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Taxact 2012 Login

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Taxact 2012 Login

Taxact 2012 login 6. Taxact 2012 login   How To Report Table of Contents Where To ReportGifts. Taxact 2012 login Statutory employees. Taxact 2012 login Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Taxact 2012 login Standard mileage rate. Taxact 2012 login Actual expenses. Taxact 2012 login Car rentals. Taxact 2012 login Hours of service limits. Taxact 2012 login Allocating your reimbursement. Taxact 2012 login 1. Taxact 2012 login Limit on meals and entertainment. Taxact 2012 login 2. Taxact 2012 login Limit on miscellaneous itemized deductions. Taxact 2012 login 3. Taxact 2012 login Limit on total itemized deductions. Taxact 2012 login Special Rules This chapter explains where and how to report the expenses discussed in this publication. Taxact 2012 login It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Taxact 2012 login It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Taxact 2012 login The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Taxact 2012 login Where To Report This section provides general information on where to report the expenses discussed in this publication. Taxact 2012 login Self-employed. Taxact 2012 login   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Taxact 2012 login You do not use Form 2106 or 2106-EZ. Taxact 2012 login    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Taxact 2012 login You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Taxact 2012 login   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Taxact 2012 login Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Taxact 2012 login   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Taxact 2012 login You can only include 50% of your meals and entertainment in that total. Taxact 2012 login If you include car expenses, you must also complete Part III of the form. Taxact 2012 login    If you file Schedule F (Form 1040): Report your car expenses on line 10. Taxact 2012 login Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Taxact 2012 login Report all other business expenses discussed in this publication on line 32. Taxact 2012 login You can only include 50% of your meals and entertainment on that line. Taxact 2012 login See your form instructions for more information on how to complete your tax return. Taxact 2012 login Both self-employed and an employee. Taxact 2012 login   If you are both self-employed and an employee, you must keep separate records for each business activity. Taxact 2012 login Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Taxact 2012 login Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Taxact 2012 login Employees. Taxact 2012 login    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Taxact 2012 login However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Taxact 2012 login You are an employee deducting expenses attributable to your job. Taxact 2012 login You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Taxact 2012 login If you claim car expenses, you use the standard mileage rate. Taxact 2012 login   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Taxact 2012 login Gifts. Taxact 2012 login   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Taxact 2012 login Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Taxact 2012 login Statutory employees. Taxact 2012 login    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Taxact 2012 login Do not complete Form 2106 or 2106-EZ. Taxact 2012 login   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Taxact 2012 login If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Taxact 2012 login Reimbursement for personal expenses. Taxact 2012 login    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Taxact 2012 login You cannot deduct personal expenses. Taxact 2012 login Income-producing property. Taxact 2012 login   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Taxact 2012 login   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Taxact 2012 login See Publication 527, Residential Rental Property, for more information on the rental of real estate. Taxact 2012 login If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Taxact 2012 login Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Taxact 2012 login The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Taxact 2012 login You cannot use the standard mileage rate. Taxact 2012 login Value reported on Form W-2. Taxact 2012 login   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Taxact 2012 login Your employer must separately state the amount if 100% of the annual lease value was included in your income. Taxact 2012 login If you are unsure of the amount included on your Form W-2, ask your employer. Taxact 2012 login Full value included in your income. Taxact 2012 login   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Taxact 2012 login On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Taxact 2012 login    To claim your expenses, complete Form 2106, Part II, Sections A and C. Taxact 2012 login Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Taxact 2012 login Complete the rest of the form. Taxact 2012 login Less than full value included in your income. Taxact 2012 login   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Taxact 2012 login Do not enter this value on your Form 2106 because it is not deductible. Taxact 2012 login   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Taxact 2012 login Examples of costs that you may have are gas, oil, and repairs. Taxact 2012 login Complete Form 2106, Part II, Sections A and C. Taxact 2012 login Enter your actual costs on line 23 of Section C and leave line 25 blank. Taxact 2012 login Complete the rest of the form. Taxact 2012 login Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Taxact 2012 login If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Taxact 