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2012 Free Tax Software Online

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2012 Free Tax Software Online

2012 free tax software online Publication 516 - Main Content Table of Contents U. 2012 free tax software online S. 2012 free tax software online Tax ReturnFiling Information Foreign Bank Accounts U. 2012 free tax software online S. 2012 free tax software online Government Payments Foreign Earned Income Exclusion Tax Treaty Benefits Allowances, Differentials, and Special Pay Other Income Deductions and Credits — Business Expenses Deductions and Credits — Nonbusiness Expenses Foreign Taxes Local (Foreign) Tax ReturnTax Treaty Benefits Other Agreements Double Withholding How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). 2012 free tax software online U. 2012 free tax software online S. 2012 free tax software online Tax Return Filing Information If you are a U. 2012 free tax software online S. 2012 free tax software online citizen or green card holder living or traveling outside the United States, you are generally required to file income tax returns in the same way as those residing in the United States. 2012 free tax software online However, the special rules explained in the following discussions may apply to you. 2012 free tax software online See also Tax Treaty Benefits, later. 2012 free tax software online When To File and Pay Most individual tax returns cover a calendar year, January through December. 2012 free tax software online The regular due date for these tax returns is April 15 of the following year. 2012 free tax software online If April 15 falls on a Saturday, Sunday, or legal holiday, your tax return is considered timely filed if it is filed by the next business day that is not a Saturday, Sunday, or legal holiday. 2012 free tax software online If you get an extension, you are allowed additional time to file and, in some circumstances, pay your tax. 2012 free tax software online You must pay interest on any tax not paid by the regular due date. 2012 free tax software online Your return is considered filed on time if it is mailed from and officially postmarked in a foreign country on or before the due date (including extensions), or given to a designated international private delivery service before midnight of the last date prescribed for filing. 2012 free tax software online See your tax form instructions for a list of private delivery services that have been designated by the IRS to meet this “timely mailing as timely filing/paying” rule for tax returns and payments. 2012 free tax software online If your return is filed late, the postmark or delivery service date does not determine the date of filing. 2012 free tax software online In that case, your return is considered filed when it is received by the IRS. 2012 free tax software online Extensions You may be able to get an extension of time to file your return and pay your tax. 2012 free tax software online Automatic 2-month extension. 2012 free tax software online   You can get an automatic 2-month extension (to June 15, for a calendar year return) to file your return and pay your tax if you are a U. 2012 free tax software online S. 2012 free tax software online citizen or resident and, on the regular due date of your return, you are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico. 2012 free tax software online To get this extension, you must attach a statement to your return explaining how you qualified. 2012 free tax software online You will owe interest on any tax not paid by the regular due date of your return. 2012 free tax software online Married taxpayers. 2012 free tax software online   If you file a joint return, either you or your spouse can qualify for the automatic extension. 2012 free tax software online If you and your spouse file separate returns, the extension applies only to the spouse who qualifies. 2012 free tax software online Additional extension. 2012 free tax software online   You can apply for an additional extension of time to file your return by filing Form 4868. 2012 free tax software online You must file Form 4868 by the due date for your income tax return. 2012 free tax software online   Generally, you must file it by April 15. 2012 free tax software online However, if you qualify for the automatic 2-month extension, you generally must file Form 4868 by June 15. 2012 free tax software online Check the box on line 8 of Form 4868. 2012 free tax software online Payment of tax. 2012 free tax software online   You should estimate and pay any additional tax you owe when you file Form 4868 to avoid being charged a late-payment penalty. 2012 free tax software online The late-payment penalty applies if, through withholding, etc. 2012 free tax software online , you paid less than 90% of your actual tax liability by the original due date of your income tax return. 2012 free tax software online Even if the late-payment penalty does not apply, you will be charged interest on any unpaid tax liability from the original due date of the return until the tax is paid. 2012 free tax software online Electronic filing. 2012 free tax software online   You can file for the additional extension by phone, using your home computer, or through a tax professional. 2012 free tax software online See Form 4868 for more information. 2012 free tax software online Limit on additional extensions. 2012 free tax software online   You generally cannot get a total extension of more than 6 months. 2012 free tax software online However, if you are outside the United States and meet certain tests, you may be able to get a longer extension. 2012 free tax software online   For more information, see Publication 54. 2012 free tax software online Foreign Bank Accounts You must file Form TD F 90-22. 2012 free tax software online 1 if at any time during the year you had an interest in, or signature or other authority over, a bank account, securities account, or other financial account in a foreign country. 2012 free tax software online This applies if the combined assets in the account(s) were more than $10,000. 2012 free tax software online Do not include accounts in a U. 2012 free tax software online S. 2012 free tax software online military banking facility operated by a U. 2012 free tax software online S. 2012 free tax software online financial institution. 2012 free tax software online File the completed form by June 30 of the following year with the Department of the Treasury at the address shown on that form. 2012 free tax software online Do not attach it to Form 1040. 2012 free tax software online If you are required to file Form TD F 90-22. 2012 free tax software online 1 but do not do so, you may have to pay a penalty of up to $10,000 (more if the failure to file is willful). 2012 free tax software online You also may be required to file Form 8938 with your U. 2012 free tax software online S. 2012 free tax software online income tax return to report your interest in foreign bank accounts and other specified foreign financial assets. 2012 free tax software online For taxpayers living abroad, you generally do not have to file Form 8938 unless the total value of your specified foreign financial assets is more than $200,000 ($400,000 if married filing jointly) on the last day of the tax year or more than $300,000 ($600,000 if married filing jointly) at any time during the tax year. 2012 free tax software online For more information, see Form 8938 and its instructions. 2012 free tax software online U. 2012 free tax software online S. 2012 free tax software online Government Payments Wages earned for performing services outside the United States is foreign income, regardless of your employer. 2012 free tax software online If you are a U. 2012 free tax software online S. 2012 free tax software online citizen or resident alien, you must report all income from worldwide sources on your tax return unless it is exempt by U. 2012 free tax software online S. 2012 free tax software online law. 2012 free tax software online This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains). 2012 free tax software online If you are a nonresident alien, your income from sources outside the United States is not subject to U. 2012 free tax software online S. 2012 free tax software online tax. 2012 free tax software online Foreign Earned Income Exclusion Employees of the U. 2012 free tax software online S. 2012 free tax software online Government are not entitled to the foreign earned income exclusion or the foreign housing exclusion/deduction under section 911 because “foreign earned income ”does not include amounts paid by the U. 2012 free tax software online S. 2012 free tax software online Government as an employee. 2012 free tax software online But see Other Employment, later. 2012 free tax software online Special Situations In the following two situations, your pay is from the U. 2012 free tax software online S. 2012 free tax software online Government and does not qualify for the foreign earned income exclusion. 2012 free tax software online U. 2012 free tax software online S. 2012 free tax software online agency reimbursed by foreign country. 2012 free tax software online   If you are a U. 2012 free tax software online S. 2012 free tax software online Government employee paid by a U. 2012 free tax software online S. 2012 free tax software online agency to perform services in a foreign country, your pay is from the U. 2012 free tax software online S. 2012 free tax software online Government and does not qualify the foreign earned income exclusion or the foreign housing exclusion/deduction. 2012 free tax software online This is true even if the U. 2012 free tax software online S. 2012 free tax software online agency is reimbursed by the foreign government. 2012 free tax software online Employees of post exchanges, etc. 2012 free tax software online   If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, Embassy commissary, or similar instrumentality of the U. 2012 free tax software online S. 2012 free tax software online Government, the earnings you receive are paid by the U. 2012 free tax software online S. 2012 free tax software online Government. 2012 free tax software online This is true whether they are paid from appropriated or nonappropriated funds. 2012 free tax software online These earnings are not eligible for the foreign earned income exclusion or the foreign housing exclusion/deduction. 2012 free tax software online Tax Treaty Benefits Most income tax treaties contain an article relating to remuneration from government services. 2012 free tax software online Even if you are working in a foreign country with which the United States has an income tax treaty in force and the treaty article that applies to government services says that your government pay is taxable only in the foreign country, the treaty will likely contain a “saving clause”, which provides that the United States may tax its citizens and its residents as if the treaty had not come into effect. 2012 free tax software online In some treaties, the government service article is an exception to the saving clause, but often only for individuals who are not U. 2012 free tax software online S. 2012 free tax software online citizens or green card holders. 2012 free tax software online Consequently, if you are a U. 2012 free tax software online S. 2012 free tax software online citizen or green card holder, you will generally not be entitled to reduce your U. 2012 free tax software online S. 2012 free tax software online tax on your government pay. 2012 free tax software online If you are neither a U. 2012 free tax software online S. 2012 free tax software online citizen nor green card holder, and you are treated as a resident of the treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule), then you may be entitled to benefits under the government service article. 2012 free tax software online Review the treaty text carefully. 2012 free tax software online U. 2012 free tax software online S. 2012 free tax software online citizens must always file Form 1040. 