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2011 Tax Forms 1040 Ez

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2011 Tax Forms 1040 Ez

2011 tax forms 1040 ez 12. 2011 tax forms 1040 ez   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. 2011 tax forms 1040 ez Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. 2011 tax forms 1040 ez  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. 2011 tax forms 1040 ez 5 cents per mile. 2011 tax forms 1040 ez For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. 2011 tax forms 1040 ez Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. 2011 tax forms 1040 ez To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. 2011 tax forms 1040 ez What is the tax benefit of taking a business deduction for work-related education. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez An itemized deduction reduces the amount of your income subject to tax. 2011 tax forms 1040 ez   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. 2011 tax forms 1040 ez This reduces the amount of your income subject to both income tax and self-employment tax. 2011 tax forms 1040 ez   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. 2011 tax forms 1040 ez You may qualify for these other benefits even if you do not meet the requirements listed above. 2011 tax forms 1040 ez   Also, your work-related education expenses may qualify you to claim more than one tax benefit. 2011 tax forms 1040 ez Generally, you may claim any number of benefits as long as you use different expenses to figure each one. 2011 tax forms 1040 ez Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. 2011 tax forms 1040 ez This is education that meets at least one of the following two tests. 2011 tax forms 1040 ez The education is required by your employer or the law to keep your present salary, status, or job. 2011 tax forms 1040 ez The required education must serve a bona fide business purpose of your employer. 2011 tax forms 1040 ez The education maintains or improves skills needed in your present work. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. 2011 tax forms 1040 ez Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez This additional education is qualifying work-related education if all three of the following requirements are met. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez See Education To Maintain or Improve Skills , later. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You are a teacher who has satisfied the minimum requirements for teaching. 2011 tax forms 1040 ez Your employer requires you to take an additional college course each year to keep your teaching job. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez This image is too large to be displayed in the current screen. 2011 tax forms 1040 ez Please click the link to view the image. 2011 tax forms 1040 ez Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. 2011 tax forms 1040 ez This could include refresher courses, courses on current developments, and academic or vocational courses. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You repair televisions, radios, and stereo systems for XYZ Store. 2011 tax forms 1040 ez To keep up with the latest changes, you take special courses in radio and stereo service. 2011 tax forms 1040 ez These courses maintain and improve skills required in your work. 2011 tax forms 1040 ez Maintaining skills vs. 2011 tax forms 1040 ez qualifying for new job. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez Education during temporary absence. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You quit your biology research job to become a full-time biology graduate student for 1 year. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Education during indefinite absence. 2011 tax forms 1040 ez   If you stop work for more than a year, your absence from your job is considered indefinite. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Therefore, it is not qualifying work-related education. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. 2011 tax forms 1040 ez Example 1. 2011 tax forms 1040 ez You are a full-time engineering student. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez The education is not qualifying work-related education. 2011 tax forms 1040 ez Example 2. 2011 tax forms 1040 ez You are an accountant and you have met the minimum educational requirements of your employer. 2011 tax forms 1040 ez Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. 2011 tax forms 1040 ez The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. 2011 tax forms 1040 ez If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez You generally will be considered a faculty member when one or more of the following occurs. 2011 tax forms 1040 ez You have tenure. 2011 tax forms 1040 ez Your years of service count toward obtaining tenure. 2011 tax forms 1040 ez You have a vote in faculty decisions. 2011 tax forms 1040 ez Your school makes contributions for you to a retirement plan other than social security or a similar program. 2011 tax forms 1040 ez Example 1. 2011 tax forms 1040 ez The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. 2011 tax forms 1040 ez In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez If you have all the required education except the fifth year, you have met the minimum educational requirements. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Example 2. 2011 tax forms 1040 ez Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. 2011 tax forms 1040 ez The additional four education courses can be qualifying work-related education. 