File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Aarp Org Taxaide

How To File A 2011 Tax ReturnState Taxes Free OnlineAmendment Tax ReturnFree Tax ServicesFree Tax2012 Tax Forms 10401040ez Tax Form 20141040nr Form 2013H&r Block At Home MilitaryTaxact 1040xWww H&rblock ComTax Preparation FormsFree 2012 Tax HelpFree State Tax FillingIrs 2008 Tax FormsPrintable 1040ez Tax FormFree Online Taxes 2012Irs 1040ez 2011 FormTurbotax ComWhere File Amended 1040xWww Handrblock ComI Need To Print A Free 1040x FormAmend My 2010 Tax Return2010 Tax Forms InstructionsHow Do I Amend My Tax Return10ez2013 1040xHr Block Tax Free1040x Download1040ez2012Auto Fill 1040xE File State ReturnHr Block Free EfileVita Tax ServiceState Taxes For FreeIncome Tax1040ez Form 2013How Can I File My 2011 Taxes Online For FreeAmend Tax2012 Tax Form 940

Aarp Org Taxaide

Aarp org taxaide Publication 929 - Main Content Table of Contents Part 1. Aarp org taxaide Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. Aarp org taxaide Designated as representative. Aarp org taxaide IRS notice. Aarp org taxaide Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Aarp org taxaide Part 2. Aarp org taxaide Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. Aarp org taxaide Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Aarp org taxaide Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Aarp org taxaide Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Aarp org taxaide Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. Aarp org taxaide Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. Aarp org taxaide A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. Aarp org taxaide See Other Filing Requirements, later. Aarp org taxaide The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Aarp org taxaide  To find out whether a dependent must file, read the section that applies, or use Table 1. Aarp org taxaide Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. Aarp org taxaide Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Aarp org taxaide Example. Aarp org taxaide William is 16. Aarp org taxaide His mother claims an exemption for him on her income tax return. Aarp org taxaide He worked part time on weekends during the school year and full time during the summer. Aarp org taxaide He earned $7,000 in wages. Aarp org taxaide He did not have any unearned income. Aarp org taxaide He must file a tax return because he has earned income only and his gross income is more than $6,100. Aarp org taxaide If he is blind, he does not have to file a return because his gross income is not more than $7,600. Aarp org taxaide Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. Aarp org taxaide Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Aarp org taxaide Example. Aarp org taxaide Sarah is 18 and single. Aarp org taxaide Her parents can claim an exemption for her on their income tax return. Aarp org taxaide She received $1,970 of taxable interest and dividend income. Aarp org taxaide She did not work during the year. Aarp org taxaide She must file a tax return because she has unearned income only and her gross income is more than $1,000. Aarp org taxaide If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. Aarp org taxaide Election to report child's unearned income on parent's return. Aarp org taxaide   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. Aarp org taxaide See Parent's Election To Report Child's Interest and Dividends in Part 2. Aarp org taxaide If the parent makes this election, the child does not have to file a return. Aarp org taxaide Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. Aarp org taxaide Filing Requirement Worksheet for Most Dependents 1. Aarp org taxaide Enter dependent's earned income plus $350     2. Aarp org taxaide Minimum amount   $1,000 3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger amount     4. Aarp org taxaide Maximum amount   6,100 5. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount     6. Aarp org taxaide Enter the dependent's gross income. Aarp org taxaide If line 6 is more than line 5, the dependent must file an income tax return. Aarp org taxaide If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Aarp org taxaide       Table 1. Aarp org taxaide 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Aarp org taxaide   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Aarp org taxaide   Single dependents—Were you either age 65 or older or blind?     No. Aarp org taxaide You must file a return if any of the following apply. Aarp org taxaide       Your unearned income was over $1,000. Aarp org taxaide Your earned income was over $6,100. Aarp org taxaide Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Aarp org taxaide         Yes. Aarp org taxaide You must file a return if any of the following apply. Aarp org taxaide     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Aarp org taxaide       Married dependents—Were you either age 65 or older or blind?     No. Aarp org taxaide You must file a return if any of the following apply. Aarp org taxaide       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Aarp org taxaide Your unearned income was over $1,000. Aarp org taxaide Your earned income was over $6,100. Aarp org taxaide Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Aarp org taxaide       Yes. Aarp org taxaide You must file a return if any of the following apply. Aarp org taxaide       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Aarp org taxaide Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Aarp org taxaide       Example 1. Aarp org taxaide Joe is 20, single, not blind, and a full-time college student. Aarp org taxaide He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. Aarp org taxaide He received $200 taxable interest income and earned $2,750 from a part-time job. Aarp org taxaide He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). Aarp org taxaide Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. Aarp org taxaide Enter dependent's earned income plus $350   $ 3,100 2. Aarp org taxaide Minimum amount   1,000 3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger amount   3,100 4. Aarp org taxaide Maximum amount   6,100 5. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount   3,100 6. Aarp org taxaide Enter the dependent's gross income. Aarp org taxaide If line 6 is more than line 5, the dependent must file an income tax return. Aarp org taxaide If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Aarp org taxaide   $ 2,950   Example 2. Aarp org taxaide The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Aarp org taxaide He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). Aarp org taxaide Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Aarp org taxaide Enter dependent's earned income plus $350   $ 3,100 2. Aarp org taxaide Minimum amount   1,000 3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger amount   3,100 4. Aarp org taxaide Maximum amount   6,100 5. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount   3,100 6. Aarp org taxaide Enter the dependent's gross income. Aarp org taxaide If line 6 is more than line 5, the dependent must file an income tax return. Aarp org taxaide If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Aarp org taxaide   $ 3,350   Age 65 or older or blind. Aarp org taxaide A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. Aarp org taxaide Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Aarp org taxaide Enter dependent's earned income plus $350     2. Aarp org taxaide Minimum amount   $1,000 3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger amount     4. Aarp org taxaide Maximum amount   6,100 5. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount     6. Aarp org taxaide Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Aarp org taxaide Add lines 5 and 6. Aarp org taxaide Enter the total     8. Aarp org taxaide Enter the dependent's gross income. Aarp org taxaide If line 8 is more than line 7, the dependent must file an income tax return. Aarp org taxaide If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. Aarp org taxaide The facts are the same as in Example 2 except that Joe is also blind. Aarp org taxaide He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). Aarp org taxaide   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Aarp org taxaide Enter dependent's earned income plus $350   $3,100 2. Aarp org taxaide Minimum amount   1,000 3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger amount   3,100 4. Aarp org taxaide Maximum amount   6,100 5. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount   3,100 6. Aarp org taxaide Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Aarp org taxaide Add lines 5 and 6. Aarp org taxaide Enter the total   4,600 8. Aarp org taxaide Enter the dependent's gross income. Aarp org taxaide If line 8 is more than line 7, the dependent must file an income tax return. Aarp org taxaide If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. Aarp org taxaide A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Aarp org taxaide But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Aarp org taxaide A dependent must also file a tax return if he or she: Had wages of $108. Aarp org taxaide 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. Aarp org taxaide Spouse itemizes. Aarp org taxaide   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). Aarp org taxaide Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. Aarp org taxaide Income tax was withheld from his or her income. Aarp org taxaide He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Aarp org taxaide See the tax return instructions to find out who qualifies for these credits. Aarp org taxaide  By filing a return, the dependent can get a refund. Aarp org taxaide Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. Aarp org taxaide If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Aarp org taxaide Signing the child's return. Aarp org taxaide   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. Aarp org taxaide ” Authority of parent or guardian. Aarp org taxaide   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. Aarp org taxaide   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. Aarp org taxaide That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. Aarp org taxaide Third party designee. Aarp org taxaide   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. Aarp org taxaide The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. Aarp org taxaide   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. Aarp org taxaide This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. Aarp org taxaide See the return instructions for more information. Aarp org taxaide Designated as representative. Aarp org taxaide   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. Aarp org taxaide Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Aarp org taxaide See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Aarp org taxaide   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. Aarp org taxaide IRS notice. Aarp org taxaide   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. Aarp org taxaide The notice will show who to contact. Aarp org taxaide The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Aarp org taxaide Child's earnings. Aarp org taxaide   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. Aarp org taxaide This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Aarp org taxaide If the child does not pay the tax due on this income, the parent may be liable for the tax. Aarp org taxaide Child's expenses. Aarp org taxaide   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. Aarp org taxaide Example. Aarp org taxaide You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Aarp org taxaide You made the payments out of your child's earnings. Aarp org taxaide These items can be deducted only on the child's return. Aarp org taxaide Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). Aarp org taxaide However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Aarp org taxaide Certain dependents cannot claim any standard deduction. Aarp org taxaide See Standard Deduction of Zero , later. Aarp org taxaide Worksheet 1. Aarp org taxaide   Use Worksheet 1 to figure the dependent's standard deduction. Aarp org taxaide Worksheet 1. Aarp org taxaide Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Aarp org taxaide If you were 65 or older and/or blind, check the correct number of boxes below. Aarp org taxaide Put the total number of boxes checked in box c and go to line 1. Aarp org taxaide a. Aarp org taxaide You 65 or older   Blind   b. Aarp org taxaide Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Aarp org taxaide Total boxes checked         1. Aarp org taxaide Enter your earned income (defined below) plus $350. Aarp org taxaide If none, enter -0-. Aarp org taxaide 1. Aarp org taxaide     2. Aarp org taxaide Minimum amount. Aarp org taxaide   2. Aarp org taxaide $1,000   3. Aarp org taxaide Compare lines 1 and 2. Aarp org taxaide Enter the larger of the two amounts here. Aarp org taxaide 3. Aarp org taxaide     4. Aarp org taxaide Enter on line 4 the amount shown below for your filing status. Aarp org taxaide       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Aarp org taxaide     5. Aarp org taxaide Standard deduction. Aarp org taxaide         a. Aarp org taxaide Compare lines 3 and 4. Aarp org taxaide Enter the smaller amount here. Aarp org taxaide If under 65 and not blind, stop here. Aarp org taxaide This is your standard deduction. Aarp org taxaide Otherwise, go on to line 5b. Aarp org taxaide 5a. Aarp org taxaide     b. Aarp org taxaide If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Aarp org taxaide Enter the result here. Aarp org taxaide 5b. Aarp org taxaide     c. Aarp org taxaide Add lines 5a and 5b. Aarp org taxaide This is your standard deduction for 2013. Aarp org taxaide 5c. Aarp org taxaide     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Aarp org taxaide It also includes any amount received as a scholarship that you must include in income. Aarp org taxaide   Example 1. Aarp org taxaide Michael is single, age 15, and not blind. Aarp org taxaide His parents can claim him as a dependent on their tax return. Aarp org taxaide He has taxable interest income of $800 and wages of $150. Aarp org taxaide He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Aarp org taxaide On line 3, he enters $1,000, the larger of $500 or $1,000. Aarp org taxaide Michael enters $6,100 on line 4. Aarp org taxaide On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Aarp org taxaide His standard deduction is $1,000. Aarp org taxaide Example 2. Aarp org taxaide Judy, a full-time student, is single, age 22, and not blind. Aarp org taxaide Her parents can claim her as a dependent on their tax return. Aarp org taxaide She has dividend income of $275 and wages of $2,500. Aarp org taxaide She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Aarp org taxaide On line 3, she enters $2,850, the larger of $2,850 or $1,000. Aarp org taxaide She enters $6,100 on line 4. Aarp org taxaide On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Aarp org taxaide Example 3. Aarp org taxaide Amy, who is single, is claimed as a dependent on her parents' tax return. Aarp org taxaide She is 18 years old and blind. Aarp org taxaide She has taxable interest income of $1,000 and wages of $2,000. Aarp org taxaide She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Aarp org taxaide She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. Aarp org taxaide Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Aarp org taxaide She enters $1,500 (the number in box c times $1,500) on line 5b. Aarp org taxaide Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Aarp org taxaide Standard Deduction of Zero The standard deduction for the following dependents is zero. Aarp org taxaide A married dependent filing a separate return whose spouse itemizes deductions. Aarp org taxaide A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. Aarp org taxaide A nonresident or dual-status alien dependent, unless the dependent is married to a U. Aarp org taxaide S. Aarp org taxaide citizen or resident alien at the end of the year and chooses to be treated as a U. Aarp org taxaide S. Aarp org taxaide resident for the year. Aarp org taxaide See Publication 519, U. Aarp org taxaide S. Aarp org taxaide Tax Guide for Aliens, for information on making this choice. Aarp org taxaide Example. Aarp org taxaide Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Aarp org taxaide However, her husband elects to file a separate return and itemize his deductions. Aarp org taxaide Because he itemizes, Jennifer's standard deduction on her return is zero. Aarp org taxaide She can, however, itemize any of her allowable deductions. Aarp org taxaide Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. Aarp org taxaide This is true even if the other taxpayer does not actually claim the exemption. Aarp org taxaide Example. Aarp org taxaide James and Barbara can claim their child, Ben, as a dependent on their return. Aarp org taxaide Ben is a college student who works during the summer and must file a tax return. Aarp org taxaide Ben cannot claim his own exemption on his return. Aarp org taxaide This is true even if James and Barbara do not claim him as a dependent on their return. Aarp org taxaide Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Aarp org taxaide If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Aarp org taxaide The exemption from withholding does not apply to social security and Medicare taxes. Aarp org taxaide Conditions for exemption from withholding. Aarp org taxaide   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Aarp org taxaide For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Aarp org taxaide For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Aarp org taxaide Dependents. Aarp org taxaide   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Aarp org taxaide The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Aarp org taxaide The employee's unearned income will be more than $350. Aarp org taxaide Exceptions. Aarp org taxaide   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. Aarp org taxaide The above exceptions do not apply to supplemental wages greater than $1,000,000. Aarp org taxaide For more information, see Exemption From Withholding in chapter 1 of Publication 505. Aarp org taxaide Example. Aarp org taxaide Guy is 17 and a student. Aarp org taxaide During the summer he works part time at a grocery store. Aarp org taxaide He expects to earn about $1,200 this year. Aarp org taxaide He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. Aarp org taxaide The only other income he expects during the year is $375 interest on a