross income ($77,000 ÷ $146,000), and 52. Tax software 2012 74% of your business expenses ($90,713) is attributable to that income and is not deductible. Tax software 2012 Show your total income and expenses on Schedule C (Form 1040). Tax software 2012 On Form 2555, exclude $77,000 and show $90,713 on line 44. Tax software 2012 Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. Tax software 2012 Because this amount is negative, enter it as a positive (no parentheses) on line 21, Form 1040, and combine it with your other income to arrive at total income on line 22 of Form 1040. Tax software 2012 In this situation (Example 4), you would probably not want to choose the foreign earned income exclusion if this was the first year you were eligible. Tax software 2012 If you had chosen the exclusion in an earlier year, you might want to revoke the choice for this year. Tax software 2012 To do so would mean that you could not claim the exclusion again for the next 5 tax years without IRS approval. Tax software 2012 See Choosing the Exclusion in chapter 4. Tax software 2012 Example 5. Tax software 2012 You are a U. Tax software 2012 S. Tax software 2012 citizen, have a tax home in Panama, and meet the bona fide residence test. Tax software 2012 You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. Tax software 2012 Capital investment is not material in producing the partnership's income. Tax software 2012 Under the terms of the partnership agreement, you are to receive 50% of the net profits. Tax software 2012 The partnership received gross income of $244,000 and incurred operating expenses of $98,250. Tax software 2012 Of the net profits of $145,750, you received $72,875 as your distributive share. Tax software 2012 You choose to exclude $97,600 of your share of the gross income. Tax software 2012 Because you exclude 80% ($97,600 ÷ $122,000) of your share of the gross income, you cannot deduct $39,300, 80% of your share of the operating expenses (. Tax software 2012 80 × $49,125). Tax software 2012 Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040), Supplemental Income and Loss. Tax software 2012 On Form 2555, show $97,600 on line 42 and show $39,300 on line 44. Tax software 2012 Your exclusion on Form 2555 is $58,300. Tax software 2012 In this situation (Example 5), you cannot use Form 2555-EZ since you had earned income other than salaries and wages and you had business expenses. Tax software 2012 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Contact My Local Office in Kentucky

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Bowling Green 200 West Professional
Park Court
Bowling Green, KY 42104

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(270) 782-7667
Hopkinsville 121 W. Tenth St.
Hopkinsville, KY 42240

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(270) 886-6625 
Lexington  1500 Leestown Rd.
Lexington, KY 40511 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(859) 244-2400 
Louisville  600 Dr. Martin Luther
King Jr. Place
Louisville, KY 40202 

Monday-Friday - 8:30 a.m.-4:30 p.m. 

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(502) 582-6700 
Owensboro  401 Frederica St.
Owensboro, KY 42301 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

   Services Provided

(270) 852-8490 
Paducah  2765 Wayne Sullivan Dr.
Paducah, KY 42003 

Monday - Friday  8:30 a.m. - 4:30 p.m.
(Closed for lunch 11:30 a.m.-12:30 p.m.) 

 

Services Provided

(270) 443-1977 
Prestonsburg  311 N. Arnold Ave.
Prestonsburg, KY 41653 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.) 

 

Services Provided

(606) 889-1590 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (502) 582-6030 in Louisville or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
600 Dr. Martin Luther King, Jr. Place
Room 321
Louisville, KY 40202