2012 login This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Taxact 2012 login It also covers rules for independent contractors. Taxact 2012 login No reimbursement. Taxact 2012 login   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Taxact 2012 login In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Taxact 2012 login Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Taxact 2012 login Reimbursement, allowance, or advance. Taxact 2012 login   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Taxact 2012 login Arrangements include per diem and car allowances. Taxact 2012 login    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Taxact 2012 login (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Taxact 2012 login ) A car allowance is an amount your employer gives you for the business use of your car. Taxact 2012 login   Your employer should tell you what method of reimbursement is used and what records you must provide. Taxact 2012 login Employers. Taxact 2012 login   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Taxact 2012 login Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Taxact 2012 login Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Taxact 2012 login See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Taxact 2012 login Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Taxact 2012 login You must adequately account to your employer for these expenses within a reasonable period of time. Taxact 2012 login You must return any excess reimbursement or allowance within a reasonable period of time. Taxact 2012 login “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Taxact 2012 login An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Taxact 2012 login Reasonable period of time. Taxact 2012 login   The definition of reasonable period of time depends on the facts and circumstances of your situation. Taxact 2012 login However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Taxact 2012 login You receive an advance within 30 days of the time you have an expense. Taxact 2012 login You adequately account for your expenses within 60 days after they were paid or incurred. Taxact 2012 login You return any excess reimbursement within 120 days after the expense was paid or incurred. Taxact 2012 login You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Taxact 2012 login Employee meets accountable plan rules. Taxact 2012 login   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Taxact 2012 login If your expenses equal your reimbursements, you do not complete Form 2106. Taxact 2012 login You have no deduction since your expenses and reimbursement are equal. Taxact 2012 login    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Taxact 2012 login Accountable plan rules not met. Taxact 2012 login   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Taxact 2012 login All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Taxact 2012 login Failure to return excess reimbursements. Taxact 2012 login   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Taxact 2012 login See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Taxact 2012 login Reimbursement of nondeductible expenses. Taxact 2012 login   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Taxact 2012 login The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Taxact 2012 login Example. Taxact 2012 login Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Taxact 2012 login The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Taxact 2012 login The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Taxact 2012 login If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Taxact 2012 login Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Taxact 2012 login You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Taxact 2012 login (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Taxact 2012 login ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Taxact 2012 login See Per Diem and Car Allowances , later. Taxact 2012 login You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Taxact 2012 login This includes amounts you charged to your employer by credit card or other method. Taxact 2012 login You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Taxact 2012 login You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Taxact 2012 login Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Taxact 2012 login A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Taxact 2012 login Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Taxact 2012 login The allowance is similar in form to and not more than the federal rate (defined later). Taxact 2012 login You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Taxact 2012 login You are not related to your employer (as defined next). Taxact 2012 login If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Taxact 2012 login If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Taxact 2012 login In this case, you must be able to prove your expenses to the IRS. Taxact 2012 login Related to employer. Taxact 2012 login   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Taxact 2012 login You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Taxact 2012 login The federal rate. Taxact 2012 login   The federal rate can be figured using any one of the following methods. Taxact 2012 login For per diem amounts: The regular federal per diem rate. Taxact 2012 login The standard meal allowance. Taxact 2012 login The high-low rate. Taxact 2012 login For car expenses: The standard mileage rate. Taxact 2012 login A fixed and variable rate (FAVR). Taxact 2012 login    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Taxact 2012 login Regular federal per diem rate. Taxact 2012 login   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Taxact 2012 login The rates are different for different locations. Taxact 2012 login Your employer should have these rates available. Taxact 2012 