2012 free tax software online Non-U. 2012 free tax software online S. 2012 free tax software online citizens who are treated as a resident of a treaty country under the treaty residence article (after application of the so-called “tie-breaker” rule) may file Form 1040NR and attach Form 8833. 2012 free tax software online If you pay or accrue taxes to the foreign country on your pay, you may be able to relieve double taxation with a foreign tax credit. 2012 free tax software online Most income tax treaties contain an article providing relief from double taxation. 2012 free tax software online Many treaties contain special foreign tax credit rules for U. 2012 free tax software online S. 2012 free tax software online citizens who are residents of a treaty country. 2012 free tax software online For more information on the mechanics of the foreign tax credit, see Foreign Taxes, later. 2012 free tax software online Allowances, Differentials, and Special Pay Most payments received by U. 2012 free tax software online S. 2012 free tax software online Government civilian employees for working abroad, including pay differentials, are taxable. 2012 free tax software online However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. 2012 free tax software online The following discussions explain the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. 2012 free tax software online Pay differentials. 2012 free tax software online   Pay differentials you receive as financial incentives for employment abroad are taxable. 2012 free tax software online Your employer should have included these differentials as wages on your Form W-2, Wage and Tax Statement. 2012 free tax software online   Generally, pay differentials are given for employment under adverse conditions (such as severe climate) or because the post of duty is located in a hazardous or isolated area that may be outside the United States. 2012 free tax software online The area does not have to be a qualified hazardous duty area as discussed in Publication 3. 2012 free tax software online Pay differentials include: Post differentials, Special incentive differentials, and Danger pay. 2012 free tax software online Foreign areas allowances. 2012 free tax software online   Certain foreign areas allowances are tax free. 2012 free tax software online Your employer should not have included these allowances as wages on your Form W-2. 2012 free tax software online   Tax-free foreign areas allowances are allowances (other than post differentials) received under the following laws. 2012 free tax software online Title I, chapter 9, of the Foreign Service Act of 1980. 2012 free tax software online Section 4 of the Central Intelligence Agency Act of 1949, as amended. 2012 free tax software online Title II of the Overseas Differentials and Allowances Act. 2012 free tax software online Subsection (e) or (f) of the first section of the Administrative Expenses Act of 1946, as amended, or section 22 of that Act. 2012 free tax software online These allowances cover such expenses as: Certain repairs to a leased home, Education of dependents in special situations, Motor vehicle shipment, Separate maintenance for dependents, Temporary quarters, Transportation for medical treatment, and Travel, moving, and storage. 2012 free tax software online Allowances received by foreign service employees for representation expenses are also tax free under the above provisions. 2012 free tax software online Cost-of-living allowances. 2012 free tax software online   If you are stationed outside the continental United States or in Alaska, your gross income does not include cost-of-living allowances (other than amounts received under Title II of the Overseas Differentials and Allowances Act) granted by regulations approved by the President of the United States. 2012 free tax software online The cost-of-living portion of any other allowance (for example, a living and quarters allowance) is not included even if the underlying allowance is included in gross income. 2012 free tax software online Cost-of-living allowances are not included on your Form W-2. 2012 free tax software online Federal court employees. 2012 free tax software online   If you are a federal court employee, the preceding paragraph also applies to you. 2012 free tax software online The cost-of-living allowance must be granted by rules similar to regulations approved by the President. 2012 free tax software online American Institute in Taiwan. 2012 free tax software online   If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. 2012 free tax software online S. 2012 free tax software online tax if they are equivalent to tax-exempt allowances received by civilian employees of the U. 2012 free tax software online S. 2012 free tax software online Government. 2012 free tax software online Federal reemployment payments after serving with an international organization. 2012 free tax software online   If you are a federal employee who is reemployed by a federal agency after serving with an international organization, you must include in income any reemployment payments you receive. 2012 free tax software online These payments are equal to the difference between the pay, allowances, post differential, and other monetary benefits paid by the international organization and the pay and other benefits that would have been paid by the federal agency had you been detailed to the international agency. 2012 free tax software online Allowances or reimbursements for travel and transportation expenses. 2012 free tax software online   See How To Report Business Expenses, later, for a discussion on whether a reimbursement or allowance for travel or transportation is included in your income. 2012 free tax software online Lodging furnished to a principal representative of the United States. 2012 free tax software online   If you are a principal representative of the United States stationed in a foreign country, you do not have to include in income the value of lodging (including utilities) provided to you as an official residence. 2012 free tax software online However, amounts paid by the U. 2012 free tax software online S. 2012 free tax software online government for your usual costs of operating and maintaining your household are taxable. 2012 free tax software online If amounts are withheld from your pay to cover these expenses, you cannot exclude or deduct those amounts from your income. 2012 free tax software online Peace Corps. 2012 free tax software online   If you are a Peace Corps volunteer or volunteer leader, some allowances you receive are taxable and others are not. 2012 free tax software online Taxable allowances. 2012 free tax software online   The following allowances must be included on your Form W-2 and reported on your return as wages. 2012 free tax software online If you are a volunteer leader, allowances paid to your spouse and minor children while you are training in the United States. 2012 free tax software online The part of living allowances designated by the Director of the Peace Corps as basic compensation. 2012 free tax software online This is the part for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. 2012 free tax software online Leave allowances. 2012 free tax software online Readjustment allowances or “termination payments. 2012 free tax software online ” Taxable allowances are considered received by you when credited to your account. 2012 free tax software online Example. 2012 free tax software online Gary Carpenter, a Peace Corps volunteer, gets $175 a month during his period of service, to be paid to him in a lump sum at the end of his tour of duty. 2012 free tax software online Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. 2012 free tax software online Nontaxable allowances. 2012 free tax software online   These generally include travel allowances and the part of living allowances for housing, utilities, food, clothing, and household supplies. 2012 free tax software online These allowances should not be included on your Form W-2. 2012 free tax software online These allowances are tax free whether paid by the U. 2012 free tax software online S. 2012 free tax software online Government or the foreign country in which you are stationed. 2012 free tax software online Other Income Other employment. 2012 free tax software online   If, in addition to your U. 2012 free tax software online S. 2012 free tax software online government pay, you receive income from a private employer or self-employment, you may qualify to claim the foreign earned income exclusion and the foreign housing exclusion and deduction under section 911 based on this other income provided you meet either the bona fide residence test or the physical presence test. 2012 free tax software online In addition, if your spouse is a U. 2012 free tax software online S. 2012 free tax software online citizen or resident alien who earns income in a foreign country that is paid by a private employer or is from self-employment, he or she may also qualify for the exclusion or the deduction. 2012 free tax software online For more information, see Publication 54. 2012 free tax software online The tax treaty rules relating to income from personal services generally apply to income from private employment. 2012 free tax software online As discussed above, the saving clause applies to you if you are a U. 2012 free tax software online S. 2012 free tax software online citizen or if you are a resident of the United States under the treaty residence article (after application of the so-called “tie-breaker” rule). 2012 free tax software online Sale of personal property. 2012 free tax software online   If you have a gain from the sale of your personal property (such as an automobile or a home appliance), whether directly or through a favorable exchange rate in converting the proceeds to U. 2012 free tax software online S. 2012 free tax software online dollars, the excess of the amount received in U. 2012 free tax software online S. 2012 free tax software online dollars over the cost or other basis of the property is a capital gain. 2012 free tax software online Capital gains are reported on Schedule D (Form 1040), Capital Gains and Losses. 2012 free tax software online However, losses from sales of your personal property, whether directly or through an unfavorable exchange rate, are not deductible. 2012 free tax software online Sale of your home. 2012 free tax software online   All or part of the gain on the sale of your main home, within or outside the United States, may be taxable. 2012 free tax software online Losses are not deductible. 2012 free tax software online   You may be able to exclude from income any gain up to $250,000 ($500,000 on a joint return). 2012 free tax software online Generally, you must have owned and used the home as your main residence for two of the five years preceding the date of sale. 2012 free tax software online   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse is serving on qualified official extended duty as a member of the Foreign Service of the United States, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps. 2012 free tax software online   For detailed information on selling your home, see Publication 523. 2012 free tax software online Deductions and Credits — Business Expenses You may deduct certain expenses such as travel expenses, transportation expenses, and other expenses connected to your employment. 2012 free tax software online Travel Expenses Subject to certain limits, you can deduct your unreimbursed ordinary and necessary expenses of traveling away from home in connection with the performance of your official duties. 2012 free tax software online These expenses include such items as travel costs, meals, lodging, baggage charges, local transportation costs (such as taxi fares), tips, and dry cleaning and laundry fees. 2012 free tax software online Your home for tax purposes (tax home) is your regular post of duty regardless of where you maintain your family home. 2012 free tax software online Your tax home is not limited to the Embassy, consulate, or duty station. 2012 free tax software online It includes the entire city or general area in which your principal place of employment is located. 