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Tax Software 2012

Tax software 2012 27. Tax software 2012   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: 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. Tax software 2012 Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Tax software 2012  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Tax software 2012 For more information, see Transportation Expenses under What Expenses Can Be Deducted. Tax software 2012 Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Tax software 2012 To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Tax software 2012 If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Tax software 2012 Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Tax software 2012 See chapter 28. Tax software 2012 If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Tax software 2012 Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Tax software 2012 You may qualify for these other benefits even if you do not meet the requirements listed earlier. Tax software 2012 Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Tax software 2012 Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Tax software 2012 When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Tax software 2012 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Tax software 2012 This is education that meets at least one of the following two tests. Tax software 2012 The education is required by your employer or the law to keep your present salary, status, or job. Tax software 2012 The required education must serve a bona fide business purpose of your employer. Tax software 2012 The education maintains or improves skills needed in your present work. Tax software 2012 However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Tax software 2012 You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Tax software 2012 Use Figure 27-A, later, as a quick check to see if your education qualifies. Tax software 2012 Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Tax software 2012 This additional education is qualifying work-related education if all three of the following requirements are met. Tax software 2012 It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Tax software 2012 When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Tax software 2012 See Education To Maintain or Improve Skills , later. Tax software 2012 Example. Tax software 2012 You are a teacher who has satisfied the minimum requirements for teaching. Tax software 2012 Your employer requires you to take an additional college course each year to keep your teaching job. Tax software 2012 If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Tax software 2012 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. Tax software 2012 This could include refresher courses, courses on current developments, and academic or vocational courses. Tax software 2012 Example. Tax software 2012 You repair televisions, radios, and stereo systems for XYZ Store. Tax software 2012 To keep up with the latest changes, you take special courses in radio and stereo service. Tax software 2012 These courses maintain and improve skills required in your work. Tax software 2012 Maintaining skills vs. Tax software 2012 qualifying for new job. Tax software 2012   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Tax software 2012 Education during temporary absence. Tax software 2012   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Tax software 2012 Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Tax software 2012 Example. Tax software 2012 You quit your biology research job to become a full-time biology graduate student for one year. Tax software 2012 If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Tax software 2012 Education during indefinite absence. Tax software 2012   If you stop work for more than a year, your absence from your job is considered indefinite. Tax software 2012 Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Tax software 2012 Therefore, it is not qualifying work-related education. Tax software 2012 Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Tax software 2012 The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Tax software 2012 Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Tax software 2012 This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Tax software 2012 You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Tax software 2012 Example 1. Tax software 2012 You are a full-time engineering student. Tax software 2012 Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Tax software 2012 Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Tax software 2012 The education is not qualifying work-related education. Tax software 2012 Example 2. Tax software 2012 You are an accountant and you have met the minimum educational requirements of your employer. Tax software 2012 Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Tax software 2012 These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Tax software 2012 Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Tax software 2012 The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Tax software 2012 If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Tax software 2012 The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Tax software 2012 You generally will be considered a faculty member when one or more of the following occurs. Tax software 2012 You have tenure. Tax software 2012 Your years of service count toward obtaining tenure. Tax software 2012 You have a vote in faculty decisions. Tax software 2012 Your school makes contributions for you to a retirement plan other than social security or a similar program. Tax software 2012 Example 1. Tax software 2012 The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Tax software 2012 In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Tax software 2012 If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Tax software 2012 However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Tax software 2012 Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Tax software 2012 If you have all the required education except the fifth year, you have met the minimum educational requirements. Tax software 2012 The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Tax software 2012 Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Tax software 2012 Figure 27-A. Tax software 2012 Does Your Work-Related Education Qualify?" Example 2. Tax software 2012 Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Tax software 2012 The additional four education courses can be qualifying work-related education. Tax software 2012 Although you do not have all the required courses, you have already met the minimum educational requirements. Tax software 2012 Example 3. Tax software 2012 Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Tax software 2012 The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Tax software 2012 They are needed to meet the minimum educational requirements for employment as a teacher. Tax software 2012 Example 4. Tax software 2012 You have a bachelor's degree and you work as a temporary instructor at a university. Tax software 2012 At the same time, you take graduate courses toward an advanced