2011 tax forms 1040 ez Although you do not have all the required courses, you have already met the minimum educational requirements. 2011 tax forms 1040 ez Example 3. 2011 tax forms 1040 ez Assume the same facts as in Example 1 except that you are hired with only 3 years of college. 2011 tax forms 1040 ez The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. 2011 tax forms 1040 ez They are needed to meet the minimum educational requirements for employment as a teacher. 2011 tax forms 1040 ez Example 4. 2011 tax forms 1040 ez You have a bachelor's degree and you work as a temporary instructor at a university. 2011 tax forms 1040 ez At the same time, you take graduate courses toward an advanced degree. 2011 tax forms 1040 ez The rules of the university state that you can become a faculty member only if you get a graduate degree. 2011 tax forms 1040 ez Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. 2011 tax forms 1040 ez You have not met the minimum educational requirements to qualify you as a faculty member. 2011 tax forms 1040 ez The graduate courses are not qualifying work-related education. 2011 tax forms 1040 ez Certification in a new state. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez This is true even if you must get additional education to be certified in another state. 2011 tax forms 1040 ez Any additional education you need is qualifying work-related education. 2011 tax forms 1040 ez You have already met the minimum requirements for teaching. 2011 tax forms 1040 ez Teaching in another state is not a new trade or business. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. 2011 tax forms 1040 ez You move to State B and are promptly hired as a teacher. 2011 tax forms 1040 ez You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez This is true even if you do not plan to enter that trade or business. 2011 tax forms 1040 ez If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. 2011 tax forms 1040 ez Example 1. 2011 tax forms 1040 ez You are an accountant. 2011 tax forms 1040 ez Your employer requires you to get a law degree at your own expense. 2011 tax forms 1040 ez You register at a law school for the regular curriculum that leads to a law degree. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Example 2. 2011 tax forms 1040 ez You are a general practitioner of medicine. 2011 tax forms 1040 ez You take a 2-week course to review developments in several specialized fields of medicine. 2011 tax forms 1040 ez The course does not qualify you for a new profession. 2011 tax forms 1040 ez It is qualifying work- related education because it maintains or improves skills required in your present profession. 2011 tax forms 1040 ez Example 3. 2011 tax forms 1040 ez While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. 2011 tax forms 1040 ez The program will lead to qualifying you to practice psychoanalysis. 2011 tax forms 1040 ez The psychoanalytic training does not qualify you for a new profession. 2011 tax forms 1040 ez It is qualifying work-related education because it maintains or improves skills required in your present profession. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez They are part of a program of study that can qualify you for a new profession. 2011 tax forms 1040 ez Teaching and Related Duties All teaching and related duties are considered the same general kind of work. 2011 tax forms 1040 ez A change in duties in any of the following ways is not considered a change to a new business. 2011 tax forms 1040 ez Elementary school teacher to secondary school teacher. 2011 tax forms 1040 ez Teacher of one subject, such as biology, to teacher of another subject, such as art. 2011 tax forms 1040 ez Classroom teacher to guidance counselor. 2011 tax forms 1040 ez Classroom teacher to school administrator. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez If you are not self-employed, you can deduct business expenses only if you itemize your deductions. 2011 tax forms 1040 ez You cannot deduct expenses related to tax-exempt and excluded income. 2011 tax forms 1040 ez Deductible expenses. 2011 tax forms 1040 ez   The following education expenses can be deducted. 2011 tax forms 1040 ez Tuition, books, supplies, lab fees, and similar items. 2011 tax forms 1040 ez Certain transportation and travel costs. 2011 tax forms 1040 ez Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. 2011 tax forms 1040 ez Nondeductible expenses. 2011 tax forms 1040 ez   You cannot deduct personal or capital expenses. 2011 tax forms 1040 ez For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. 2011 tax forms 1040 ez This amount is a personal expense. 2011 tax forms 1040 ez Unclaimed reimbursement. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez Your employer agrees to pay your education expenses if you file a voucher showing your expenses. 2011 tax forms 1040 ez You do not file a voucher and you do not get reimbursed. 2011 tax forms 1040 ez Because you did not file a voucher, you cannot deduct the expenses on your tax return. 2011 tax forms 1040 ez Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Temporary basis. 2011 tax forms 1040 ez   You go to school on a temporary basis if either of the following situations applies to you. 2011 tax forms 1040 ez Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Your attendance is temporary up to the date you determine it will last more than 1 year. 2011 tax forms 1040 ez If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. 2011 tax forms 1040 ez Attendance not on a temporary basis. 