2012 free tax software online Traveling away from home. 2012 free tax software online   You are traveling away from home if you meet both of the following requirements. 2012 free tax software online Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work. 2012 free tax software online You need to get sleep or rest to meet the demands of your work while away from home. 2012 free tax software online This requirement is not satisfied by merely napping in your car. 2012 free tax software online You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. 2012 free tax software online Temporary assignment. 2012 free tax software online   If your assignment or job away from your tax home is temporary, your tax home does not change. 2012 free tax software online You are considered to be away from home for the whole period, and your travel expenses are deductible. 2012 free tax software online Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. 2012 free tax software online   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. 2012 free tax software online An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year. 2012 free tax software online   You must determine whether your assignment is temporary or indefinite when you start work. 2012 free tax software online If you expect employment to last for one year or less, it is temporary unless there are facts and circumstances that indicate otherwise. 2012 free tax software online Employment that is initially temporary may become indefinite due to changed circumstances. 2012 free tax software online A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. 2012 free tax software online Exception for federal crime investigations or prosecutions. 2012 free tax software online   If you are a federal employee participating in a federal crime investigation or prosecution, you may be able to deduct travel expenses even if you are away from your tax home for more than one year. 2012 free tax software online This exception to the one-year rule applies if the Attorney General certifies that you are traveling for the federal government in a temporary duty status to prosecute, or provide support services for the investigation or prosecution of, a federal crime. 2012 free tax software online Limit on meals and entertainment. 2012 free tax software online   You can generally deduct only 50% of the cost of your unreimbursed business-related meals and entertainment. 2012 free tax software online However, the limit does not apply to expenses reimbursed under a U. 2012 free tax software online S. 2012 free tax software online Government expense allowance arrangement. 2012 free tax software online Individuals subject to hours of service limits. 2012 free tax software online   You can deduct 80% of your unreimbursed business-related meal expenses if the meals take place during or incident to any period subject to the Department of Transportation's hours of service limits. 2012 free tax software online   Individuals subject to the Department of Transportation's “hours of service” limits include the following. 2012 free tax software online Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. 2012 free tax software online Interstate truck operators and bus drivers who are under Department of Transportation regulations. 2012 free tax software online Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. 2012 free tax software online Certain merchant mariners who are under Coast Guard regulations. 2012 free tax software online Primary purpose of trip must be for business. 2012 free tax software online   If your trip was entirely for business, your unreimbursed travel expenses are generally deductible. 2012 free tax software online However, if you spend some of your time on nonbusiness activities, part of your expenses may not be deductible. 2012 free tax software online   If your trip was mainly personal, you cannot deduct your travel expenses to and from your destination. 2012 free tax software online This applies even if you engage in business activities while there. 2012 free tax software online However, you can deduct any expenses while at your destination that are directly related to your business. 2012 free tax software online Expenses paid for others. 2012 free tax software online   You generally cannot deduct travel expenses of your spouse, dependents, or other individuals who go with you on a trip. 2012 free tax software online Home leave. 2012 free tax software online   The Foreign Service Act requires U. 2012 free tax software online S. 2012 free tax software online citizens who are members of the foreign service to take a leave of absence after completing 3 years of continuous service abroad. 2012 free tax software online This period is called “home leave” and can be used to take care of certain personal matters such as medical and dental checkups, buying a new wardrobe, and visiting relatives. 2012 free tax software online   The amounts paid for your travel, meals, and lodging while on home leave are deductible as travel or business expenses subject to the rules and limits discussed earlier. 2012 free tax software online You must be able to verify these amounts in order to claim them. 2012 free tax software online Amounts paid on behalf of your family while on home leave are personal living expenses and are not deductible. 2012 free tax software online More information. 2012 free tax software online   See chapter 1 of Publication 463 for more information on travel expenses. 2012 free tax software online Transportation Expenses You can deduct allowable transportation expenses that are directly related to your official duties. 2012 free tax software online Transportation expenses include the cost of transportation by air, rail, bus, or taxi, and the cost of driving and maintaining your car. 2012 free tax software online They do not include expenses you have when traveling away from home overnight. 2012 free tax software online Those expenses are deductible as travel expenses and are discussed earlier. 2012 free tax software online Commuting. 2012 free tax software online   You cannot deduct your transportation costs of going between your home and your regular business location. 2012 free tax software online These costs are personal commuting expenses. 2012 free tax software online   If you have one or more regular business locations but must work at a temporary location, you can deduct the costs of commuting to that temporary place of work. 2012 free tax software online   If you work at two or more places in the same day, you can deduct your expenses of getting from one place of work to the other. 2012 free tax software online More information. 2012 free tax software online   For more information on transportation expenses, see chapter 4 of Publication 463. 2012 free tax software online Other Employee Business Expenses You may be able to deduct other unreimbursed expenses that are connected with your employment. 2012 free tax software online Membership dues. 2012 free tax software online   You can deduct membership dues you pay to professional societies that relate to your business or profession. 2012 free tax software online Subscriptions. 2012 free tax software online   You can deduct subscriptions to professional publications that relate to your business or profession. 2012 free tax software online Educational expenses. 2012 free tax software online   Generally, educational expenses are considered to be personal expenses and are not deductible. 2012 free tax software online However, under some circumstances, educational expenses are deductible as business expenses. 2012 free tax software online   You can deduct educational expenses as business expenses if the education: Maintains or improves skills needed in your present position, or Meets the express requirements of your agency to keep your present position, salary, or status. 2012 free tax software online   You cannot deduct educational expenses as business expenses if the education: Is needed to enable you to meet minimum educational requirements for qualification in your present position, Is a part of a program of study that can qualify you for a new position, or Is for travel as a form of education. 2012 free tax software online These rules apply even if the education is required by your agency or it maintains or improves skills required in your work. 2012 free tax software online   See Publication 970, Tax Benefits for Education, for more information on educational expenses. 2012 free tax software online    Educational expenses that are not work related, such as costs of sending children to college, are personal expenses that you cannot deduct. 2012 free tax software online However, you may be eligible for other tax benefits such as the American opportunity and lifetime learning credits; contributions to a Coverdell education savings account or qualified tuition program; deduction for student loan interest; and exclusion from income of certain savings bond interest. 2012 free tax software online These benefits are explained in Publication 970. 2012 free tax software online Foreign service representation expenses. 2012 free tax software online   If you are an employee of the U. 2012 free tax software online S. 2012 free tax software online Foreign Service and your position requires you to establish and maintain favorable relations in foreign countries, you may receive a nontaxable allowance for representation expenses. 2012 free tax software online If your expenses are more than the allowance you receive, you can deduct the excess expenses as an itemized deduction on Schedule A (Form 1040) if you meet one of the following conditions. 2012 free tax software online You have a certificate from the Secretary of State attesting that the expenses were incurred for the benefit of the United States, and would be reimbursable under appropriate legislation if the agency had sufficient funds for these reimbursements. 2012 free tax software online The expenses, while specifically not reimbursable under State Department regulations, were ordinary and necessary business expenses incurred in the performance of your official duties. 2012 free tax software online    To deduct any expenses for travel, entertainment, and gifts, including those certified by the Secretary of State, you must meet the rules for recordkeeping and accounting to your employer. 2012 free tax software online These rules are explained in Publication 463. 2012 free tax software online Representation expenses. 2012 free tax software online   These are expenses that further the interest of the United States abroad. 2012 free tax software online They include certain entertainment, gifts, costs of official functions, and rental of ceremonial dress. 2012 free tax software online They generally do not include costs of passenger vehicles (such as cars or aircraft), printing or engraving, membership fees, or amounts a principal representative must pay personally to cover the usual costs of operating and maintaining an official residence. 2012 free tax software online   Chapters 300 and 400 of the Standardized Regulations (Government Civilians, Foreign Area) provide more detail on what expenses are allowable as representation expenses. 2012 free tax software online These regulations are available on the Internet at www. 2012 free tax software online state. 2012 free tax software online gov/m/a/als. 2012 free tax software online Look under “Standardized Regulations (DSSR)” and click on “DSSR Table of Contents. 2012 free tax software online ” Publication 463 and Publication 529, Miscellaneous Deductions, provide more detail on what expenses are allowable as ordinary and necessary business expenses. 2012 free tax software online Impairment-related work expenses. 2012 free tax software online   If you are an employee with a physical or mental disability, you can deduct attendant-care services at your place of work and other expenses in connection with work that are necessary for you to be able to work. 2012 free tax software online Attendant care includes a reader for a blind person and a helper for a person with a physical disability. 2012 free tax software online These expenses are reported on Form 2106 or 2106-EZ and carried to Schedule A (Form 1040). 