degree. Tax software 2012 The rules of the university state that you can become a faculty member only if you get a graduate degree. Tax software 2012 Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Tax software 2012 You have not met the minimum educational requirements to qualify you as a faculty member. Tax software 2012 The graduate courses are not qualifying work-related education. Tax software 2012 Certification in a new state. Tax software 2012   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Tax software 2012 This is true even if you must get additional education to be certified in another state. Tax software 2012 Any additional education you need is qualifying work-related education. Tax software 2012 You have already met the minimum requirements for teaching. Tax software 2012 Teaching in another state is not a new trade or business. Tax software 2012 Example. Tax software 2012 You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Tax software 2012 You move to State B and are promptly hired as a teacher. Tax software 2012 You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Tax software 2012 These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Tax software 2012 Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Tax software 2012 This is true even if you do not plan to enter that trade or business. Tax software 2012 If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Tax software 2012 Example 1. Tax software 2012 You are an accountant. Tax software 2012 Your employer requires you to get a law degree at your own expense. Tax software 2012 You register at a law school for the regular curriculum that leads to a law degree. Tax software 2012 Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Tax software 2012 Example 2. Tax software 2012 You are a general practitioner of medicine. Tax software 2012 You take a 2-week course to review developments in several specialized fields of medicine. Tax software 2012 The course does not qualify you for a new profession. Tax software 2012 It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax software 2012 Example 3. Tax software 2012 While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Tax software 2012 The program will lead to qualifying you to practice psychoanalysis. Tax software 2012 The psychoanalytic training does not qualify you for a new profession. Tax software 2012 It is qualifying work-related education because it maintains or improves skills required in your present profession. Tax software 2012 Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Tax software 2012 They are part of a program of study that can qualify you for a new profession. Tax software 2012 Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Tax software 2012 A change in duties in any of the following ways is not considered a change to a new business. Tax software 2012 Elementary school teacher to secondary school teacher. Tax software 2012 Teacher of one subject, such as biology, to teacher of another subject, such as art. Tax software 2012 Classroom teacher to guidance counselor. Tax software 2012 Classroom teacher to school administrator. Tax software 2012 What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Tax software 2012 If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Tax software 2012 You cannot deduct expenses related to tax-exempt and excluded income. Tax software 2012 Deductible expenses. Tax software 2012   The following education expenses can be deducted. Tax software 2012 Tuition, books, supplies, lab fees, and similar items. Tax software 2012 Certain transportation and travel costs. Tax software 2012 Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Tax software 2012 Nondeductible expenses. Tax software 2012   You cannot deduct personal or capital expenses. Tax software 2012 For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Tax software 2012 This amount is a personal expense. Tax software 2012 Unclaimed reimbursement. Tax software 2012   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Tax software 2012 Example. Tax software 2012 Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Tax software 2012 You do not file a voucher, and you do not get reimbursed. Tax software 2012 Because you did not file a voucher, you cannot deduct the expenses on your tax return. Tax software 2012 Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Tax software 2012 If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Tax software 2012 Temporary basis. Tax software 2012   You go to school on a temporary basis if either of the following situations applies to you. Tax software 2012 Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Tax software 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax software 2012 Your attendance is temporary up to the date you determine it will last more than 1 year. Tax software 2012 Note. Tax software 2012 If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Tax software 2012 Attendance not on a temporary basis. Tax software 2012   You do not go to school on a temporary basis if either of the following situations apply to you. Tax software 2012 Your attendance at school is realistically expected to last more than 1 year. Tax software 2012 It does not matter how long you actually attend. Tax software 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Tax software 2012 Your attendance is not temporary after the date you determine it will last more than 1 year. Tax software 2012 Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Tax software 2012 This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Tax software 2012 Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Tax software 2012 Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Tax software 2012 Example 1. Tax software 2012 You regularly work in a nearby town, and go directly from work to home. Tax software 2012 You also attend school every work night for 3 months to take a course that improves your job skills. Tax software 2012 Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Tax software 2012 This is true regardless of the distance traveled. Tax software 2012 Example 2. Tax software 2012 Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Tax software 2012 You can deduct your transportation expenses from your regular work site to school and then home. Tax software 2012 Example 3. Tax software 2012 Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Tax software 2012 Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Tax software 2012 Example 4. Tax software 2012 Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Tax software 2012 Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Tax software 2012 If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Tax software 2012 If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Tax software 2012 Using your car. Tax software 2012   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Tax software 2012 The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Tax software 2012 Whichever method you use, you can also deduct parking fees and tolls. Tax software 2012 See chapter 26 for information on deducting your actual expenses of using a car. Tax software 2012 Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Tax software 2012 Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Tax software 2012 For more information, see chapter 26. Tax software 2012 You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Tax software 2012 Mainly personal travel. Tax software 2012   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Tax software 2012 You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Tax software 2012   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Tax software 2012 An important factor is the comparison of time spent on personal activities with time spent on educational activities. Tax software 2012 If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Tax software 2012 Example 1. Tax software 2012 John works in Newark, New Jersey. Tax software 2012 He traveled to Chicago to take a deductible 1-week course at the request of his employer. Tax software 2012 His main reason for going to Chicago was to take the course. Tax software 2012 While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Tax software 2012 Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Tax software 2012 He cannot deduct his transportation expenses of going to Pleasantville. Tax software 2012 He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Tax software 2012 Example 2. Tax software 2012 Sue works in Boston. Tax software 2012 She went to a university in Michigan to take a course for work. Tax software 2012 The course is qualifying work-related education. Tax software 2012 She took one course, which is one-fourth of a full course load of study. Tax software 2012 She spent the rest of the time on personal activities. Tax software 2012 Her reasons for taking the course in Michigan were all personal. Tax software 2012 Sue's trip is mainly personal because three-fourths of her time is considered personal time. Tax software 2012 She cannot deduct the cost of her round-trip train ticket to Michigan. Tax software 2012 She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Tax software 2012 Example 3. Tax software 2012 Dave works in Nashville and recently traveled to California to take a 2-week seminar. Tax software 2012 The seminar is qualifying work-related education. Tax software 2012 While there, he spent an extra 8 weeks on personal activities. Tax software 2012 The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Tax software 2012 Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Tax software 2012 He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Tax software 2012 Cruises and conventions. Tax software 2012   Certain cruises and conventions offer seminars or courses as part of their itinerary. Tax software 2012 Even if the seminars or courses are work-related, your deduction for travel may be limited. Tax software 2012 This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Tax software 2012   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Tax software 2012 50% limit on meals. Tax software 2012   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Tax software 2012 You cannot have been reimbursed for the meals. Tax software 2012   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Tax software 2012 Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Tax software 2012 Example. Tax software 2012 You are a French language teacher. Tax software 2012 While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Tax software 2012 You chose your itinerary and most of your activities to improve your French language skills. Tax software 2012 You cannot deduct your travel expenses as education expenses. Tax software 2012 This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Tax software 2012 No Double Benefit Allowed You cannot do either of the following. Tax software 2012 Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Tax software 2012 Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Tax software 2012 See Adjustments to Qualifying Work-Related Education Expenses , next. Tax software 2012 Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Tax software 2012 You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Tax software 2012 For more information, see chapter 12 of Publication 970. Tax software 2012 Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Tax software 2012 Amounts that do not reduce qualifying work-related education expenses. Tax software 2012   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Tax software 2012   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Tax software 2012 Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Tax software 2012 There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Tax software 2012 You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Tax software 2012 For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Tax software 2012 Deducting Business Expenses Self-employed persons and employees report business expenses differently. Tax software 2012 The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Tax software 2012 Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Tax software 2012 If your educational 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. Tax software 2012 See the instructions for the form you file for information on how to complete it. Tax software 2012 Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Tax software 2012 If either (1) or (2) applies, you can deduct the total qualifying cost. Tax software 2012 If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Tax software 2012 In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Tax software 2012 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax software 2012 ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Tax software 2012 See chapter 28. Tax software 2012 Form 2106 or 2106-EZ. Tax software 2012   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Tax software 2012 Form not required. Tax software 2012   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Tax software 2012   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Tax software 2012 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Tax software 2012 ) Using Form 2106-EZ. Tax software 2012   This form is shorter and easier to use than Form 2106. Tax software 2012 Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Tax software 2012   If you do not meet both of these requirements, use Form 2106. Tax software 2012 Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Tax software 2012 Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Tax software 2012 You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Tax software 2012 You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Tax software 2012 For more information on qualified performing artists, see chapter 6 of Publication 463. Tax software 2012 Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Tax software 2012 They are not subject to the 2%-of-adjusted-gross-income limit. Tax software 2012 To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Tax software 2012 For more information on impairment-related work expenses, see chapter 6 of Publication 463. Tax software 2012 Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Tax software 2012 Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Tax software 2012 For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Tax software 2012 Prev  Up  Next   Home   More Online Publications