savings account. Aarp org taxaide He expects that his parents will be able to claim him as a dependent on their tax return. Aarp org taxaide He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Aarp org taxaide Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. Aarp org taxaide Claiming exemption from withholding. Aarp org taxaide    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Aarp org taxaide The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Aarp org taxaide Renewing an exemption from withholding. Aarp org taxaide   An exemption from withholding is good for only one year. Aarp org taxaide An employee must file a new Form W-4 by February 15 each year to continue the exemption. Aarp org taxaide Part 2. Aarp org taxaide Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Aarp org taxaide If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. Aarp org taxaide (See Parent's Election To Report Child's Interest and Dividends , later. Aarp org taxaide ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Aarp org taxaide (See Tax for Certain Children Who Have Unearned Income , later. Aarp org taxaide ) For these rules, the term “child” includes a legally adopted child and a stepchild. Aarp org taxaide These rules apply whether or not the child is a dependent. Aarp org taxaide These rules do not apply if neither of the child's parents were living at the end of the year. Aarp org taxaide Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. Aarp org taxaide The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . Aarp org taxaide Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. Aarp org taxaide Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Aarp org taxaide Parents are married. Aarp org taxaide   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Aarp org taxaide Parents not living together. Aarp org taxaide   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. Aarp org taxaide If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Aarp org taxaide   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. Aarp org taxaide Parents are divorced. Aarp org taxaide   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. Aarp org taxaide Custodial parent remarried. Aarp org taxaide   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Aarp org taxaide Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Aarp org taxaide Do not use the return of the noncustodial parent. Aarp org taxaide   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Aarp org taxaide If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Aarp org taxaide Parents never married. Aarp org taxaide   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. Aarp org taxaide If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Aarp org taxaide Widowed parent remarried. Aarp org taxaide   If a widow or widower remarries, the new spouse is treated as the child's other parent. Aarp org taxaide The rules explained earlier under Custodial parent remarried apply. Aarp org taxaide Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. Aarp org taxaide If you do, your child will not have to file a return. Aarp org taxaide You can make this election only if all the following conditions are met. Aarp org taxaide Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Aarp org taxaide Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Aarp org taxaide The child's gross income was less than $10,000. Aarp org taxaide The child is required to file a return unless you make this election. Aarp org taxaide The child does not file a joint return for the year. Aarp org taxaide No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. Aarp org taxaide No federal income tax was withheld from your child's income under the backup withholding rules. Aarp org taxaide You are the parent whose return must be used when applying the special tax rules for children. Aarp org taxaide (See Which Parent's Return To Use , earlier. Aarp org taxaide ) These conditions are also shown in Figure 1. Aarp org taxaide Certain January 1 birthdays. Aarp org taxaide   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Aarp org taxaide You cannot make this election for such a child unless the child was a full-time student. Aarp org taxaide   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Aarp org taxaide You cannot make this election for such a child. Aarp org taxaide How to make the election. Aarp org taxaide    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Aarp org taxaide (If you make this election, you cannot file Form 1040A or Form 1040EZ. Aarp org taxaide ) Attach a separate Form 8814 for each child for whom you make the election. Aarp org taxaide You can make the election for one or more children and not for others. Aarp org taxaide Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Aarp org taxaide Rate may be higher. Aarp org taxaide   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. Aarp org taxaide This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Aarp org taxaide However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. Aarp org taxaide Deductions you cannot take. Aarp org taxaide   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. Aarp org taxaide The additional standard deduction if the child is blind. Aarp org taxaide The deduction for a penalty on an early withdrawal of your child's savings. Aarp org taxaide Itemized deductions (such as your child's investment expenses or charitable contributions). Aarp org taxaide Figure 1. Aarp org taxaide Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Aarp org taxaide Figure 1. Aarp org taxaide Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Aarp org taxaide   If you use Form 8814, your child's unearned income is considered your unearned income. Aarp org taxaide To figure the limit on your deductible investment interest, add the child's unearned income to yours. Aarp org taxaide However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. Aarp org taxaide Alternative minimum tax. Aarp org taxaide    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. Aarp org taxaide If it is, you must include it with your own tax preference items when figuring your AMT. Aarp org taxaide See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Aarp org taxaide Reduced deductions or credits. Aarp org taxaide   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Aarp org taxaide Deduction for contributions to a traditional individual retirement arrangement (IRA). Aarp org taxaide Deduction for student loan interest. Aarp org taxaide Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Aarp org taxaide Credit for child and dependent care expenses. Aarp org taxaide Child tax credit. Aarp org taxaide Education tax credits. Aarp org taxaide Earned income credit. Aarp org taxaide Penalty for underpayment of estimated tax. Aarp org taxaide   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. Aarp org taxaide If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. Aarp org taxaide Get Publication 505 for more information. Aarp org taxaide Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Aarp org taxaide Only the amount over $2,000 is added to your income. Aarp org taxaide The amount over $2,000 is shown on Form 8814, line 6. Aarp org taxaide Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Aarp org taxaide Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Aarp org taxaide If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. Aarp org taxaide On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Aarp org taxaide Note. Aarp org taxaide The tax on the first $2,000 is figured on Form 8814, Part II. Aarp org taxaide See Figuring Additional Tax , later. Aarp org taxaide Qualified dividends. Aarp org taxaide   Enter on Form 8814, line 2a, any ordinary dividends your child received. Aarp org taxaide This amount may include qualified dividends. Aarp org taxaide Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. Aarp org taxaide For detailed information about qualified dividends, see Publication 550. Aarp org taxaide   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Aarp org taxaide You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Aarp org taxaide   Enter the child's qualified dividends on Form 8814, line 2b. Aarp org taxaide But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Aarp org taxaide Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Aarp org taxaide (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Aarp org taxaide ) Capital gain distributions. Aarp org taxaide   Enter on Form 8814, line 3, any capital gain distributions your child received. Aarp org taxaide The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. Aarp org taxaide You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Aarp org taxaide   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Aarp org taxaide (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Aarp org taxaide ) Collectibles (28% rate) gain. Aarp org taxaide    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. Aarp org taxaide Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Aarp org taxaide The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Aarp org taxaide The denominator is the child's total capital gain distribution. Aarp org taxaide Enter the result on line 4 of the 28% Rate Gain Worksheet. Aarp org taxaide Unrecaptured section 1250 gain. Aarp org taxaide   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. Aarp