2011 tax forms 1040 ez   You do not go to school on a temporary basis if either of the following situations apply to you. 2011 tax forms 1040 ez Your attendance at school is realistically expected to last more than 1 year. 2011 tax forms 1040 ez It does not matter how long you actually attend. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Your attendance is not temporary after the date you determine it will last more than 1 year. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. 2011 tax forms 1040 ez Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. 2011 tax forms 1040 ez Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. 2011 tax forms 1040 ez Example 1. 2011 tax forms 1040 ez You regularly work in a nearby town, and go directly from work to home. 2011 tax forms 1040 ez You also attend school every work night for 3 months to take a course that improves your job skills. 2011 tax forms 1040 ez Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. 2011 tax forms 1040 ez This is true regardless of the distance traveled. 2011 tax forms 1040 ez Example 2. 2011 tax forms 1040 ez Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. 2011 tax forms 1040 ez You can deduct your transportation expenses from your regular work site to school and then home. 2011 tax forms 1040 ez Example 3. 2011 tax forms 1040 ez Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. 2011 tax forms 1040 ez Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. 2011 tax forms 1040 ez Example 4. 2011 tax forms 1040 ez Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. 2011 tax forms 1040 ez Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. 2011 tax forms 1040 ez If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Using your car. 2011 tax forms 1040 ez    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. 2011 tax forms 1040 ez The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. 2011 tax forms 1040 ez 5 cents per mile. 2011 tax forms 1040 ez Whichever method you use, you can also deduct parking fees and tolls. 2011 tax forms 1040 ez See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. 2011 tax forms 1040 ez For more information, see chapter 1 of Publication 463. 2011 tax forms 1040 ez You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. 2011 tax forms 1040 ez Mainly personal travel. 2011 tax forms 1040 ez   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. 2011 tax forms 1040 ez You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. 2011 tax forms 1040 ez   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. 2011 tax forms 1040 ez An important factor is the comparison of time spent on personal activities with time spent on educational activities. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Example 1. 2011 tax forms 1040 ez John works in Newark, New Jersey. 2011 tax forms 1040 ez He traveled to Chicago to take a deductible 1-week course at the request of his employer. 2011 tax forms 1040 ez His main reason for going to Chicago was to take the course. 2011 tax forms 1040 ez While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. 2011 tax forms 1040 ez Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. 2011 tax forms 1040 ez He cannot deduct his transportation expenses of going to Pleasantville. 2011 tax forms 1040 ez He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. 2011 tax forms 1040 ez Example 2. 2011 tax forms 1040 ez Sue works in Boston. 2011 tax forms 1040 ez She went to a university in Michigan to take a course for work. 2011 tax forms 1040 ez The course is qualifying work-related education. 2011 tax forms 1040 ez She took one course, which is one-fourth of a full course load of study. 2011 tax forms 1040 ez She spent the rest of the time on personal activities. 2011 tax forms 1040 ez Her reasons for taking the course in Michigan were all personal. 2011 tax forms 1040 ez Sue's trip is mainly personal because three-fourths of her time is considered personal time. 2011 tax forms 1040 ez She cannot deduct the cost of her round-trip train ticket to Michigan. 2011 tax forms 1040 ez She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. 2011 tax forms 1040 ez Example 3. 2011 tax forms 1040 ez Dave works in Nashville and recently traveled to California to take a 2-week seminar. 2011 tax forms 1040 ez The seminar is qualifying work-related education. 2011 tax forms 1040 ez While there, he spent an extra 8 weeks on personal activities. 2011 tax forms 1040 ez The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. 2011 tax forms 1040 ez Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. 2011 tax forms 1040 ez He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. 2011 tax forms 1040 ez Cruises and conventions. 2011 tax forms 1040 ez   Certain cruises and conventions offer seminars or courses as part of their itinerary. 2011 tax forms 1040 ez Even if the seminars or courses are work related, your deduction for travel may be limited. 2011 tax forms 1040 ez This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez 50% limit on meals. 2011 tax forms 1040 ez   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. 2011 tax forms 1040 ez If you were reimbursed for the meals, see How To Treat Reimbursements , later. 2011 tax forms 1040 ez   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You are a French language teacher. 2011 tax forms 1040 ez While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. 2011 tax forms 1040 ez You chose your itinerary and most of your activities to improve your French language skills. 2011 tax forms 1040 ez You cannot deduct your travel expenses as education expenses. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez No Double Benefit Allowed You cannot do either of the following. 