login You can also find federal per diem rates at www. Taxact 2012 login gsa. Taxact 2012 login gov/perdiem. Taxact 2012 login The standard meal allowance. Taxact 2012 login   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Taxact 2012 login The rate for most small localities in the United States is $46 a day. Taxact 2012 login Most major cities and many other localities qualify for higher rates. Taxact 2012 login You can find this information on the Internet at www. Taxact 2012 login gsa. Taxact 2012 login gov/perdiem. Taxact 2012 login   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Taxact 2012 login Provides you with lodging (furnishes it in kind). Taxact 2012 login Reimburses you, based on your receipts, for the actual cost of your lodging. Taxact 2012 login Pays the hotel, motel, etc. Taxact 2012 login , directly for your lodging. Taxact 2012 login Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Taxact 2012 login Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Taxact 2012 login High-low rate. Taxact 2012 login   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Taxact 2012 login It eliminates the need to keep a current list of the per diem rates for each city. Taxact 2012 login   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Taxact 2012 login All other areas have a per diem amount of $163 (including $52 for M&IE). Taxact 2012 login For more information, see Notice 2012-63, which can be found on the Internet at www. Taxact 2012 login irs. Taxact 2012 login gov/irb/2012-42_IRB/ar12. Taxact 2012 login html. Taxact 2012 login    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Taxact 2012 login The rate for all other locations increased to $170 (including $52 for M&IE). Taxact 2012 login Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Taxact 2012 login For more information, see Notice 2013-65, which can be found on the Internet at www. Taxact 2012 login irs. Taxact 2012 login gov/pub/irs-drop/n-13–65. Taxact 2012 login pdf and Revenue Procedure 2011-47 at www. Taxact 2012 login irs. Taxact 2012 login gov/irb/2011-42_IRB/ar12. Taxact 2012 login html. Taxact 2012 login Prorating the standard meal allowance on partial days of travel. Taxact 2012 login   The standard meal allowance is for a full 24-hour day of travel. Taxact 2012 login If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Taxact 2012 login This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Taxact 2012 login   You can use either of the following methods to figure the federal M&IE for that day. Taxact 2012 login Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Taxact 2012 login For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Taxact 2012 login Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Taxact 2012 login For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Taxact 2012 login m. Taxact 2012 login of one day to 5 p. Taxact 2012 login m. Taxact 2012 login of the next day as being no more than the federal rate. Taxact 2012 login This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Taxact 2012 login The standard mileage rate. Taxact 2012 login   This is a set rate per mile that you can use to compute your deductible car expenses. Taxact 2012 login For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Taxact 2012 login Fixed and variable rate (FAVR). Taxact 2012 login   This is an allowance your employer may use to reimburse your car expenses. Taxact 2012 login Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Taxact 2012 login ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Taxact 2012 login ). Taxact 2012 login If your employer chooses to use this method, your employer will request the necessary records from you. Taxact 2012 login Reporting your expenses with a per diem or car allowance. Taxact 2012 login   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Taxact 2012 login The federal rate. Taxact 2012 login Whether the allowance or your actual expenses were more than the federal rate. Taxact 2012 login The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Taxact 2012 login Allowance less than or equal to the federal rate. Taxact 2012 login   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Taxact 2012 login You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Taxact 2012 login   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Taxact 2012 login If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Taxact 2012 login If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Taxact 2012 login Example 1. Taxact 2012 login In April, Jeremy takes a 2-day business trip to Denver. Taxact 2012 login The federal rate for Denver is $215 per day. Taxact 2012 login As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Taxact 2012 login His employer reimburses him $215 a day ($430 total) for living expenses. Taxact 2012 login Jeremy's living expenses in Denver are not more than $215 a day. Taxact 2012 login Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Taxact 2012 login Example 2. Taxact 2012 login In June, Matt takes a 2-day business trip to Boston. Taxact 2012 login Matt's employer uses the high-low method to reimburse employees. Taxact 2012 login Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Taxact 2012 login Matt's actual expenses totaled $700. Taxact 2012 login Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Taxact 2012 login Matt completes Form 2106 (showing all of his expenses and reimbursements). Taxact 2012 login He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Taxact 2012 login Example 3. Taxact 2012 login Nicole drives 10,000 miles in 2013 for business. Taxact 2012 login Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Taxact 2012 login Her employer pays her a mileage allowance of 40 cents a mile. Taxact 2012 login Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Taxact 2012 login Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Taxact 2012 login Allowance more than the federal