org taxaide Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Aarp org taxaide The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Aarp org taxaide The denominator is the child's total capital gain distribution. Aarp org taxaide Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Aarp org taxaide Section 1202 gain. Aarp org taxaide   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. Aarp org taxaide (For information about the exclusion, see chapter 4 of Publication 550. Aarp org taxaide ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Aarp org taxaide The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Aarp org taxaide The denominator is the child's total capital gain distribution. Aarp org taxaide Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Aarp org taxaide In some cases, the exclusion is more than 50%. Aarp org taxaide See the instructions for Schedule D for details and information on how to report the exclusion amount. Aarp org taxaide Example. Aarp org taxaide Fred is 6 years old. Aarp org taxaide In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. Aarp org taxaide (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Aarp org taxaide ) All of the ordinary dividends are qualified dividends. Aarp org taxaide He has no other income and is not subject to backup withholding. Aarp org taxaide No estimated tax payments were made under his name and social security number. Aarp org taxaide Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Aarp org taxaide They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. Aarp org taxaide They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Aarp org taxaide They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Aarp org taxaide They enter the amount of Fred's capital gain distributions, $525, on line 3. Aarp org taxaide Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Aarp org taxaide They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. Aarp org taxaide This is the total amount from Form 8814 to be reported on their return. Aarp org taxaide Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Aarp org taxaide They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Aarp org taxaide They enter the result, . Aarp org taxaide 75, on line 7. Aarp org taxaide They divide the amount on line 3, $525, by the amount on line 4, $2,100. Aarp org taxaide They enter the result, . Aarp org taxaide 25, on line 8. Aarp org taxaide They multiply the amount on line 6, $100, by the decimal on line 7, . Aarp org taxaide 75, and enter the result, $75, on line 9. Aarp org taxaide They multiply the amount on line 6, $100, by the decimal on line 8, . Aarp org taxaide 25, and enter the result, $25, on line 10. Aarp org taxaide They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. Aarp org taxaide They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. Aarp org taxaide They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Aarp org taxaide Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Aarp org taxaide Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. Aarp org taxaide This tax is added to the tax figured on your income. Aarp org taxaide This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Aarp org taxaide Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Aarp org taxaide Check box a on Form 1040, line 44, or Form 1040NR, line 42. Aarp org taxaide Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Aarp org taxaide If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Aarp org taxaide Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Aarp org taxaide When Form 8615 must be filed. Aarp org taxaide   Form 8615 must be filed for a child if all of the following statements are true. Aarp org taxaide The child's unearned income was more than $2,000. Aarp org taxaide The child is required to file a return for 2013. Aarp org taxaide The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. Aarp org taxaide At least one of the child's parents was alive at the end of 2013. Aarp org taxaide The child does not file a joint return for 2013. Aarp org taxaide These conditions are also shown in Figure 2. Aarp org taxaide Certain January 1 birthdays. Aarp org taxaide   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Aarp org taxaide IF a child was born on. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide THEN, at the end of 2013, the child is considered to be. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Aarp org taxaide The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Aarp org taxaide  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. Aarp org taxaide  ***Do not use Form 8615 for this child. Aarp org taxaide Figure 2. Aarp org taxaide Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Aarp org taxaide Figure 2. Aarp org taxaide Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Aarp org taxaide (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Aarp org taxaide ) On line C, check the box for the parent's filing status. Aarp org taxaide See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Aarp org taxaide Parent with different tax year. Aarp org taxaide   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. Aarp org taxaide Example. Aarp org taxaide Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Aarp org taxaide Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Aarp org taxaide Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Aarp org taxaide Parent's return information not known timely. Aarp org taxaide   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. Aarp org taxaide   You can use any reasonable estimate. Aarp org taxaide This includes using information from last year's return. Aarp org taxaide If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Aarp org taxaide   When you get the correct information, file an amended return on Form 1040X, Amended U. Aarp org taxaide S. Aarp org taxaide Individual Income Tax Return. Aarp org taxaide Extension of time to file. Aarp org taxaide   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Aarp org taxaide S. Aarp org taxaide Individual Income Tax Return. Aarp org taxaide See the instructions for Form 4868 for details. Aarp org taxaide    An extension of time to file is not an extension of time to pay. Aarp org taxaide You must make an accurate estimate of the tax for 2013. Aarp org taxaide If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. Aarp org taxaide See Form 4868 and its instructions. Aarp org taxaide Parent's return information not available. Aarp org taxaide   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). Aarp org taxaide How to request. Aarp org taxaide   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. Aarp org taxaide (The IRS cannot process a request received before the end of the tax year. Aarp org taxaide )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. Aarp org taxaide   The request must contain all of the following. Aarp org taxaide A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. Aarp org taxaide Proof of the child's age (for example, a copy of the child's birth certificate). Aarp org taxaide Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). Aarp org taxaide The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. Aarp org taxaide    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. Aarp org taxaide Step 1. Aarp org taxaide Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. Aarp org taxaide To do that, use Form 8615, Part I. Aarp org taxaide Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Aarp org taxaide Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Aarp org taxaide Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Aarp org taxaide If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. Aarp org taxaide However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. Aarp org taxaide Alternate Worksheet for Form 8615, Line 1 A. Aarp org taxaide Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Aarp org taxaide Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Aarp org taxaide Enter this total as a positive number (greater than zero)   C. Aarp org taxaide Add line A and line B and  enter the total   D. Aarp org taxaide Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. Aarp org taxaide Subtract line D from line C. Aarp org taxaide Enter the result here and on Form 8615, line 1   Unearned income defined. Aarp org taxaide   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Aarp org taxaide It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Aarp org taxaide Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). Aarp org taxaide Nontaxable income. Aarp org taxaide   For this purpose, unearned income includes only amounts the child must include in gross income. Aarp org taxaide Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Aarp org taxaide Capital loss. Aarp org taxaide   A child's capital losses are taken into account in figuring the child's unearned income. Aarp org taxaide Capital losses are first applied against capital gains. Aarp org taxaide If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. Aarp org taxaide Any difference over $3,000 is carried to the next year. Aarp org taxaide Income from property received as a gift. Aarp org taxaide   A child's unearned income includes all income produced by property belonging to the child. Aarp org taxaide This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. Aarp