2012 free tax software online They are not subject to the 2%-of-adjusted- gross-income limit on miscellaneous itemized deductions. 2012 free tax software online Loss on conversion of U. 2012 free tax software online S. 2012 free tax software online dollars into foreign currency. 2012 free tax software online   The conversion of U. 2012 free tax software online S. 2012 free tax software online dollars into foreign currency at an official rate of exchange that is not as favorable as the free market rate does not result in a deductible loss. 2012 free tax software online Recordkeeping Rules If you claim a deduction for unreimbursed business expenses, you must keep timely and adequate records of all your business expenses. 2012 free tax software online For example, you must keep records and supporting evidence to prove the following elements about deductions for travel expenses (including meals and lodging while away from home). 2012 free tax software online The amount of each separate expense for travel away from home, such as the cost of your transportation, lodging, or meals. 2012 free tax software online You may total your incidental expenses if you list them in reasonable categories such as daily meals, gasoline and oil, and taxi fares. 2012 free tax software online For each trip away from home, the dates you left and returned and the number of days spent on business. 2012 free tax software online The destination or area of your travel, described by the name of the city, town, or similar designation. 2012 free tax software online The business reason for your travel or the business benefit gained or expected to be gained from your travel. 2012 free tax software online How to record your expenses. 2012 free tax software online   Records for proof of your expenses should be kept in an account book, diary, statement of expense, or similar record. 2012 free tax software online They should be supported by other records, such as receipts or canceled checks, in sufficient detail to establish the elements for these expenses. 2012 free tax software online You do not need to duplicate information in an account book or diary that is shown on a receipt as long as your records and receipts complement each other in an orderly manner. 2012 free tax software online   Each expense should be recorded separately in your records. 2012 free tax software online However, some items can be totaled in reasonable categories. 2012 free tax software online You can make one daily entry for categories such as taxi fares, telephone calls, meals while away from home, gas and oil, and other incidental costs of travel. 2012 free tax software online You may record tips separately or with the cost of the service. 2012 free tax software online    Documentary evidence generally is required to support all lodging expenses while traveling away from home. 2012 free tax software online It is also required for any other expense of $75 or more, except transportation charges if the evidence is not readily available. 2012 free tax software online Documentary evidence is a receipt, paid bill, or similar proof sufficient to support an expense. 2012 free tax software online It ordinarily will be considered adequate if it shows the amount, date, place, and essential business character of the expense. 2012 free tax software online    A canceled check by itself does not prove a business cost. 2012 free tax software online You must have other evidence to show that the check was used for a business purpose. 2012 free tax software online Your records must be timely. 2012 free tax software online   Record the elements for the expense in your account book or other record at or near the time of the expense. 2012 free tax software online A timely-kept record has more value than statements prepared later when, generally, there is a lack of accurate recall. 2012 free tax software online Confidential information. 2012 free tax software online   You do not need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. 2012 free tax software online However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense. 2012 free tax software online How To Report Business Expenses As a U. 2012 free tax software online S. 2012 free tax software online Government employee, your business expense reimbursements are generally paid under an accountable plan and are not included in your wages on your Form W-2. 2012 free tax software online If your expenses are not more than the reimbursements, you do not need to show your expenses or reimbursements on your return. 2012 free tax software online However, if you do not account to your employer for a travel advance or if you do not return any excess advance within a reasonable period of time, the advance (or excess) will be included in your wages on your Form W-2. 2012 free tax software online If you are entitled to a reimbursement from your employer but you do not claim it, you cannot deduct the expenses to which that unclaimed reimbursement applies. 2012 free tax software online Form 2106 or Form 2106-EZ. 2012 free tax software online   You must complete Form 2106 or 2106-EZ to deduct your expenses. 2012 free tax software online Also, if your actual expenses are more than your reimbursements, you can complete Form 2106 or 2106-EZ to deduct your excess expenses. 2012 free tax software online Generally, you must include all of your expenses and reimbursements on Form 2106 or 2106-EZ and carry your allowable expense to Schedule A (Form 1040). 2012 free tax software online Your allowable expense is then generally subject to the 2%-of-adjusted-gross-income limit. 2012 free tax software online Form 2106-EZ. 2012 free tax software online   You may be able to use Form 2106-EZ instead of the more complex Form 2106 for reporting unreimbursed employee business expenses. 2012 free tax software online You can use Form 2106-EZ if you meet both of the following conditions. 2012 free tax software online You are not reimbursed by your employer for any expenses. 2012 free tax software online (Amounts your employer included in your wages on your Form W-2 are not considered reimbursements. 2012 free tax software online ) If you claim car expenses, you use the standard mileage rate. 2012 free tax software online Deductions and Credits — Nonbusiness Expenses In addition to deductible business expenses, you may be entitled to deduct certain other expenses. 2012 free tax software online Moving Expenses If you changed job locations or started a new job, you may be able to deduct the reasonable expenses of moving yourself, your family, and your household goods and personal effects to your new home. 2012 free tax software online However, you cannot deduct any expenses for which you received a tax-free allowance as a U. 2012 free tax software online S. 2012 free tax software online Government employee. 2012 free tax software online To deduct moving expenses, your move must be closely related to the start of work and you must meet the distance test and the time test. 2012 free tax software online Closely related to the start of work. 2012 free tax software online   The move must be closely related, both in time and in place, to the start of work at the new location. 2012 free tax software online In general, you must have incurred your moving expenses within one year from the time you first report to your new job or business. 2012 free tax software online   A move generally is not considered closely related in place to the start of work if the distance from your new home to the new job location is more than the distance from your former home to the new job location. 2012 free tax software online A move that does not meet this requirement may qualify if you can show that you must live at the new home as a condition of employment, or you will spend less time or money commuting from the new home to the new job. 2012 free tax software online Distance test. 2012 free tax software online   Your new main job location must be at least 50 miles farther from your former home than your old main job location was. 2012 free tax software online If you did not have an old job location, your new job location must be at least 50 miles from your former home. 2012 free tax software online Time test. 2012 free tax software online   If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location. 2012 free tax software online Deductible moving expenses. 2012 free tax software online   Moving expenses that can be deducted include the reasonable costs of: Moving household goods and personal effects (including packing, crating, in-transit storage, and insurance) of both you and members of your household, and Transportation and lodging for yourself and members of your household for one trip from your former home to your new home (including costs of getting passports). 2012 free tax software online    The cost of your meals is not a deductible moving expense. 2012 free tax software online   The costs of moving household goods include the reasonable expenses of moving household goods and personal effects to and from storage. 2012 free tax software online For a foreign move, the costs also include expenses of storing the goods and effects for part or all of the period that your new job location abroad continues to be your main job location. 2012 free tax software online Expenses must be reasonable. 2012 free tax software online   You can deduct only those expenses that are reasonable for the circumstances of your move. 2012 free tax software online For example, the costs of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. 2012 free tax software online Members of your household. 2012 free tax software online   A member of your household includes anyone who has both your former home and new home as his or her home. 2012 free tax software online It does not include a tenant or employee unless you can claim that person as a dependent. 2012 free tax software online Retirees. 2012 free tax software online   You can deduct the costs of moving to the United States when you permanently retire if both your former main job location and former home were outside the United States and its possessions. 2012 free tax software online You do not have to meet the time test described earlier. 2012 free tax software online Survivors. 2012 free tax software online   You can deduct moving expenses for a move to the United States if you are the spouse or dependent of a person whose main job location at the time of death was outside the United States and its possessions. 2012 free tax software online The move must begin within 6 months after the decedent's death. 2012 free tax software online It must be from the decedent's former home outside the United States, and that home must also have been your home. 2012 free tax software online You do not have to meet the time test described earlier. 2012 free tax software online How to report moving expenses. 2012 free tax software online   Use Form 3903 to report your moving expenses and figure your allowable deduction. 2012 free tax software online Claim the deduction as an adjustment to income on Form 1040. 2012 free tax software online (You cannot deduct moving expenses on Form 1040A or Form 1040EZ. 2012 free tax software online ) Reimbursements. 2012 free tax software online   Generally, you must include reimbursements of, or payments for, nondeductible moving expenses in gross income for the year paid. 2012 free tax software online You also must include in gross income reimbursements paid to you under a nonaccountable plan. 2012 free tax software online However, there is an exception for the tax-free foreign areas allowances described earlier under Allowances, Differentials, and Special Pay. 2012 free tax software online Additional information. 2012 free tax software online   For additional information about moving expenses, see Publication 521. 2012 free tax software online Other Itemized Deductions You may be able to claim other itemized deductions not connected to your employment. 2012 free tax software online Contributions. 2012 free tax software online   You can deduct contributions to qualified organizations created or organized in or under the laws of the United States or its possessions. 