rate. Taxact 2012 login   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Taxact 2012 login This amount is not taxable. Taxact 2012 login However, the excess allowance will be included in box 1 of your Form W-2. Taxact 2012 login You must report this part of your allowance as if it were wage income. Taxact 2012 login   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Taxact 2012 login   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Taxact 2012 login You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Taxact 2012 login You should be able to prove these amounts to the IRS. Taxact 2012 login Example 1. Taxact 2012 login Laura lives and works in Austin. Taxact 2012 login In July her employer sent her to Albuquerque for 4 days on business. Taxact 2012 login Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Taxact 2012 login Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Taxact 2012 login Table 6-1. Taxact 2012 login Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Taxact 2012 login No amount. Taxact 2012 login No amount. Taxact 2012 login Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Taxact 2012 login The excess amount as wages in box 1. Taxact 2012 login No amount. Taxact 2012 login Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Taxact 2012 login No amount. Taxact 2012 login All expenses and reimbursements only if excess expenses are claimed. Taxact 2012 login Otherwise, form is not filed. Taxact 2012 login Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Taxact 2012 login The excess amount as wages in box 1. Taxact 2012 login The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Taxact 2012 login No amount. Taxact 2012 login Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Taxact 2012 login The excess amount as wages in box 1. Taxact 2012 login The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Taxact 2012 login All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Taxact 2012 login Otherwise, form is not filed. Taxact 2012 login A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Taxact 2012 login The entire amount as wages in box 1. Taxact 2012 login All expenses. Taxact 2012 login No reimbursement plan: The entire amount as wages in box 1. Taxact 2012 login All expenses. Taxact 2012 login * You may be able to use Form 2106-EZ. Taxact 2012 login See Completing Forms 2106 and 2106-EZ . Taxact 2012 login Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Taxact 2012 login Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Taxact 2012 login This amount is not included in Laura's income. Taxact 2012 login Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Taxact 2012 login Example 2. Taxact 2012 login Joe also lives in Austin and works for the same employer as Laura. Taxact 2012 login In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Taxact 2012 login The employer reimbursed Joe $75 a day for his meals and incidental expenses. Taxact 2012 login The federal rate for San Diego is $71 a day. Taxact 2012 login Joe can prove that his actual meal expenses totaled $380. Taxact 2012 login His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Taxact 2012 login However, he does account for the time, place, and business purpose of the trip. Taxact 2012 login This is Joe's only business trip this year. Taxact 2012 login Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Taxact 2012 login The employer includes the $16 as income on Joe's Form W-2 in box 1. Taxact 2012 login The employer also enters $284 in box 12 of Joe's Form W-2. Taxact 2012 login Joe completes Form 2106 to figure his deductible expenses. Taxact 2012 login He enters the total of his actual expenses for the year ($380) on Form 2106. Taxact 2012 login He also enters the reimbursements that were not included in his income ($284). Taxact 2012 login His total deductible expense, before the 50% limit, is $96. Taxact 2012 login After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Taxact 2012 login Example 3. Taxact 2012 login Debbie drives 10,000 miles in 2013 for business. Taxact 2012 login Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Taxact 2012 login Her total reimbursement is $6,000. Taxact 2012 login Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Taxact 2012 login That amount is not taxable. Taxact 2012 login Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Taxact 2012 login This is the reimbursement that is more than the standard mileage rate. Taxact 2012 login If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Taxact 2012 login If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Taxact 2012 login She would then claim the excess expenses as an itemized deduction. Taxact 2012 login Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Taxact 2012 login Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Taxact 2012 login For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Taxact 2012 login “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Taxact 2012 login Travel advance. Taxact 2012 login   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Taxact 2012 login Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Taxact 2012 login   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Taxact 2012 login Unproved amounts. Taxact 2012 login   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Taxact 2012 login If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Taxact 2012 login Per diem allowance more than federal rate. Taxact 2012 login   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Taxact 2012 login However, the difference will be reported as wages on your Form W-2. Taxact 2012 login This excess amount is considered paid under a nonaccountable plan (discussed later). Taxact 2012 login Example. Taxact 2012 login Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Taxact 2012 login The federal per diem for meals and incidental expenses for Phoenix is $71. Taxact 2012 login Your trip lasts