2011 tax forms 1040 ez Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. 2011 tax forms 1040 ez Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. 2011 tax forms 1040 ez See Adjustments to Qualifying Work-Related Education Expenses, next. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. 2011 tax forms 1040 ez Tax-free educational assistance. 2011 tax forms 1040 ez   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 2011 tax forms 1040 ez Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2011 tax forms 1040 ez Amounts that do not reduce qualifying work-related education expenses. 2011 tax forms 1040 ez   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. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. 2011 tax forms 1040 ez There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. 2011 tax forms 1040 ez You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. 2011 tax forms 1040 ez Note. 2011 tax forms 1040 ez The following rules about reimbursement arrangements also apply to expense allowances received from your employer. 2011 tax forms 1040 ez Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. 2011 tax forms 1040 ez Your expenses must have a business connection. 2011 tax forms 1040 ez This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. 2011 tax forms 1040 ez You must adequately account to your employer for your expenses within a reasonable period of time. 2011 tax forms 1040 ez You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. 2011 tax forms 1040 ez If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. 2011 tax forms 1040 ez If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. 2011 tax forms 1040 ez Accountable plan rules not met. 2011 tax forms 1040 ez   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. 2011 tax forms 1040 ez Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). 2011 tax forms 1040 ez Expenses equal reimbursement. 2011 tax forms 1040 ez   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. 2011 tax forms 1040 ez Because your expenses and reimbursements are equal, you do not have a deduction. 2011 tax forms 1040 ez Excess expenses. 2011 tax forms 1040 ez   If your expenses are more than your reimbursement, you can deduct your excess expenses. 2011 tax forms 1040 ez This is discussed later, under Deducting Business Expenses . 2011 tax forms 1040 ez Allocating your reimbursements for meals. 2011 tax forms 1040 ez   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. 2011 tax forms 1040 ez If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. 2011 tax forms 1040 ez Make the allocation as follows. 2011 tax forms 1040 ez Divide your meal expenses by your total expenses. 2011 tax forms 1040 ez Multiply your total reimbursement by the result from (1). 2011 tax forms 1040 ez This is the allocated reimbursement for your meal expenses. 2011 tax forms 1040 ez Subtract the amount figured in (2) from your total reimbursement. 2011 tax forms 1040 ez The difference is the allocated reimbursement for your other expenses of qualifying work-related education. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez Your employer paid you an expense allowance of $2,000 under an accountable plan. 2011 tax forms 1040 ez The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. 2011 tax forms 1040 ez There was no indication of how much of the reimbursement was for each type of expense. 2011 tax forms 1040 ez Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). 2011 tax forms 1040 ez Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. 2011 tax forms 1040 ez   1. 2011 tax forms 1040 ez $425 meal expenses  $2,500 total expenses = . 2011 tax forms 1040 ez 17   2. 2011 tax forms 1040 ez $2,000 (reimbursement)×. 2011 tax forms 1040 ez 17     =$340 (allocated reimbursement for meal expenses)   3. 2011 tax forms 1040 ez $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). 2011 tax forms 1040 ez After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). 2011 tax forms 1040 ez Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. 2011 tax forms 1040 ez You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. 2011 tax forms 1040 ez This is discussed later under Deducting Business Expenses . 2011 tax forms 1040 ez An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. 2011 tax forms 1040 ez Reimbursements for nondeductible expenses. 2011 tax forms 1040 ez   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. 2011 tax forms 1040 ez You must include them in your income. 2011 tax forms 1040 ez For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. 2011 tax forms 1040 ez   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. 2011 tax forms 1040 ez Deducting Business Expenses Self-employed persons and employees report their business expenses differently. 2011 tax forms 1040 ez The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. 2011 tax forms 1040 ez Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). 2011 tax forms 1040 ez If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. 2011 tax forms 1040 ez See the instructions for the form you file for information on how to complete it. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez If either (1) or (2) applies, you can deduct the total qualifying cost. 2011 tax forms 1040 ez If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. 2011 tax forms 1040 ez In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 2011 tax forms 1040 ez (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. 2011 tax forms 1040 ez ) 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. 