2012 free tax software online You cannot deduct contributions you make directly to foreign organizations (except for certain Canadian, Israeli, and Mexican charities), churches, and governments. 2012 free tax software online For more information, see Publication 526, Charitable Contributions. 2012 free tax software online Real estate tax and home mortgage interest. 2012 free tax software online   If you receive a tax-free housing allowance, your itemized deductions for real estate taxes and home mortgage interest are limited. 2012 free tax software online You must reduce the amount of each deduction that would otherwise be allowable by the amount of each expense that is related to the tax-free allowance. 2012 free tax software online Example. 2012 free tax software online Adam is an IRS employee working overseas who receives a $6,300 tax-free housing and utility allowance. 2012 free tax software online During the year, Adam used the allowance, with other funds, to provide a home for himself. 2012 free tax software online His expenses for this home totaled $8,400 and consisted of mortgage principal ($500), insurance ($400), real estate taxes ($1,400), mortgage interest ($4,000), and utility costs ($2,100). 2012 free tax software online Adam did not have any other expenses related to providing a home for himself. 2012 free tax software online Adam must reduce his deductions for home mortgage interest and real estate taxes. 2012 free tax software online He figures a reasonable way to reduce them is to multiply them by a fraction: its numerator is $6,300 (the total housing and utility allowance) and its denominator is $8,400 (the total of all payments to which the housing and utility allowance applies). 2012 free tax software online The result is 3/4. 2012 free tax software online Adam reduces his otherwise allowable home mortgage interest deduction by $3,000 (the $4,000 he paid ×3/4) and his otherwise allowable real estate tax deduction by $1,050 (the $1,400 he paid × 3/4). 2012 free tax software online He can deduct $1,000 of his mortgage interest ($4,000 − $3,000) and $350 of his real estate taxes ($1,400 − $1,050) when he itemizes his deductions. 2012 free tax software online Exception to the reduction. 2012 free tax software online   If you receive a tax-free housing allowance as a member of the military or the clergy, you do not have to reduce your deductions for real estate tax and home mortgage interest expenses you are otherwise entitled to deduct. 2012 free tax software online Required statement. 2012 free tax software online   If you receive a tax-free housing allowance and have real estate tax or home mortgage interest expenses, attach a statement to your tax return. 2012 free tax software online The statement must contain all of the following information. 2012 free tax software online The amount of each type of tax-free income you received, such as a tax-free housing allowance or tax-free representation allowance. 2012 free tax software online The amount of otherwise deductible expenses attributable to each type of tax-free income. 2012 free tax software online The amount attributable to each type of tax-free income that was not directly attributable to that type of tax-free income. 2012 free tax software online An explanation of how you determined the amounts not directly attributable to each type of tax-free income. 2012 free tax software online   The statement must also indicate that none of the amounts deducted on your return are in any way attributable to tax-free income. 2012 free tax software online Foreign Taxes If you pay or accrue taxes to a foreign government, you generally can choose to either claim them as a credit against your U. 2012 free tax software online S. 2012 free tax software online income tax liability or deduct them as an itemized deduction when figuring your taxable income. 2012 free tax software online Do not include the foreign taxes paid or accrued as withheld income taxes in the Payments section of Form 1040. 2012 free tax software online Foreign tax credit. 2012 free tax software online   Your foreign tax credit is subject to a limit based on your taxable income from foreign sources. 2012 free tax software online If you choose to figure a credit against your U. 2012 free tax software online S. 2012 free tax software online tax liability for the foreign taxes, you generally must complete Form 1116 and attach it to your U. 2012 free tax software online S. 2012 free tax software online income tax return. 2012 free tax software online    You cannot claim a credit for foreign taxes paid on amounts excluded from gross income under the foreign earned income or housing exclusions. 2012 free tax software online If all your foreign income is exempt from U. 2012 free tax software online S. 2012 free tax software online tax, you will not be able to claim a foreign tax credit. 2012 free tax software online   If, because of the limit on the credit, you cannot use the full amount of qualified foreign taxes paid or accrued in the tax year, you are allowed to carry the excess back 1 year and then forward 10 years. 2012 free tax software online Exemption from limit. 2012 free tax software online   You can elect to not be subject to the foreign tax limit if you meet all the following conditions. 2012 free tax software online Your only foreign income is passive income, such as interest, dividends, and royalties. 2012 free tax software online The total of all your foreign taxes is not more than $300 ($600 for joint tax returns). 2012 free tax software online The foreign income and taxes are reported to you on a payee statement, such as Form 1099-DIV, Dividends and Distributions, or 1099-INT, Interest Income. 2012 free tax software online If you make the election, you can claim a foreign tax credit without filing Form 1116. 2012 free tax software online However, you cannot carry back or carry over any unused foreign tax to or from this year. 2012 free tax software online See the instructions for the appropriate line in the Tax and Credits section of Form 1040. 2012 free tax software online Foreign tax deduction. 2012 free tax software online   If you choose to deduct all foreign income taxes on your U. 2012 free tax software online S. 2012 free tax software online income tax return, itemize the deduction on Schedule A (Form 1040). 2012 free tax software online You cannot deduct foreign taxes paid on income you exclude under the foreign earned income or housing exclusions. 2012 free tax software online Example. 2012 free tax software online Dennis and Christina are married and live and work in Country X. 2012 free tax software online Dennis works for the U. 2012 free tax software online S. 2012 free tax software online Government and Christina is employed by a private company. 2012 free tax software online They pay income tax to Country X on Christina's income only. 2012 free tax software online Dennis and Christina file a joint tax return and exclude all of Christina's income. 2012 free tax software online They cannot claim a foreign tax credit or take a deduction for the taxes paid to Country X. 2012 free tax software online Deduction for other foreign taxes. 2012 free tax software online   The deduction for foreign taxes other than foreign income taxes is not related to the foreign tax credit. 2012 free tax software online You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes paid to a foreign country. 2012 free tax software online   You can deduct real property taxes you pay that are imposed on you by a foreign country. 2012 free tax software online You take this deduction on Schedule A (Form 1040). 2012 free tax software online You cannot deduct other foreign taxes, such as personal property taxes, unless you incurred the expenses in a trade or business or in the production of income. 2012 free tax software online More information. 2012 free tax software online   The foreign tax credit and deduction, their limits, and carryback and carryover provisions are discussed in detail in Publication 514. 2012 free tax software online Local (Foreign) Tax Return As a U. 2012 free tax software online S. 2012 free tax software online Government employee, you are expected to observe and fulfill all tax obligations imposed by the host country government. 2012 free tax software online Check with local tax authorities to determine whether you are considered a tax resident of your host country, whether you are required to file a host country tax return and whether you owe taxes to the host country. 2012 free tax software online Tax Treaty Benefits As discussed earlier, most income tax treaties contain an article relating to remuneration from government services. 2012 free tax software online Review the treaty text carefully to determine whether your U. 2012 free tax software online S. 2012 free tax software online Government remuneration is taxable in the host country. 2012 free tax software online You will first have to determine whether you are a resident of your host country under the treaty residence article (after application of the so-called “tie-breaker” rule). 2012 free tax software online If you or your spouse receives income from a private employer or self-employment, review the tax treaty rules relating to income from personal services to determine whether that income is taxable in the host country. 2012 free tax software online If you pay or accrue taxes to both the host country and the United States, you may be able to relieve double taxation with a foreign tax credit. 2012 free tax software online Most income tax treaties contain an article providing relief from double taxation. 2012 free tax software online Many treaties contain special foreign tax credit rules for U. 2012 free tax software online S. 2012 free tax software online citizens who are residents of a treaty country. 2012 free tax software online For more information about the foreign tax credit, see Foreign Taxes, earlier. 2012 free tax software online Other Agreements The United States may be a party to agreements other than income tax treaties that may affect your tax obligations to the host country. 2012 free tax software online For example, consular employees may be exempt from host country tax under the Vienna Convention on Consular Relations or bilateral consular agreements. 2012 free tax software online Similarly, certain diplomatic staff may be exempt from host country tax under the Vienna Convention on Diplomatic Relations. 2012 free tax software online Check with the appropriate U. 2012 free tax software online S. 2012 free tax software online Embassy for more information. 2012 free tax software online Double Withholding If your U. 2012 free tax software online S. 2012 free tax software online government pay is subject to withholding in both the United States and the foreign country, you may reduce the amount of U. 2012 free tax software online S. 2012 free tax software online tax that is withheld from your pay if you expect to be entitled to a foreign tax credit on your U. 2012 free tax software online S. 2012 free tax software online income tax return on this income. 2012 free tax software online Complete Worksheet 1-6 in Publication 505, Tax Withholding and Estimated Tax, to determine how to revise Form W-4, Employee’s Withholding Allowance Certificate. 2012 free tax software online How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 2012 free tax software online By selecting the method that is best for you, you will have quick and easy access to tax help. 2012 free tax software online Free help with your tax return. 2012 free tax software online   Free help in preparing your return is available nationwide from IRS-certified volunteers. 2012 free tax software online The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income, elderly, disabled, and limited English proficient taxpayers. 2012 free tax software online The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 2012 free tax software online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2012 free tax software online Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. 