only 3 days. Taxact 2012 login Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Taxact 2012 login For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Taxact 2012 login However, the $27 will be reported on your Form W-2 as wages. Taxact 2012 login Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Taxact 2012 login In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Taxact 2012 login See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Taxact 2012 login An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Taxact 2012 login This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Taxact 2012 login If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Taxact 2012 login Reporting your expenses under a nonaccountable plan. Taxact 2012 login   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. Taxact 2012 login Your employer will report the total in box 1 of your Form W-2. Taxact 2012 login    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Taxact 2012 login Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Taxact 2012 login Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Taxact 2012 login Example 1. Taxact 2012 login Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Taxact 2012 login Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Taxact 2012 login Kim is being reimbursed under a nonaccountable plan. Taxact 2012 login Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Taxact 2012 login If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Taxact 2012 login Example 2. Taxact 2012 login Kevin is paid $2,000 a month by his employer. Taxact 2012 login On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Taxact 2012 login Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Taxact 2012 login No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Taxact 2012 login Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Taxact 2012 login The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Taxact 2012 login You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Taxact 2012 login Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Taxact 2012 login If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Taxact 2012 login You must keep adequate records of these expenses whether or not you account to your client for these expenses. Taxact 2012 login If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Taxact 2012 login See 50% Limit in chapter 2. Taxact 2012 login Adequate accounting. Taxact 2012 login   As a self-employed person, you adequately account by reporting your actual expenses. Taxact 2012 login You should follow the recordkeeping rules in chapter 5 . Taxact 2012 login How to report. Taxact 2012 login   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Taxact 2012 login Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Taxact 2012 login However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Taxact 2012 login Contractor adequately accounts. Taxact 2012 login   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Taxact 2012 login Use your records as proof for a deduction on your tax return. Taxact 2012 login If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Taxact 2012 login If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Taxact 2012 login Contractor does not adequately account. Taxact 2012 login    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Taxact 2012 login You are not subject to the 50% limit on entertainment in this case. Taxact 2012 login You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Taxact 2012 login However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Taxact 2012 login How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Taxact 2012 login The Two Substantiation Methods High-low method. Taxact 2012 login   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Taxact 2012 login Notice 2012–63, available at www. Taxact 2012 login irs. Taxact 2012 login gov/irb/2012–42_IRB/ar12. Taxact 2012 login html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Taxact 2012 login For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Taxact 2012 login   Notice 2013–65, available at www. Taxact 2012 login irs. Taxact 2012 login gov/pub/irs-drop/n-13–65. Taxact 2012 login pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Taxact 2012 login For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Taxact 2012 login Regular federal per diem rate method. Taxact 2012 login   Regular federal per diem rates are published by the General Services Administration (GSA). Taxact 2012 login Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Taxact 2012 login The rates listed for FY2013 at www. Taxact 2012 login gsa. Taxact 2012 login gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Taxact 2012 login The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Taxact 2012 login For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Taxact 2012 login Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Taxact 2012 login During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Taxact 2012 login High-low method. Taxact 2012 login   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Taxact 2012 login However, you must continue using the high-low method for the rest of the calendar year (through December 31). Taxact 2012 login If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Taxact 2012 login   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Taxact 2012 login You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Taxact 2012 login irs. Taxact 2012 login gov/irb. Taxact 2012 login Federal per diem rate method. Taxact 2012 login   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Taxact 2012 login Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Taxact 2012 login However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Taxact 2012 login   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Taxact 2012 login Go to www. Taxact 2012 login gsa. Taxact 2012 login