org taxaide   A child's unearned income includes income produced by property given as a gift to the child. Aarp org taxaide This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Aarp org taxaide Example. Aarp org taxaide Amanda Black, age 13, received the following income. Aarp org taxaide Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. Aarp org taxaide Amanda's unearned income is $2,100. Aarp org taxaide This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Aarp org taxaide Her wages are earned (not unearned) income because they are received for work actually performed. Aarp org taxaide Her tax-exempt interest is not included because it is nontaxable. Aarp org taxaide Trust income. Aarp org taxaide   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. Aarp org taxaide   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Aarp org taxaide See the Form 8615 instructions for details. Aarp org taxaide Adjustment to income. Aarp org taxaide   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. Aarp org taxaide Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Aarp org taxaide If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. Aarp org taxaide Directly connected. Aarp org taxaide   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. Aarp org taxaide These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Aarp org taxaide    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Aarp org taxaide Only the amount greater than 2% of the child's adjusted gross income can be deducted. Aarp org taxaide See Publication 529, Miscellaneous Deductions, for more information. Aarp org taxaide Example 1. Aarp org taxaide Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. Aarp org taxaide His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Aarp org taxaide Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. Aarp org taxaide Example 2. Aarp org taxaide Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Aarp org taxaide She has no other income. Aarp org taxaide She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. Aarp org taxaide Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Aarp org taxaide The amount on line 2 is $2,050. Aarp org taxaide This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Aarp org taxaide Line 3 Subtract line 2 from line 1 and enter the result on this line. Aarp org taxaide If zero or less, do not complete the rest of the form. Aarp org taxaide However, you must still attach Form 8615 to the child's tax return. Aarp org taxaide Figure the tax on the child's taxable income in the normal manner. Aarp org taxaide Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Aarp org taxaide Child files Form 2555 or 2555-EZ. Aarp org taxaide   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. Aarp org taxaide Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Aarp org taxaide Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Aarp org taxaide Enter on Form 8615, line 5, the smaller of line 3 or line 4. Aarp org taxaide This is the child's net unearned income. Aarp org taxaide If zero or less, do not complete the rest of the form. Aarp org taxaide However, you must still attach Form 8615 to the child's tax return. Aarp org taxaide Figure the tax on the child's taxable income in the normal manner. Aarp org taxaide Step 2. Aarp org taxaide Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. Aarp org taxaide The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. Aarp org taxaide When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. Aarp org taxaide For example, do not refigure the medical expense deduction. Aarp org taxaide Figure the tentative tax on Form 8615, lines 6 through 13. Aarp org taxaide Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. Aarp org taxaide If the parent's taxable income is zero or less, enter zero on line 6. Aarp org taxaide Parent files Form 2555 or 2555-EZ. Aarp org taxaide   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. Aarp org taxaide Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. Aarp org taxaide Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Aarp org taxaide Do not include the amount from line 5 of the Form 8615 being completed. Aarp org taxaide (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. Aarp org taxaide ) Example. Aarp org taxaide Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Aarp org taxaide The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. Aarp org taxaide Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Aarp org taxaide Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Aarp org taxaide Other children's information not available. Aarp org taxaide   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. Aarp org taxaide Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Aarp org taxaide Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Aarp org taxaide You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Aarp org taxaide Net capital gain. Aarp org taxaide   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. Aarp org taxaide If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Aarp org taxaide Qualified dividends. Aarp org taxaide   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Aarp org taxaide Net capital gain and qualified dividends on line 8. Aarp org taxaide   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Aarp org taxaide   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Aarp org taxaide   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. Aarp org taxaide   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. Aarp org taxaide   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Aarp org taxaide See the instructions for Form 8615 for more details. Aarp org taxaide Note. Aarp org taxaide The amount of any net capital gain or qualified dividends is not separately reported on line 8. Aarp org taxaide It is  needed, however, when figuring the tax on line 9. Aarp org taxaide Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. Aarp org taxaide If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. Aarp org taxaide But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. Aarp org taxaide If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Aarp org taxaide For details, see the instructions for Form 8615, line 9. Aarp org taxaide However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Aarp org taxaide But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Aarp org taxaide Child files Form 2555 or 2555-EZ. Aarp org taxaide   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. Aarp org taxaide Using the Schedule D Tax Worksheet for line 9 tax. Aarp org taxaide    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. Aarp org taxaide If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. Aarp org taxaide Then figure the line 9 tax using another Schedule D Tax Worksheet. Aarp org taxaide (Do not attach this Schedule D Tax Worksheet to the child's return. Aarp org taxaide )   Complete this Schedule D Tax Worksheet as follows. Aarp org taxaide On line 1, enter the amount from Form 8615, line 8. Aarp org taxaide On line 2, enter the qualified dividends included on Form 8615, line 8. Aarp org taxaide (See the earlier discussion for line 8. Aarp org taxaide ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. Aarp org taxaide On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. Aarp org taxaide If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Aarp org taxaide On lines 5 and 6, follow the worksheet instructions. Aarp org taxaide On line 7, enter the net capital gain included on Form 8615, line 8. Aarp org taxaide (See the earlier discussion for line 8. Aarp org taxaide ) On lines 8 through 10, follow the worksheet instructions. Aarp org taxaide On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Aarp org taxaide Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Aarp org taxaide Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Aarp org taxaide If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Aarp org taxaide Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Aarp org taxaide Determine whether there is a line 8 capital gain excess as follows. Aarp org taxaide Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. Aarp org taxaide (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Aarp org taxaide ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Aarp org taxaide Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Aarp org taxaide If the result is more than zero, that amount is the line 8 capital gain excess. Aarp org taxaide If the result is zero or less, there is no line 8 capital gain excess. Aarp org taxaide If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Aarp org taxaide If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. Aarp org taxaide (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Aarp org taxaide ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Aarp org taxaide Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. Aarp org taxaide If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. Aarp org taxaide If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. Aarp org taxaide Complete lines 12 through 45 following the worksheet instructions. Aarp org taxaide Use the parent's filing status to complete lines 15, 42, and 44. Aarp org taxaide Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line
Print - Click this link to Print this page