2012 free tax software online To find the nearest VITA or TCE site, visit IRS. 2012 free tax software online gov or call 1-800-906-9887 or 1-800-829-1040. 2012 free tax software online   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2012 free tax software online To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2012 free tax software online aarp. 2012 free tax software online org/money/taxaide or call 1-888-227-7669. 2012 free tax software online   For more information on these programs, go to IRS. 2012 free tax software online gov and enter “VITA” in the search box. 2012 free tax software online Internet. 2012 free tax software online You can access the IRS website at IRS. 2012 free tax software online gov 24 hours a day, 7 days a week to: E-file your return. 2012 free tax software online Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 2012 free tax software online Check the status of your 2012 refund. 2012 free tax software online Go to IRS. 2012 free tax software online gov and click on Where’s My Refund. 2012 free tax software online Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. 2012 free tax software online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2012 free tax software online Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2012 free tax software online Where's My Refund? has a new look this year! The tool will include a tracker that displays progress through three stages: (1) return received, (2) refund approved, and (3) refund sent. 2012 free tax software online Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. 2012 free tax software online So in a change from previous filing seasons, you won't get an estimated refund date right away. 2012 free tax software online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 2012 free tax software online You can obtain a free transcript online at IRS. 2012 free tax software online gov by clicking on Order a Return or Account Transcript under “Tools. 2012 free tax software online ” For a transcript by phone, call 1-800-908-9946 and follow the prompts in the recorded message. 2012 free tax software online You will be prompted to provide your SSN or Individual Taxpayer Identification Number (ITIN), date of birth, street address and ZIP code. 2012 free tax software online Download forms, including talking tax forms, instructions, and publications. 2012 free tax software online Order IRS products. 2012 free tax software online Research your tax questions. 2012 free tax software online Search publications by topic or keyword. 2012 free tax software online Use the Internal Revenue Code, regulations, or other official guidance. 2012 free tax software online View Internal Revenue Bulletins (IRBs) published in the last few years. 2012 free tax software online Figure your withholding allowances using the IRS Withholding Calculator at www. 2012 free tax software online irs. 2012 free tax software online gov/individuals. 2012 free tax software online Determine if Form 6251 (Alternative Minimum Tax— Individuals), must be filed by using our Alternative Minimum Tax (AMT) Assistant available at IRS. 2012 free tax software online gov by typing Alternative Minimum Tax Assistant in the search box. 2012 free tax software online Sign up to receive local and national tax news by email. 2012 free tax software online Get information on starting and operating a small business. 2012 free tax software online Phone. 2012 free tax software online Many services are available by phone. 2012 free tax software online   Ordering forms, instructions, and publications. 2012 free tax software online Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions (limited to 5 years). 2012 free tax software online You should receive your order within 10 days. 2012 free tax software online Asking tax questions. 2012 free tax software online Call the IRS with your tax questions at 1-800-829-1040. 2012 free tax software online Solving problems. 2012 free tax software online You can get face-to-face help solving tax problems most business days in IRS Taxpayer Assistance Centers (TAC). 2012 free tax software online An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 2012 free tax software online Call your local Taxpayer Assistance Center for an appointment. 2012 free tax software online To find the number, go to www. 2012 free tax software online irs. 2012 free tax software online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2012 free tax software online TTY/TDD equipment. 2012 free tax software online If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 2012 free tax software online The TTY/TDD telephone number is for individuals who are deaf, hard of hearing, or have a speech disability. 2012 free tax software online These individuals can also access the IRS through relay services such as the Federal Relay Service at www. 2012 free tax software online gsa. 2012 free tax software online gov/fedrelay. 2012 free tax software online TeleTax topics. 2012 free tax software online Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 2012 free tax software online Checking the status of your 2012 refund. 2012 free tax software online To check the status of your 2012 refund, call 1-800-829-1954 or 1-800-829-4477 (automated Where's My Refund? information 24 hours a day, 7 days a week). 2012 free tax software online Information about your return will generally be available within 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail your paper return. 2012 free tax software online If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 2012 free tax software online Have your 2012 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 2012 free tax software online Where's My Refund? will provide an actual personalized refund date as soon as the IRS processes your tax return and approves your refund. 2012 free tax software online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 2012 free tax software online Outside the U. 2012 free tax software online S. 2012 free tax software online If you are outside the United States, taxpayer assistance is available at the following U. 2012 free tax software online S Embassies or consulate. 2012 free tax software online Beijing, China (86) (10) 8531-3983 Frankfurt, Germany (49) (69) 7535-3834 London, England (44) (20) 7894-0476 Paris, France (33) (1) 4312-2555 Please contact the office for times when assistance will be available. 2012 free tax software online If you cannot get to one of these offices, taxpayer assistance is available at (267) 941-1000 (not a toll free call). 2012 free tax software online If you are in a U. 2012 free tax software online S. 2012 free tax software online territory (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U. 2012 free tax software online S. 2012 free tax software online Virgin Islands) and have a tax question, you can call 1-800-829-1040. 2012 free tax software online Evaluating the quality of our telephone services. 2012 free tax software online To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 2012 free tax software online One method is for a second IRS representative to listen in on or record random telephone calls. 2012 free tax software online Another is to ask some callers to complete a short survey at the end of the call. 2012 free tax software online Walk-in. 2012 free tax software online Some products and services are available on a walk-in basis. 2012 free tax software online   Products. 2012 free tax software online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2012 free tax software online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 2012 free tax software online Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 2012 free tax software online Services. 2012 free tax software online You can walk in to your local TAC most business days for personal, face-to-face tax help. 2012 free tax software online An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 2012 free tax software online If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. 2012 free tax software online No appointment is necessary—just walk in. 2012 free tax software online Before visiting, check www. 2012 free tax software online irs. 2012 free tax software online gov/localcontacts for hours of operation and services provided. 2012 free tax software online If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested by calling your local TAC. 2012 free tax software online You can leave a message and a representative will call you back within 2 business days. 2012 free tax software online All other issues will be handled without an appointment. 2012 free tax software online To call your local TAC, go to  www. 2012 free tax software online irs. 2012 free tax software online gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 2012 free tax software online Outside the U. 2012 free tax software online S. 2012 free tax software online If you are outside the United States during the filing period (January to mid-June), you can get the necessary federal tax forms and publications from most U. 2012 free tax software online S. 2012 free tax software online Embassies and consulates. 2012 free tax software online Mail. 2012 free tax software online You can send your order for forms, instructions, and publications to the address below. 2012 free tax software online You should receive a response within 10 days after your request is received. 2012 free tax software online  Internal Revenue Service 1201 N. 2012 free tax software online Mitsubishi Motorway Bloomington, IL 61705-6613 Outside the U. 2012 free tax software online S. 2012 free tax software online If you are outside the United States, you can get tax assistance by writing to the address below. 2012 free tax software online  Internal Revenue Service International Accounts Philadelphia, PA 19255-0725 Taxpayer Advocate Service. 2012 free tax software online   The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2012 free tax software online Its job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. 2012 free tax software online TAS offers free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. 2012 free tax software online Remember, the worst thing you can do is nothing at all. 2012 free tax software online   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. 2012 free tax software online You face (or your business is facing) an immediate threat of adverse action. 2012 free tax software online You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. 2012 free tax software online   If you qualify for help, they will do everything they can to get your problem resolved. 2012 free tax software online You will be assigned to one advocate who will be with you at every turn. 2012 free tax software online TAS has offices in every state, the District of Columbia, and Puerto Rico. 2012 free tax software online Although TAS is independent within the IRS, their advocates know how to work with the IRS to get your problems resolved. 2012 free tax software online And its services are always free. 2012 free tax software online   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. 2012 free tax software online The TAS tax toolkit at www. 2012 free tax software online TaxpayerAdvocate. 2012 free tax software online irs. 2012 free tax software online gov can help you understand these rights. 2012 free tax software online   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. 2012 free tax software online irs. 2012 free tax software online gov/advocate. 2012 free tax software online You can also call the toll-free number at 1-877-777-4778. 2012 free tax software online Deaf and hard of hearing individuals who have access to TTY/TDD equipment can call 1-800-829-4059. 2012 free tax software online These individuals can also access the IRS through relay services such as the Federal Relay Service at www. 2012 free tax software online gsa. 2012 free tax software online gov/fedrelay. 2012 free tax software online   TAS also handles large-scale or systemic problems that affect many taxpayers. 2012 free tax software online If you know of one of these broad issues, please report it through the Systemic Advocacy Management System at www. 2012 free tax software online irs. 2012 free tax software online gov/advocate. 