2011 tax forms 1040 ez Form 2106 or 2106-EZ. 2011 tax forms 1040 ez   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. 2011 tax forms 1040 ez Form not required. 2011 tax forms 1040 ez   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. 2011 tax forms 1040 ez   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. 2011 tax forms 1040 ez (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. 2011 tax forms 1040 ez ) Using Form 2106-EZ. 2011 tax forms 1040 ez   This form is shorter and easier to use than Form 2106. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez   If you do not meet both of these requirements, use Form 2106. 2011 tax forms 1040 ez 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. 2011 tax forms 1040 ez Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. 2011 tax forms 1040 ez You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. 2011 tax forms 1040 ez You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . 2011 tax forms 1040 ez For more information on qualified performing artists, see chapter 6 of Publication 463. 2011 tax forms 1040 ez Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. 2011 tax forms 1040 ez They are not subject to the 2%-of-adjusted-gross-income limit. 2011 tax forms 1040 ez To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . 2011 tax forms 1040 ez For more information on impairment-related work expenses, see chapter 6 of Publication 463. 2011 tax forms 1040 ez Recordkeeping You must keep records as proof of any deduction claimed on your tax return. 2011 tax forms 1040 ez Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. 2011 tax forms 1040 ez If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. 2011 tax forms 1040 ez However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. 2011 tax forms 1040 ez Examples of records to keep. 2011 tax forms 1040 ez   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. 2011 tax forms 1040 ez You should keep adequate records or have sufficient evidence that will support your expenses. 2011 tax forms 1040 ez Estimates or approximations do not qualify as proof of an expense. 2011 tax forms 1040 ez Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. 2011 tax forms 1040 ez , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. 2011 tax forms 1040 ez Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. 2011 tax forms 1040 ez Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. 2011 tax forms 1040 ez Complete information about any scholarship or fellowship grants, including amounts you received during the year. 2011 tax forms 1040 ez Illustrated Example Victor Jones teaches math at a private high school in North Carolina. 2011 tax forms 1040 ez He was selected to attend a 3-week math seminar at a university in California. 2011 tax forms 1040 ez The seminar will improve his skills in his current job and is qualifying work-related education. 2011 tax forms 1040 ez He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. 2011 tax forms 1040 ez Victor will file Form 1040. 2011 tax forms 1040 ez His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. 2011 tax forms 1040 ez He shows his expenses for the seminar in Part I of the form. 2011 tax forms 1040 ez He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. 2011 tax forms 1040 ez He enters $400 on line 4 for his tuition and books. 2011 tax forms 1040 ez On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. 2011 tax forms 1040 ez He multiplies that amount by 50% and enters the result, $263, on line 5. 2011 tax forms 1040 ez On line 6, Victor totals the amounts from lines 3 through 5. 2011 tax forms 1040 ez He carries the total, $2,313, to Schedule A (Form 1040), line 21. 2011 tax forms 1040 ez Since he does not claim any vehicle expenses, Victor leaves Part II blank. 2011 tax forms 1040 ez His filled-in form is shown on the next page. 2011 tax forms 1040 ez This image is too large to be displayed in the current screen. 2011 tax forms 1040 ez Please click the link to view the image. 2011 tax forms 1040 ez Form 2106-EZ for V. 2011 tax forms 1040 ez Jones Prev  Up  Next   Home   More Online Publications
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The 2011 Tax Forms 1040 Ez

2011 tax forms 1040 ez 6. 2011 tax forms 1040 ez   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. 2011 tax forms 1040 ez Vehicles not considered highway vehicles. 2011 tax forms 1040 ez Idling reduction device. 2011 tax forms 1040 ez Separate purchase. 2011 tax forms 1040 ez Leases. 2011 tax forms 1040 ez Exported vehicle. 2011 tax forms 1040 ez Tax on resale of tax-paid trailers and semitrailers. 2011 tax forms 1040 ez Use treated as sale. 2011 tax forms 1040 ez Sale. 2011 tax forms 1040 ez Long-term lease. 2011 tax forms 1040 ez Short-term lease. 2011 tax forms 1040 ez Related person. 2011 tax forms 1040 ez Exclusions from tax base. 2011 tax forms 1040 ez Sales not at arm's length. 2011 tax forms 1040 ez Installment sales. 2011 tax forms 1040 ez Repairs and modifications. 2011 tax forms 1040 ez Further manufacture. 2011 tax forms 1040 ez Rail trailers and rail vans. 2011 tax forms 1040 ez Parts and accessories. 2011 tax forms 1040 ez Trash containers. 2011 tax forms 1040 ez House trailers. 2011 tax forms 1040 ez Camper coaches or bodies for self-propelled mobile homes. 2011 tax forms 1040 ez Farm feed, seed, and fertilizer equipment. 2011 tax forms 1040 ez Ambulances and hearses. 2011 tax forms 1040 ez Truck-tractors. 2011 tax forms 1040 ez Concrete mixers. 2011 tax forms 1040 ez Registration requirement. 2011 tax forms 1040 ez Further manufacture. 