Contact My Local Office in Oregon

Face-to-face Tax Help

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

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

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

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

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

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

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

City  Street Address  Days/Hours of Service  Telephone* 
Bend 

250 NW Franklin Ave.
Bend, OR  97701

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

 

Services Provided

(541) 706-5732
Eugene 211 E 7th           
Eugene, OR 97401

Monday-Friday 8:30 a.m.- 4:30 p.m.

 

Services Provided

(541) 342-8766
Medford 960 Ellendale Dr.
Medford, OR 97504

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

 

Services Provided

(541) 282-1350
Portland 1220 SW Third Ave.
Portland, OR  97204
 

Monday-Friday 8:30 a.m.- 4:30 p.m.

 

Services Provided

(503) 265-3501
Salem

1660 Oak St. S.E.
Salem, OR  97301

Monday-Friday 8:30 a.m.- 4:30 p.m.

 

Services Provided

(503) 587-3101

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

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

The Taxpayer Advocate Service: Call (503) 265-3591 in the Portland area or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

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

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

Internal Revenue Service
100 SW Main Street, MS 0180
Portland, OR 97204

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

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

Page Last Reviewed or Updated: 28-Mar-2014

The Aarp Org Taxaide

Aarp org taxaide 26. Aarp org taxaide   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Aarp org taxaide Parking fees. Aarp org taxaide Advertising display on car. Aarp org taxaide Car pools. Aarp org taxaide Hauling tools or instruments. Aarp org taxaide Union members' trips from a union hall. Aarp org taxaide Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Aarp org taxaide Statutory employees. Aarp org taxaide Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. Aarp org taxaide  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Aarp org taxaide Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. Aarp org taxaide Depreciation limits on cars, trucks, and vans. Aarp org taxaide  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Aarp org taxaide For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Aarp org taxaide For more information, see Depreciation limits in Publication 463. Aarp org taxaide Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Aarp org taxaide An ordinary expense is one that is common and accepted in your trade or business. Aarp org taxaide A necessary expense is one that is helpful and appropriate for your business. Aarp org taxaide An expense does not have to be required to be considered necessary. Aarp org taxaide This chapter explains the following. Aarp org taxaide What expenses are deductible. Aarp org taxaide How to report your expenses on your return. Aarp org taxaide What records you need to prove your expenses. Aarp org taxaide How to treat any expense reimbursements you may receive. Aarp org taxaide Who does not need to use this chapter. Aarp org taxaide   If you are an employee, you will not need to read this chapter if all of the following are true. Aarp org taxaide You fully accounted to your employer for your work-related expenses. Aarp org taxaide You received full reimbursement for your expenses. Aarp org taxaide Your employer required you to return any excess reimbursement and you did so. Aarp org taxaide There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Aarp org taxaide If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Aarp org taxaide See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. Aarp org taxaide    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Aarp org taxaide Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. Aarp org taxaide This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. Aarp org taxaide It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. Aarp org taxaide Travel expenses defined. Aarp org taxaide   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. Aarp org taxaide   You will find examples of deductible travel expenses in Table 26-1 . Aarp org taxaide Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. Aarp org taxaide This rest requirement is not satisfied by merely napping in your car. Aarp org taxaide 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. Aarp org taxaide Example 1. Aarp org taxaide You are a railroad conductor. Aarp org taxaide You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Aarp org taxaide During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. Aarp org taxaide You are considered to be away from home. Aarp org taxaide Example 2. Aarp org taxaide You are a truck driver. Aarp org taxaide You leave your terminal and return to it later the same day. Aarp org taxaide You get an hour off at your turnaround point to eat. Aarp org taxaide Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. Aarp org taxaide Members of the Armed Forces. Aarp org taxaide   If you are a member of the U. Aarp org taxaide S. Aarp org taxaide Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Aarp org taxaide You cannot deduct your expenses for meals and lodging. Aarp org taxaide You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Aarp org taxaide If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. Aarp org taxaide    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. Aarp org taxaide Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Aarp org taxaide Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Aarp org taxaide It includes the entire city or general area in which your business or work is located. Aarp org taxaide If you have more than one regular place of business, your tax home is your main place of business. Aarp org taxaide See Main place of business or work , later. Aarp org taxaide If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. Aarp org taxaide See No main place of business or work , later. Aarp org taxaide If you do not have a regular or a main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. Aarp org taxaide As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Aarp org taxaide Main place of business or work. Aarp org taxaide   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. Aarp org taxaide The total time you ordinarily spend in each place. Aarp org taxaide The level of your business activity in each place. Aarp org taxaide Whether your income from each place is significant or insignificant. Aarp org taxaide Example. Aarp org taxaide You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Aarp org taxaide You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Aarp org taxaide Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Aarp org taxaide No main place of business or work. Aarp org taxaide   You may have a tax home even if you do not have a regular or main place of business or work. Aarp org taxaide Your tax home may be the home where you regularly live. Aarp org taxaide Factors used to determine tax home. Aarp org taxaide   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. Aarp org taxaide You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. Aarp org taxaide You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Aarp org taxaide You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. Aarp org taxaide   If you satisfy all three factors, your tax home is the home where you regularly live. Aarp org taxaide If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Aarp org taxaide If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Aarp org taxaide Example. Aarp org taxaide You are single and live in Boston in an apartment you rent. Aarp org taxaide You have worked for your employer in Boston for a number of years. Aarp org taxaide Your employer enrolls you in a 12-month executive training program. Aarp org taxaide You do not expect to return to work in Boston after you complete your training. Aarp org taxaide During your training, you do not do any work in Boston. Aarp org taxaide Instead, you receive classroom and on-the-job training throughout the United States. Aarp org taxaide You keep your apartment in Boston and return to it frequently. Aarp org taxaide You use your apartment to conduct your personal business. Aarp org taxaide You also keep up your community contacts in Boston. Aarp org taxaide When you complete your training, you are transferred to Los Angeles. Aarp org taxaide You do not satisfy factor (1) because you did not work in Boston. Aarp org taxaide You satisfy factor (2) because you had duplicate living expenses. Aarp org taxaide You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Aarp org taxaide Therefore, you have a tax home in Boston. Aarp org taxaide Tax home different from family home. Aarp org taxaide   If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. Aarp org taxaide You also cannot deduct the cost of meals and lodging while at your tax home. Aarp org taxaide See Example 1 . Aarp org taxaide   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Aarp org taxaide See Example 2 . Aarp org taxaide Example 1. Aarp org taxaide You are a truck driver and you and your family live in Tucson. Aarp org taxaide You are employed by a trucking firm that has its terminal in Phoenix. Aarp