2012 free tax software online    Outside the U. 2012 free tax software online S. 2012 free tax software online If you live outside of the United States, you can call the Taxpayer Advocate at (787) 522-8601 in English or (787) 522-8600 in Spanish. 2012 free tax software online You can contact the Taxpayer Advocate at: Internal Revenue Service Taxpayer Advocate Service City View Plaza, 48 Carr 165, Suite 2000 Guaynabo, P. 2012 free tax software online R. 2012 free tax software online 00968-8000 Low Income Taxpayer Clinics (LITCs). 2012 free tax software online   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. 2012 free tax software online Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. 2012 free tax software online These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. 2012 free tax software online Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. 2012 free tax software online For more information and to find a clinic near you, see the LITC page on www. 2012 free tax software online irs. 2012 free tax software online gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. 2012 free tax software online This publication is also available by calling 1-800-TAX-FORM (1-800-829-3676) or at your local IRS office. 2012 free tax software online Free tax services. 2012 free tax software online   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. 2012 free tax software online Learn about free tax information from the IRS, including publications, services, and education and assistance programs. 2012 free tax software online The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. 2012 free tax software online The majority of the information and services listed in this publication are available to you free of charge. 2012 free tax software online If there is a fee associated with a resource or service, it is listed in the publication. 2012 free tax software online   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 2012 free tax software online DVD for tax products. 2012 free tax software online You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. 2012 free tax software online Prior-year forms, instructions, and publications. 2012 free tax software online Tax Map: an electronic research tool and finding aid. 2012 free tax software online Tax law frequently asked questions. 2012 free tax software online Tax Topics from the IRS telephone response system. 2012 free tax software online Internal Revenue Code—Title 26 of the U. 2012 free tax software online S. 2012 free tax software online Code. 2012 free tax software online Links to other Internet-based tax research materials. 2012 free tax software online Fill-in, print, and save features for most tax forms. 2012 free tax software online Internal Revenue Bulletins. 2012 free tax software online Toll-free and email technical support. 2012 free tax software online Two releases during the year. 2012 free tax software online  – The first release will ship the beginning of January 2013. 2012 free tax software online  – The final release will ship the beginning of March 2013. 2012 free tax software online Purchase the DVD from National Technical Information Service (NTIS) at www. 2012 free tax software online irs. 2012 free tax software online gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). 2012 free tax software online Prev  Up  Next   Home   More Online Publications
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The 2012 Free Tax Software Online

2012 free tax software online 2. 2012 free tax software online   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. 2012 free tax software online 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. 2012 free tax software online Deduction may depend on your type of business. 2012 free tax software online Exception for events that benefit charitable organizations. 2012 free tax software online Food and beverages in skybox seats. 2012 free tax software online What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. 2012 free tax software online You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. 2012 free tax software online The rules and definitions are summarized in Table 2-1 . 2012 free tax software online You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. 2012 free tax software online Directly-related test. 2012 free tax software online Associated test. 2012 free tax software online Both of these tests are explained later. 2012 free tax software online An ordinary expense is one that is common and accepted in your trade or business. 2012 free tax software online A necessary expense is one that is helpful and appropriate for your business. 2012 free tax software online An expense does not have to be required to be considered necessary. 2012 free tax software online The amount you can deduct for entertainment expenses may be limited. 2012 free tax software online Generally, you can deduct only 50% of your unreimbursed entertainment expenses. 2012 free tax software online This limit is discussed later under 50% Limit. 2012 free tax software online Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. 2012 free tax software online Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. 2012 free tax software online Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. 2012 free tax software online See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. 2012 free tax software online You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. 2012 free tax software online It is not necessary to devote more time to business than to entertainment. 2012 free tax software online However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. 2012 free tax software online Table 2-1. 2012 free tax software online When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. 2012 free tax software online Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. 2012 free tax software online An ordinary expense is one that is common and accepted in your trade or business. 2012 free tax software online A necessary expense is one that is helpful and appropriate. 2012 free tax software online Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. 2012 free tax software online   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. 2012 free tax software online Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. 2012 free tax software online You cannot deduct expenses that are lavish or extravagant under the circumstances. 2012 free tax software online You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). 2012 free tax software online You do not have to show that business income or other business benefit actually resulted from each entertainment expense. 2012 free tax software online Clear business setting. 2012 free tax software online   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. 2012 free tax software online The following situations are examples of entertainment in a clear business setting. 2012 free tax software online Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. 2012 free tax software online Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). 2012 free tax software online Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. 2012 free tax software online An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. 2012 free tax software online Expenses not considered directly related. 2012 free tax software online   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. 2012 free tax software online The following are examples of situations where there are substantial distractions. 2012 free tax software online A meeting or discussion at a nightclub, theater, or sporting event. 2012 free tax software online A meeting or discussion during what is essentially a social gathering, such as a cocktail party. 2012 free tax software online A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. 2012 free tax software online Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. 2012 free tax software online To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). 2012 free tax software online Associated with trade or business. 2012 free tax software online   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. 2012 free tax software online The purpose may be to get new business or to encourage the continuation of an existing business relationship. 2012 free tax software online Substantial business discussion. 2012 free tax software online   Whether a business discussion is substantial depends on the facts of each case. 2012 free tax software online A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. 2012 free tax software online   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. 2012 free tax software online It is not necessary that you devote more time to business than to entertainment. 2012 free tax software online You do not have to discuss business during the meal or entertainment. 2012 free tax software online Meetings at conventions. 2012 free tax software online   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. 2012 free tax software online However, your reason for attending the convention or meeting must be to further your trade or business. 2012 free tax software online The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. 2012 free tax software online Directly before or after business discussion. 2012 free tax software online   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. 2012 free tax software online   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. 2012 free tax software online Among the facts to consider are the place, date, and duration of the business discussion. 2012 free tax software online If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. 2012 free tax software online Example. 2012 free tax software online A group of business associates comes from out of town to your place of business to hold a substantial business discussion. 2012 free tax software online If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. 2012 free tax software online The expense meets the associated test. 2012 free tax software online 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. 2012 free tax software online (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. 2012 free tax software online See Individuals subject to “hours of service” limits , later. 2012 free tax software online ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. 2012 free tax software online Figure A summarizes the general rules explained in this section. 2012 free tax software online The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. 2012 free tax software online Included expenses. 2012 free tax software online   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. 2012 free tax software online However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. 2012 free tax software online Figure A. 2012 free tax software online Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. 2012 free tax software online See Exceptions to the 50% Limit . 2012 free tax software online Please click here for the text description of the image. 2012 free tax software online Figure A. 2012 free tax software online Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. 2012 free tax software online   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. 2012 free tax software online   The 50% limit also applies to certain meal and entertainment expenses that are not business related. 2012 free tax software online It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. 2012 free tax software online It also applies to the cost of meals included in deductible educational expenses. 2012 free tax software online When to apply the 50% limit. 2012 free tax software online   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. 2012 free tax software online You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. 2012 free tax software online Example 1. 2012 free tax software online You spend $200 for a business-related meal. 2012 free tax software online If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. 2012 free tax software online Your deduction cannot be more than $45 (50% × $90). 2012 free tax software online Example 2. 2012 free tax software online You purchase two tickets to a concert and give them to a client. 