gov/perdiem. Taxact 2012 login Per diem rates for localities listed for FY2014 may change at any time. Taxact 2012 login To be sure you have the most current rate, check www. Taxact 2012 login gsa. Taxact 2012 login gov/perdiem. Taxact 2012 login Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Taxact 2012 login Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Taxact 2012 login The instructions for the forms have more information on completing them. Taxact 2012 login If you are self-employed, do not file Form 2106 or 2106-EZ. Taxact 2012 login Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Taxact 2012 login See the instructions for the form that you must file. Taxact 2012 login Form 2106-EZ. Taxact 2012 login   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Taxact 2012 login You can use this form if you meet all the following conditions. Taxact 2012 login You are an employee deducting ordinary and necessary expenses attributable to your job. Taxact 2012 login You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Taxact 2012 login If you are claiming car expenses, you are using the standard mileage rate. Taxact 2012 login Car expenses. Taxact 2012 login   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Taxact 2012 login These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Taxact 2012 login Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Taxact 2012 login Information on use of cars. Taxact 2012 login   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Taxact 2012 login The information relates to the following items. Taxact 2012 login Date placed in service. Taxact 2012 login Mileage (total, business, commuting, and other personal mileage). Taxact 2012 login Percentage of business use. Taxact 2012 login After-work use. Taxact 2012 login Use of other vehicles. Taxact 2012 login Whether you have evidence to support the deduction. Taxact 2012 login Whether or not the evidence is written. Taxact 2012 login Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Taxact 2012 login Standard mileage rate. Taxact 2012 login   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Taxact 2012 login The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Taxact 2012 login In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Taxact 2012 login If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Taxact 2012 login See Standard Mileage Rate in chapter 4 for information on using this rate. Taxact 2012 login Actual expenses. Taxact 2012 login   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Taxact 2012 login You must complete Form 2106, Part II, Section C. Taxact 2012 login In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Taxact 2012 login   If you are still using a car that is fully depreciated, continue to complete Section C. Taxact 2012 login Since you have no depreciation deduction, enter zero on line 28. Taxact 2012 login In this case, do not complete Section D. Taxact 2012 login Car rentals. Taxact 2012 login   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Taxact 2012 login If so, you can show your car expenses and any inclusion amount as follows. Taxact 2012 login Compute the inclusion amount without taking into account your business use percentage for the tax year. Taxact 2012 login Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Taxact 2012 login Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Taxact 2012 login The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Taxact 2012 login Transportation expenses. Taxact 2012 login   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Taxact 2012 login Also include on this line business expenses you have for parking fees and tolls. Taxact 2012 login Do not include expenses of operating your car or expenses of commuting between your home and work. Taxact 2012 login Employee business expenses other than meals and entertainment. Taxact 2012 login   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Taxact 2012 login Do not include expenses for meals and entertainment on those lines. Taxact 2012 login Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Taxact 2012 login    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Taxact 2012 login Claim these amounts directly on Schedule A (Form 1040), line 21. Taxact 2012 login List the type and amount of each expense on the dotted lines and include the total on line 21. Taxact 2012 login Meal and entertainment expenses. Taxact 2012 login   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Taxact 2012 login Include meals while away from your tax home overnight and other business meals and entertainment. Taxact 2012 login Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Taxact 2012 login   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Taxact 2012 login Enter the result on line 5. Taxact 2012 login Hours of service limits. Taxact 2012 login   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Taxact 2012 login Reimbursements. Taxact 2012 login   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Taxact 2012 login This includes any amount reported under code L in box 12 of Form W-2. Taxact 2012 login Allocating your reimbursement. Taxact 2012 login   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Taxact 2012 login This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Taxact 2012 login You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Taxact 2012 login Example. Taxact 2012 login Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Taxact 2012 login The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Taxact 2012 login The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Taxact 2012 login Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Taxact 2012 login Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Taxact 2012 login To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Taxact 2012 login His completed worksheet follows. Taxact 2012 login Reimbursement Allocation Worksheet (Keep