org taxaide At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Aarp org taxaide You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Aarp org taxaide This is because Phoenix is your tax home. Aarp org taxaide Example 2. Aarp org taxaide Your family home is in Pittsburgh, where you work 12 weeks a year. Aarp org taxaide The rest of the year you work for the same employer in Baltimore. Aarp org taxaide In Baltimore, you eat in restaurants and sleep in a rooming house. Aarp org taxaide Your salary is the same whether you are in Pittsburgh or Baltimore. Aarp org taxaide Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Aarp org taxaide You cannot deduct any expenses you have for meals and lodging there. Aarp org taxaide However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Aarp org taxaide You can deduct the cost of your round trip between Baltimore and Pittsburgh. Aarp org taxaide You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Aarp org taxaide Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Aarp org taxaide It may not be practical to return to your tax home from this other location at the end of each work day. Aarp org taxaide Temporary assignment vs. Aarp org taxaide indefinite assignment. Aarp org taxaide   If your assignment or job away from your main place of work is temporary, your tax home does not change. Aarp org taxaide You are considered to be away from home for the whole period you are away from your main place of work. Aarp org taxaide You can deduct your travel expenses if they otherwise qualify for deduction. Aarp org taxaide Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Aarp org taxaide   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. Aarp org taxaide An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. Aarp org taxaide   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. Aarp org taxaide You may be able to deduct the cost of relocating to your new tax home as a moving expense. Aarp org taxaide See Publication 521 for more information. Aarp org taxaide Exception for federal crime investigations or prosecutions. Aarp org taxaide   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Aarp org taxaide This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year, provided you meet the other requirements for deductibility. Aarp org taxaide   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate or prosecute, or provide support services for the investigation or prosecution of a federal crime. Aarp org taxaide Determining temporary or indefinite. Aarp org taxaide   You must determine whether your assignment is temporary or indefinite when you start work. Aarp org taxaide If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Aarp org taxaide An assignment or job that is initially temporary may become indefinite due to changed circumstances. Aarp org taxaide 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. Aarp org taxaide Going home on days off. Aarp org taxaide   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. Aarp org taxaide You cannot deduct the cost of your meals and lodging there. Aarp org taxaide However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Aarp org taxaide You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Aarp org taxaide   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Aarp org taxaide In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. Aarp org taxaide Probationary work period. Aarp org taxaide   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. Aarp org taxaide You cannot deduct any of your expenses for meals and lodging during the probationary period. Aarp org taxaide What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Aarp org taxaide You can deduct ordinary and necessary expenses you have when you travel away from home on business. Aarp org taxaide The type of expense you can deduct depends on the facts and your circumstances. Aarp org taxaide Table 26-1 summarizes travel expenses you may be able to deduct. Aarp org taxaide You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Aarp org taxaide When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. Aarp org taxaide You can use a log, diary, notebook, or any other written record to keep track of your expenses. Aarp org taxaide The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. Aarp org taxaide Separating costs. Aarp org taxaide   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. Aarp org taxaide You must have a reasonable basis for making this allocation. Aarp org taxaide For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Aarp org taxaide Travel expenses for another individual. Aarp org taxaide   If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. Aarp org taxaide Employee. Aarp org taxaide   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. Aarp org taxaide Business associate. Aarp org taxaide   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. Aarp org taxaide A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. Aarp org taxaide A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Aarp org taxaide Bona fide business purpose. Aarp org taxaide   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Aarp org taxaide Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Aarp org taxaide Example. Aarp org taxaide Jerry drives to Chicago on business and takes his wife, Linda, with him. Aarp org taxaide Linda is not Jerry's employee. Aarp org taxaide Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Aarp org taxaide The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Aarp org taxaide Her expenses are not deductible. Aarp org taxaide Jerry pays $199 a day for a double room. Aarp org taxaide A single room costs $149 a day. Aarp org taxaide He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Aarp org taxaide If he uses public transportation, he can deduct only his fare. Aarp org taxaide Table 26-1. Aarp org taxaide Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. Aarp org taxaide IF you have expenses for. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide THEN you can deduct the cost of. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide transportation travel by airplane, train, bus, or car between your home and your business destination. Aarp org taxaide If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Aarp org taxaide If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. Aarp org taxaide taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. Aarp org taxaide baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Aarp org taxaide car operating and maintaining your car when traveling away from home on business. Aarp org taxaide You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. Aarp org taxaide If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Aarp org taxaide lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Aarp org taxaide Meals include amounts spent for food, beverages, taxes, and related tips. Aarp org taxaide See Meals and Incidental Expenses for additional rules and limits. Aarp org taxaide cleaning dry cleaning and laundry. Aarp org taxaide telephone business calls while on your business trip. Aarp org taxaide This includes business communication by fax machine or other communication devices. Aarp org taxaide tips tips you pay for any expenses in this chart. Aarp org taxaide other other similar ordinary and necessary expenses related to your business travel. Aarp org taxaide These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. Aarp org taxaide Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. Aarp org taxaide It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Aarp org taxaide The meal is business-related entertainment. Aarp org taxaide Business-related entertainment is discussed under Entertainment Expenses , later. Aarp org taxaide The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. Aarp org taxaide Lavish or extravagant. Aarp org taxaide   You cannot deduct expenses for meals that are lavish or extravagant. Aarp org taxaide An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Aarp org taxaide Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Aarp org taxaide 50% limit on meals. Aarp org taxaide   You can figure your meal expenses using either of the following methods. Aarp org taxaide Actual cost. Aarp org taxaide The standard meal allowance. Aarp org taxaide Both of these methods are explained below. Aarp org taxaide But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Aarp org taxaide   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. Aarp org taxaide If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Aarp org taxaide The 50% limit is explained later under Entertainment Expenses . Aarp org taxaide Accountable and nonaccountable plans are discussed later under Reimbursements . Aarp org taxaide Actual cost. Aarp org taxaide   You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. Aarp org taxaide If you use this method, you must keep records of your actual cost. Aarp org taxaide Standard meal allowance. Aarp org taxaide   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Aarp org taxaide It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. Aarp org taxaide The set amount varies depending on where and when you travel. Aarp org taxaide In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Aarp org taxaide If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Aarp org taxaide See Recordkeeping , later. Aarp org taxaide Incidental expenses. Aarp org taxaide   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Aarp