2011 tax forms 1040 ez A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. 2011 tax forms 1040 ez Truck chassis and bodies. 2011 tax forms 1040 ez Truck trailer and semitrailer chassis and bodies. 2011 tax forms 1040 ez Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. 2011 tax forms 1040 ez A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. 2011 tax forms 1040 ez A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. 2011 tax forms 1040 ez A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. 2011 tax forms 1040 ez A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. 2011 tax forms 1040 ez The seller is liable for the tax. 2011 tax forms 1040 ez Chassis or body. 2011 tax forms 1040 ez   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. 2011 tax forms 1040 ez Highway vehicle. 2011 tax forms 1040 ez   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. 2011 tax forms 1040 ez Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. 2011 tax forms 1040 ez A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. 2011 tax forms 1040 ez A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). 2011 tax forms 1040 ez A special kind of cargo, goods, supplies, or materials. 2011 tax forms 1040 ez Some off-highway task unrelated to highway transportation, except as discussed next. 2011 tax forms 1040 ez Vehicles not considered highway vehicles. 2011 tax forms 1040 ez   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. 2011 tax forms 1040 ez Specially designed mobile machinery for nontransportation functions. 2011 tax forms 1040 ez A self-propelled vehicle is not a highway vehicle if all the following apply. 2011 tax forms 1040 ez The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. 2011 tax forms 1040 ez The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. 2011 tax forms 1040 ez The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. 2011 tax forms 1040 ez Vehicles specially designed for off-highway transportation. 2011 tax forms 1040 ez A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. 2011 tax forms 1040 ez To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. 2011 tax forms 1040 ez It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. 2011 tax forms 1040 ez Nontransportation trailers and semitrailers. 2011 tax forms 1040 ez A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. 2011 tax forms 1040 ez For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. 2011 tax forms 1040 ez Gross vehicle weight. 2011 tax forms 1040 ez   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. 2011 tax forms 1040 ez It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. 2011 tax forms 1040 ez Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. 2011 tax forms 1040 ez   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. 2011 tax forms 1040 ez Platform truck bodies 21 feet or less in length. 2011 tax forms 1040 ez Dry freight and refrigerated truck van bodies 24 feet or less in length. 2011 tax forms 1040 ez Dump truck bodies with load capacities of 8 cubic yards or less. 2011 tax forms 1040 ez Refuse packer truck bodies with load capacities of 20 cubic yards or less. 2011 tax forms 1040 ez For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. 2011 tax forms 1040 ez R. 2011 tax forms 1040 ez B. 2011 tax forms 1040 ez 2005-14 at www. 2011 tax forms 1040 ez irs. 2011 tax forms 1040 ez gov/pub/irs-irbs/irb05-14. 2011 tax forms 1040 ez pdf. 2011 tax forms 1040 ez   The gross vehicle weight means the maximum total weight of a loaded vehicle. 2011 tax forms 1040 ez Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. 2011 tax forms 1040 ez The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. 2011 tax forms 1040 ez The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. 2011 tax forms 1040 ez See Regulations section 145. 2011 tax forms 1040 ez 4051-1(e)(3) for more information. 2011 tax forms 1040 ez Parts or accessories. 2011 tax forms 1040 ez   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. 2011 tax forms 1040 ez For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. 2011 tax forms 1040 ez The tax applies in this case whether or not the retailer bills the parts or accessories separately. 2011 tax forms 1040 ez   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. 2011 tax forms 1040 ez The tax applies unless there is evidence to the contrary. 2011 tax forms 1040 ez For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. 2011 tax forms 1040 ez The tax does not apply to parts and accessories that are spares or replacements. 2011 tax forms 1040 ez   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. 2011 tax forms 1040 ez Idling reduction device. 2011 tax forms 1040 ez   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. 2011 tax forms 1040 ez The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. 2011 tax forms 1040 ez The EPA discusses idling reduction technologies on its website at www. 2011 tax forms 1040 ez epa. 2011 tax forms 1040 ez gov/smartway/technology/idling. 2011 tax forms 1040 ez htm. 2011 tax forms 1040 ez Separate purchase. 2011 tax forms 1040 ez   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. 2011 tax forms 1040 ez The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. 2011 tax forms 1040 ez The installation occurs within 6 months after the vehicle is first placed in service. 2011 tax forms 1040 ez   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. 2011 tax forms 1040 ez   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. 2011 tax forms 1040 ez This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. 2011 tax forms 1040 ez   The tax does not apply if the installed part or accessory is a replacement part or accessory. 