for your records)   1. Taxact 2012 login Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Taxact 2012 login Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Taxact 2012 login Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Taxact 2012 login Divide line 3 by line 2. Taxact 2012 login Enter the result as a decimal (rounded to at least three places) . Taxact 2012 login 529   5. Taxact 2012 login Multiply line 1 by line 4. Taxact 2012 login Enter the result here and in Column B, line 7 3,703   6. Taxact 2012 login Subtract line 5 from line 1. Taxact 2012 login Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Taxact 2012 login After you complete the form. Taxact 2012 login   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Taxact 2012 login For most taxpayers, this is line 21 of Schedule A (Form 1040). Taxact 2012 login However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Taxact 2012 login Limits on employee business expenses. Taxact 2012 login   Your employee business expenses may be subject to either of the limits described next. Taxact 2012 login They are figured in the following order on the specified form. Taxact 2012 login 1. Taxact 2012 login Limit on meals and entertainment. Taxact 2012 login   Certain meal and entertainment expenses are subject to a 50% limit. Taxact 2012 login If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Taxact 2012 login (See 50% Limit in chapter 2. Taxact 2012 login ) 2. Taxact 2012 login Limit on miscellaneous itemized deductions. Taxact 2012 login   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Taxact 2012 login Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Taxact 2012 login This limit is figured on line 26 of Schedule A (Form 1040). Taxact 2012 login 3. Taxact 2012 login Limit on total itemized deductions. Taxact 2012 login   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Taxact 2012 login See your form instructions for information on how to figure this limit. Taxact 2012 login Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Taxact 2012 login Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Taxact 2012 login The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Taxact 2012 login See Per Diem and Car Allowances , earlier, for more information. Taxact 2012 login Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Taxact 2012 login Member of a reserve component. Taxact 2012 login   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Taxact 2012 login How to report. Taxact 2012 login   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Taxact 2012 login Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Taxact 2012 login Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Taxact 2012 login   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Taxact 2012 login Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Taxact 2012 login Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Taxact 2012 login Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Taxact 2012 login They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Taxact 2012 login If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Taxact 2012 login Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Taxact 2012 login To qualify, you must meet all of the following requirements. Taxact 2012 login During the tax year, you perform services in the performing arts as an employee for at least two employers. Taxact 2012 login You receive at least $200 each from any two of these employers. Taxact 2012 login Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Taxact 2012 login Your adjusted gross income is not more than $16,000 before deducting these business expenses. Taxact 2012 login Special rules for married persons. Taxact 2012 login   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Taxact 2012 login If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Taxact 2012 login However, requirement (4) applies to your and your spouse's combined adjusted gross income. Taxact 2012 login Where to report. Taxact 2012 login   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Taxact 2012 login Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Taxact 2012 login   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Taxact 2012 login Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Taxact 2012 login Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Taxact 2012 login After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Taxact 2012 login Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Taxact 2012 login Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Taxact 2012 login You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Taxact 2012 login You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Taxact 2012 login Example 1. Taxact 2012 login You are blind. Taxact 2012 login You must use a reader to do your work. Taxact 2012 login You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Taxact 2012 login The reader's services are only for your work. Taxact 2012 login You can deduct your expenses for the reader as business expenses. Taxact 2012 login Example 2. Taxact 2012 login You are deaf. Taxact 2012 login You must use a sign language interpreter during meetings while you are at work. Taxact 2012 login The interpreter's services are used only for your work. Taxact 2012 login You can deduct your expenses for the interpreter as business expenses. Taxact 2012 login Prev  Up  Next   Home   More Online Publications
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The Taxact 2012 Login