2012 free tax software online You purchased the tickets through a ticket agent. 2012 free tax software online You paid $200 for the two tickets, which had a face value of $80 each ($160 total). 2012 free tax software online Your deduction cannot be more than $80 (50% × $160). 2012 free tax software online Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. 2012 free tax software online Figure A can help you determine if the 50% limit applies to you. 2012 free tax software online Expenses not subject to 50% limit. 2012 free tax software online   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. 2012 free tax software online 1 - Employee's reimbursed expenses. 2012 free tax software online   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. 2012 free tax software online Accountable plans are discussed in chapter 6. 2012 free tax software online 2 - Self-employed. 2012 free tax software online   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. 2012 free tax software online You have these expenses as an independent contractor. 2012 free tax software online Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. 2012 free tax software online You provide adequate records of these expenses to your customer or client. 2012 free tax software online (See chapter 5 . 2012 free tax software online )   In this case, your client or customer is subject to the 50% limit on the expenses. 2012 free tax software online Example. 2012 free tax software online You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. 2012 free tax software online You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. 2012 free tax software online If the client can deduct the expenses, the client is subject to the 50% limit. 2012 free tax software online If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. 2012 free tax software online 3 - Advertising expenses. 2012 free tax software online   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. 2012 free tax software online For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. 2012 free tax software online 4 - Sale of meals or entertainment. 2012 free tax software online   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. 2012 free tax software online For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. 2012 free tax software online 5 - Charitable sports event. 2012 free tax software online   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. 2012 free tax software online For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. 2012 free tax software online Individuals subject to “hours of service” limits. 2012 free tax software online   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. 2012 free tax software online The percentage is 80%. 2012 free tax software online   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. 2012 free tax software online Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. 2012 free tax software online Interstate truck operators and bus drivers who are under Department of Transportation regulations. 2012 free tax software online Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. 2012 free tax software online Certain merchant mariners who are under Coast Guard regulations. 2012 free tax software online What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. 2012 free tax software online Entertainment. 2012 free tax software online   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. 2012 free tax software online Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. 2012 free tax software online   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. 2012 free tax software online A meal as a form of entertainment. 2012 free tax software online   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. 2012 free tax software online A meal expense includes the cost of food, beverages, taxes, and tips for the meal. 2012 free tax software online To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. 2012 free tax software online    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. 2012 free tax software online    Meals sold in the normal course of your business are not considered entertainment. 2012 free tax software online Deduction may depend on your type of business. 2012 free tax software online   Your kind of business may determine if a particular activity is considered entertainment. 2012 free tax software online For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. 2012 free tax software online This is because fashion shows are typical in your business. 2012 free tax software online But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. 2012 free tax software online Separating costs. 2012 free tax software online   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. 2012 free tax software online You must have a reasonable basis for making this allocation. 2012 free tax software online For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. 2012 free tax software online Taking turns paying for meals or entertainment. 2012 free tax software online   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. 2012 free tax software online Lavish or extravagant expenses. 2012 free tax software online   You cannot deduct expenses for entertainment that are lavish or extravagant. 2012 free tax software online An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. 2012 free tax software online Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. 2012 free tax software online Allocating between business and nonbusiness. 2012 free tax software online   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. 2012 free tax software online You can deduct only the business part. 2012 free tax software online If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. 2012 free tax software online Example. 2012 free tax software online You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. 2012 free tax software online Only 4/11 of the expense qualifies as a business entertainment expense. 2012 free tax software online You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. 2012 free tax software online Trade association meetings. 2012 free tax software online   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. 2012 free tax software online These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. 2012 free tax software online Entertainment tickets. 2012 free tax software online   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. 2012 free tax software online For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. 2012 free tax software online Exception for events that benefit charitable organizations. 2012 free tax software online   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. 2012 free tax software online You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. 2012 free tax software online The event's main purpose is to benefit a qualified charitable organization. 2012 free tax software online The entire net proceeds go to the charity. 2012 free tax software online The event uses volunteers to perform substantially all the event's work. 2012 free tax software online    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. 2012 free tax software online Example 1. 2012 free tax software online You purchase tickets to a golf tournament organized by the local volunteer fire company. 2012 free tax software online All net proceeds will be used to buy new fire equipment. 2012 free tax software online The volunteers will run the tournament. 2012 free tax software online You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. 2012 free tax software online Example 2. 2012 free tax software online You purchase tickets to a college football game through a ticket broker. 2012 free tax software online After having a business discussion, you take a client to the game. 2012 free tax software online Net proceeds from the game go to colleges that qualify as charitable organizations. 2012 free tax software online However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. 2012 free tax software online Skyboxes and other private luxury boxes. 2012 free tax software online   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. 2012 free tax software online   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. 2012 free tax software online For example, renting a skybox for a series of playoff games is considered renting it for more than one event. 2012 free tax software online All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. 2012 free tax software online   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. 2012 free tax software online Example. 2012 free tax software online You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. 2012 free tax software online The cost of regular nonluxury box seats at each event is $30 a seat. 2012 free tax software online You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). 2012 free tax software online Food and beverages in skybox seats. 2012 free tax software online   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. 2012 free tax software online The amounts separately stated for food and beverages must be reasonable. 2012 free tax software online You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. 2012 free tax software online What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. 2012 free tax software online Club dues and membership fees. 2012 free tax software online   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. 2012 free tax software online This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. 2012 free tax software online   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. 2012 free tax software online You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. 2012 free tax software online Entertainment facilities. 2012 free tax software online   Generally, you cannot deduct any expense for the use of an entertainment facility. 2012 free tax software online This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. 2012 free tax software online   An entertainment facility is any property you own, rent, or use for entertainment. 2012 free tax software online Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. 2012 free tax software online Out-of-pocket expenses. 2012 free tax software online   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. 2012 free tax software online These are not expenses for the use of an entertainment facility. 2012 free tax software online However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. 2012 free tax software online Expenses for spouses. 2012 free tax software online   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. 2012 free tax software online However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. 2012 free tax software online Example. 2012 free tax software online You entertain a customer. 2012 free tax software online The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. 2012 free tax software online The customer's spouse joins you because it is impractical to entertain the customer without the spouse. 2012 free tax software online You can deduct the cost of entertaining the customer's spouse. 2012 free tax software online If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. 2012 free tax software online Gift or entertainment. 2012 free tax software online   Any item that might be considered either a gift or entertainment generally will be considered entertainment. 2012 free tax software online However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. 2012 free tax software online   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. 2012 free tax software online You can treat the tickets as either a gift or entertainment, whichever is to your advantage. 2012 free tax software online   You can change your treatment of the tickets at a later date by filing an amended return. 2012 free tax software online Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. 2012 free tax software online   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. 2012 free tax software online You cannot choose, in this case, to treat the tickets as a gift. 2012 free tax software online Prev  Up  Next   Home   More Online Publications