2011 tax forms 1040 ez The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. 2011 tax forms 1040 ez However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. 2011 tax forms 1040 ez Example. 2011 tax forms 1040 ez You bought a taxable vehicle and placed it in service on April 8. 2011 tax forms 1040 ez On May 3, you bought and installed parts and accessories at a cost of $850. 2011 tax forms 1040 ez On July 15, you bought and installed parts and accessories for $300. 2011 tax forms 1040 ez Tax of $138 (12% of $1,150) applies on July 15. 2011 tax forms 1040 ez Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. 2011 tax forms 1040 ez First retail sale defined. 2011 tax forms 1040 ez   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. 2011 tax forms 1040 ez There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). 2011 tax forms 1040 ez The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). 2011 tax forms 1040 ez The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. 2011 tax forms 1040 ez There is no registration requirement. 2011 tax forms 1040 ez Leases. 2011 tax forms 1040 ez   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. 2011 tax forms 1040 ez The tax is imposed on the lessor at the time of the lease. 2011 tax forms 1040 ez   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. 2011 tax forms 1040 ez The tax is imposed on the lessor at the time of the lease. 2011 tax forms 1040 ez Exported vehicle. 2011 tax forms 1040 ez   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. 2011 tax forms 1040 ez Tax on resale of tax-paid trailers and semitrailers. 2011 tax forms 1040 ez   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. 2011 tax forms 1040 ez The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. 2011 tax forms 1040 ez The credit cannot exceed the tax on the resale. 2011 tax forms 1040 ez See Regulations section 145. 2011 tax forms 1040 ez 4052-1(a)(4) for information on the conditions to allowance for the credit. 2011 tax forms 1040 ez Use treated as sale. 2011 tax forms 1040 ez   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. 2011 tax forms 1040 ez Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. 2011 tax forms 1040 ez The tax attaches when the use begins. 2011 tax forms 1040 ez   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. 2011 tax forms 1040 ez   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. 2011 tax forms 1040 ez   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. 2011 tax forms 1040 ez Presumptive retail sales price. 2011 tax forms 1040 ez   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. 2011 tax forms 1040 ez If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. 2011 tax forms 1040 ez Table 6-1 outlines the appropriate tax base calculation for various transactions. 2011 tax forms 1040 ez   The presumed markup percentage to be used for trucks and truck-tractors is 4%. 2011 tax forms 1040 ez But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. 2011 tax forms 1040 ez Sale. 2011 tax forms 1040 ez   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. 2011 tax forms 1040 ez Long-term lease. 2011 tax forms 1040 ez   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. 2011 tax forms 1040 ez Short-term lease. 2011 tax forms 1040 ez   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. 2011 tax forms 1040 ez   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. 2011 tax forms 1040 ez   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. 2011 tax forms 1040 ez Related person. 2011 tax forms 1040 ez   A related person is any member of the same controlled group as the manufacturer, producer, or importer. 2011 tax forms 1040 ez Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. 2011 tax forms 1040 ez Table 6-1. 2011 tax forms 1040 ez Tax Base IF the transaction is a. 2011 tax forms 1040 ez . 2011 tax forms 1040 ez . 2011 tax forms 1040 ez THEN figuring the base by using the. 2011 tax forms 1040 ez . 2011 tax forms 1040 ez . 2011 tax forms 1040 ez Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. 2011 tax forms 1040 ez   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. 2011 tax forms 1040 ez   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. 2011 tax forms 1040 ez However, you do add a markup if all the following apply. 2011 tax forms 1040 ez You do not perform any significant activities relating to the processing of the sale of a taxable article. 2011 tax forms 1040 ez The main reason for processing the sale through you is to avoid or evade the presumed markup. 2011 tax forms 1040 ez You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. 2011 tax forms 1040 ez In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. 2011 tax forms 1040 ez Determination of tax base. 2011 tax forms 1040 ez   These rules apply to both normal retail sales price and presumptive retail sales price computations. 2011 tax forms 1040 ez To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. 2011 tax forms 1040 ez However, see Presumptive retail sales price, earlier. 2011 tax forms 1040 ez Exclusions from tax base. 2011 tax forms 1040 ez   Exclude from the tax base the retail excise tax imposed on the sale. 2011 tax forms 1040 ez Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. 2011 tax forms 1040 ez Also exclude the value of any used component of the article furnished by the first user of the article. 2011 tax forms 1040 ez   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. 2011 tax forms 1040 ez These expenses are those incurred in delivery from the retail dealer to the customer. 