Taxact 2012 login Publication 561 - Additional Material Table of Contents Tax Publications for Individual Taxpayers and Commonly Used Tax Forms Tax Publications for Individual Taxpayers and Commonly Used Tax Forms. Taxact 2012 login  Summary: This is a listing of tax publications and commonly used tax forms. Taxact 2012 login The text states:Tax Publications for Individual Taxpayers. Taxact 2012 login  See How to Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail. Taxact 2012 login General Guides. Taxact 2012 login   1--Your Rights as a Taxpayer 17--Your Federal Income Tax (For Individuals) 334--Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 509--Tax Calendars for 2007 553--Highlights of 2006 Tax Changes 910--IRS Guide to Free Tax Services Specialized Publications. Taxact 2012 login   3--Armed Forces' Tax Guide 54--Tax Guide for U. Taxact 2012 login S. Taxact 2012 login Citizens and Residents Aliens Abroad 225--Farmer's Tax Guide 463--Travel, Entertainment, Gift, and Car Expenses 501--Exemptions, Standard Deduction, and Filing Information 502--Medical and Dental Expenses 503--Child and Dependent Care Expenses 504--Divorced or Separated Individuals 505--Tax Withholding and Estimated Tax 514--Foreign Tax Credit for Individuals 516--U. Taxact 2012 login S. Taxact 2012 login Government Civilian Employees Stationed Abroad 517--Social Security and Other Information for Members of the Clergy and Religious Workers 519--U. Taxact 2012 login S. Taxact 2012 login Tax Guide for Aliens 520--Scholarships and Fellowships 521--Moving Expenses 523--Selling Your Home 524--Credit for the Elderly or the Disabled 525--Taxable and Nontaxable Income 526--Charitable Contributions 527--Residential Rental Property 529--Miscellaneous Deductions 530--Tax Information for First-Time Homeowners 531--Reporting Tip Income 536--Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 537--Installment Sales 541--Partnerships 544--Sales and Other Dispositions of Assets 547--Casualties, Disasters, and Thefts 550--Investment Income and Expenses 551--Basis of Assets 552--Recordkeeping for Individuals 554--Older Americans' Tax Guide 555--Community Property 556--Examination of Returns, Appeal Rights, and Claims for Refund 559--Survivors, Executors, and Administrators 561--Determining the Value of Donated Property 564--Mutual Fund Distributions 570--Tax Guide for Individuals With Income From U. Taxact 2012 login S. Taxact 2012 login Possessions 571--Tax-Sheltered Annuity Plans (403(b) Plans) 575--Pension and Annuity Income 584--Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 587--Business Use of Your Home (Including Use by Daycare Providers) 590--Individual Retirement Arrangements (IRAs) 593--Tax Highlights for U. Taxact 2012 login S. Taxact 2012 login Citizens and Residents Going Abroad 594--What You Should Know About the IRS Collection Process 596--Earned Income Credit (EIC) 721--Tax Guide to U. Taxact 2012 login S. Taxact 2012 login Civil Service Retirement Benefits 901--U. Taxact 2012 login S. Taxact 2012 login Tax Treaties 907--Tax Highlights for Persons with Disabilities 908--Bankruptcy Tax Guide 915--Social Security and Equivalent Railroad Retirement Benefits 919--How Do I Adjust My Tax Withholding? 925--Passive Activity and At-Risk Rules 926--Household Employer's Tax Guide 929--Tax Rules for Children and Dependents 936--Home Mortgage Interest Deduction 946--How to Depreciate Property 947--Practice Before the IRS and Power of Attorney 950--Introduction to Estate and Gift Taxes 967--The IRS Will Figure Your Tax 969--Health Savings Accounts and Other Tax-Favored Health Plans 970--Tax Benefits for Education 971--Innocent Spouse Relief 972--Child Tax Credit 1542--Per Diem Rates 1544--Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) 1546--The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems Spanish Language Publications. Taxact 2012 login   1SP--Derechos del Contribuyente 579SP--Cómo Preparar la Declaración de Impuesto Federal 594SP--Que es lo que Debemos Saber sobre el Proceso de Cobro del IRS 596SP--Crédito por Ingreso del Trabajo 850--English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service 1544SP--Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio) Commonly Used Tax Forms. Taxact 2012 login  See How To Get Tax Help for a variety of ways to get forms, including by computer, fax, phone, and mail. Taxact 2012 login 1040--U. Taxact 2012 login S. Taxact 2012 login Individual Income Tax Return Schedule A&B--Itemized Deductions & Interest and Ordinary Dividends Schedule C--Profit or Loss From Business Schedule C-EZ--Net Profit From Business Schedule D--Capital Gains and Losses Schedule D-1--Continuation Sheet for Schedule D Schedule E--Supplemental Income and Loss Schedule EIC--Earned Income Credit Schedule F--Profit or Loss From Farming Schedule H--Household Employment Taxes Schedule J--Income Averaging for Farmers and Fishermen Schedule R--Credit for the Elderly or the Disabled Schedule SE--Self-Employment Tax 1040A--U. Taxact 2012 login S. Taxact 2012 login Individual Income Tax Return Schedule 1--Interest and Ordinary Dividends for Form 1040A Filers Schedule 2--Child and Dependent Care Expenses for Form 1040A Filers Schedule 3--Credit for the Elderly or the Disabled for Form 1040A Filers 1040EZ--Income Tax Return for Single and Joint Filers With No Dependents 1040-ES--Estimated Tax for Individuals 1040X--Amended U. Taxact 2012 login S. Taxact 2012 login Individual Income Tax Return 2106--Employee Business Expenses 2106-EZ--Unreimbursed Employee Business Expenses 2210--Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2441--Child and Dependent Care Expenses 2848--Power of Attorney and Declaration of Representative 3903--Moving Expenses 4562--Depreciation and Amortization 4868--Application for Automatic Extension of Time To File U. Taxact 2012 login S. Taxact 2012 login Individual Income Tax Return 4952--Investment Interest Expense Deduction 5329--Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 6251--Alternative Minimum Tax--Individuals 8283--Noncash Charitable Contributions 8582--Passive Activity Loss Limitations 8606--Nondeductible IRAs 8812--Additional Child Tax Credit 8822--Change of Address 8829--Expenses for Business Use of Your Home 8863--Education Credits 9465--Installment Agreement Request Prev  Up  Next   Home   More Online Publications