2011 tax forms 1040 ez In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. 2011 tax forms 1040 ez   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. 2011 tax forms 1040 ez For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. 2011 tax forms 1040 ez Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. 2011 tax forms 1040 ez Sales not at arm's length. 2011 tax forms 1040 ez   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. 2011 tax forms 1040 ez   A sale is not at arm's length if either of the following apply. 2011 tax forms 1040 ez One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. 2011 tax forms 1040 ez The sale is made under special arrangements between a seller and a purchaser. 2011 tax forms 1040 ez Installment sales. 2011 tax forms 1040 ez   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. 2011 tax forms 1040 ez The tax is figured on the entire sales price. 2011 tax forms 1040 ez No part of the tax is deferred because the sales price is paid in installments. 2011 tax forms 1040 ez Repairs and modifications. 2011 tax forms 1040 ez   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. 2011 tax forms 1040 ez This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. 2011 tax forms 1040 ez However, this exception generally does not apply to an article that was not subject to the tax when it was new. 2011 tax forms 1040 ez Further manufacture. 2011 tax forms 1040 ez   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. 2011 tax forms 1040 ez Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. 2011 tax forms 1040 ez Combining an article with an item in this list does not give rise to taxability. 2011 tax forms 1040 ez However, see Parts or accessories discussed earlier. 2011 tax forms 1040 ez Articles exempt from tax. 2011 tax forms 1040 ez   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. 2011 tax forms 1040 ez Rail trailers and rail vans. 2011 tax forms 1040 ez   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). 2011 tax forms 1040 ez Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. 2011 tax forms 1040 ez Parts and accessories. 2011 tax forms 1040 ez   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. 2011 tax forms 1040 ez Trash containers. 2011 tax forms 1040 ez   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. 2011 tax forms 1040 ez It is designed to be used as a trash container. 2011 tax forms 1040 ez It is not designed to carry freight other than trash. 2011 tax forms 1040 ez It is not designed to be permanently mounted on or affixed to a truck chassis or body. 2011 tax forms 1040 ez House trailers. 2011 tax forms 1040 ez   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. 2011 tax forms 1040 ez Camper coaches or bodies for self-propelled mobile homes. 2011 tax forms 1040 ez   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. 2011 tax forms 1040 ez Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. 2011 tax forms 1040 ez Farm feed, seed, and fertilizer equipment. 2011 tax forms 1040 ez   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. 2011 tax forms 1040 ez This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. 2011 tax forms 1040 ez Ambulances and hearses. 2011 tax forms 1040 ez   This is any ambulance, hearse, or combination ambulance-hearse. 2011 tax forms 1040 ez Truck-tractors. 2011 tax forms 1040 ez   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. 2011 tax forms 1040 ez Concrete mixers. 2011 tax forms 1040 ez   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. 2011 tax forms 1040 ez This exemption does not apply to the chassis on which the article is mounted. 2011 tax forms 1040 ez Sales exempt from tax. 2011 tax forms 1040 ez   The following sales are ordinarily exempt from tax. 2011 tax forms 1040 ez Sales to a state or local government for its exclusive use. 2011 tax forms 1040 ez Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. 2011 tax forms 1040 ez Sales to a nonprofit educational organization for its exclusive use. 2011 tax forms 1040 ez Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. 2011 tax forms 1040 ez Sales for use by the purchaser for further manufacture of other taxable articles (see below). 2011 tax forms 1040 ez Sales for export or for resale by the purchaser to a second purchaser for export. 2011 tax forms 1040 ez Sales to the United Nations for official use. 2011 tax forms 1040 ez Registration requirement. 2011 tax forms 1040 ez   In general, the seller and buyer must be registered for a sale to be tax free. 2011 tax forms 1040 ez See the Form 637 instructions for more information. 2011 tax forms 1040 ez Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. 2011 tax forms 1040 ez Further manufacture. 2011 tax forms 1040 ez   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. 2011 tax forms 1040 ez Credits or refunds. 2011 tax forms 1040 ez   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. 2011 tax forms 1040 ez The person using the article as a component part is eligible for the credit or refund. 2011 tax forms 1040 ez   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. 2011 tax forms 1040 ez A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. 2011 tax forms 1040 ez   See also Conditions to allowance in chapter 5. 2011 tax forms 1040 ez Tire credit. 2011 tax forms 1040 ez   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. 2011 tax forms 1040 ez The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). 2011 tax forms 1040 ez This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. 2011 tax forms 1040 ez Prev  Up  Next   Home   More Online Publications