org taxaide Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. Aarp org taxaide Incidental expenses only method. Aarp org taxaide   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Aarp org taxaide The amount of the deduction is $5 a day. Aarp org taxaide You can use this method only if you did not pay or incur any meal expenses. Aarp org taxaide You cannot use this method on any day that you use the standard meal allowance. Aarp org taxaide    Federal employees should refer to the Federal Travel Regulations at  www. Aarp org taxaide gsa. Aarp org taxaide gov. Aarp org taxaide Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Aarp org taxaide 50% limit may apply. Aarp org taxaide   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. Aarp org taxaide If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. Aarp org taxaide The 50% limit is explained later under Entertainment Expenses . Aarp org taxaide Accountable and nonaccountable plans are discussed later under Reimbursements . Aarp org taxaide There is no optional standard lodging amount similar to the standard meal allowance. Aarp org taxaide Your allowable lodging expense deduction is your actual cost. Aarp org taxaide Who can use the standard meal allowance. Aarp org taxaide   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. Aarp org taxaide   Use of the standard meal allowance for other travel. Aarp org taxaide    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Aarp org taxaide You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Aarp org taxaide You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Aarp org taxaide Amount of standard meal allowance. Aarp org taxaide   The standard meal allowance is the federal M&IE rate. Aarp org taxaide For travel in 2013, the daily rate for most small localities in the United States is $46. Aarp org taxaide   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Aarp org taxaide You can find this information (organized by state) on the Internet at www. Aarp org taxaide gsa. Aarp org taxaide gov. Aarp org taxaide Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. Aarp org taxaide However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. Aarp org taxaide You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. Aarp org taxaide   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. Aarp org taxaide If you work in the transportation industry, however, see Special rate for transportation workers , later. Aarp org taxaide Standard meal allowance for areas outside the continental United States. Aarp org taxaide    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Aarp org taxaide The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Aarp org taxaide S. Aarp org taxaide Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Aarp org taxaide The Department of State establishes per diem rates for all other foreign areas. Aarp org taxaide    You can access per diem rates for non-foreign areas outside the continental United States at: www. Aarp org taxaide defensetravel. Aarp org taxaide dod. Aarp org taxaide mil/site/perdiemCalc. Aarp org taxaide cfm. Aarp org taxaide You can access all other foreign per diem rates at www. Aarp org taxaide state. Aarp org taxaide gov/travel/. Aarp org taxaide Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. Aarp org taxaide Special rate for transportation workers. Aarp org taxaide   You can use a special standard meal allowance if you work in the transportation industry. Aarp org taxaide You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. Aarp org taxaide If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). Aarp org taxaide   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. Aarp org taxaide If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. Aarp org taxaide Travel for days you depart and return. Aarp org taxaide   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). Aarp org taxaide You can do so by one of two methods. Aarp org taxaide Method 1: You can claim 3/4 of the standard meal allowance. Aarp org taxaide Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Aarp org taxaide Example. Aarp org taxaide Jen is employed in New Orleans as a convention planner. Aarp org taxaide In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Aarp org taxaide She left her home in New Orleans at 10 a. Aarp org taxaide m. Aarp org taxaide on Wednesday and arrived in Washington, DC, at 5:30 p. Aarp org taxaide m. Aarp org taxaide After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Aarp org taxaide m. Aarp org taxaide Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Aarp org taxaide Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. Aarp org taxaide Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Aarp org taxaide For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. Aarp org taxaide Travel in the United States The following discussion applies to travel in the United States. Aarp org taxaide For this purpose, the United States includes only the 50 states and the District of Columbia. Aarp org taxaide The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. Aarp org taxaide See Part of Trip Outside the United States , later. Aarp org taxaide Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. Aarp org taxaide If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses. Aarp org taxaide These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Aarp org taxaide Example. Aarp org taxaide You work in Atlanta and take a business trip to New Orleans in May. Aarp org taxaide On your way home, you stop in Mobile to visit your parents. Aarp org taxaide You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Aarp org taxaide If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. Aarp org taxaide You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. Aarp org taxaide The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Aarp org taxaide Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Aarp org taxaide However, you can deduct any expenses you have while at your destination that are directly related to your business. Aarp org taxaide A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. Aarp org taxaide The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. Aarp org taxaide Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. Aarp org taxaide For the part of your trip that is inside the United States, use the rules for travel in the United States. Aarp org taxaide Travel outside the United States does not include travel from one point in the United States to another point in the United States. Aarp org taxaide The following discussion can help you determine whether your trip was entirely within the United States. Aarp org taxaide Public transportation. Aarp org taxaide   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Aarp org taxaide Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . Aarp org taxaide Example. Aarp org taxaide You fly from New York to Puerto Rico with a scheduled stop in Miami. Aarp org taxaide You return to New York nonstop. Aarp org taxaide The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Aarp org taxaide Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Aarp org taxaide Private car. Aarp org taxaide   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. Aarp org taxaide Example. Aarp org taxaide You travel by car from Denver to Mexico City and return. Aarp org taxaide Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. Aarp org taxaide The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Aarp org taxaide Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. Aarp org taxaide For this purpose, the United States includes only the 50 states and the District of Columbia. Aarp org taxaide How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. Aarp org taxaide See chapter 1 of Publication 463 for information on luxury water travel. Aarp org taxaide Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. Aarp org taxaide Travel entirely for business. Aarp org taxaide   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Aarp org taxaide Travel considered entirely for business. Aarp org taxaide   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. Aarp org taxaide Exception 1 - No substantial control. Aarp org taxaide   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Aarp org taxaide The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Aarp org taxaide   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. Aarp org taxaide    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . Aarp org taxaide   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. Aarp org taxaide    A self-employed person generally has substantial control over arranging business trips. Aarp org taxaide Exception 2 - Outside United States no more than a week. Aarp org taxaide   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Aarp org taxaide One week means 7 consecutive days. Aarp org taxaide In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. Aarp org taxaide Exception 3 - Less than 25% of time on personal activities. Aarp org taxaide   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. Aarp org taxaide For this purpose, count both the day your trip began and the day it ended. Aarp org taxaide Exception 4 - Vacation not a major consideration. Aarp org taxaide   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. Aarp org taxaide Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. Aarp org taxaide You can only deduct the business portion of your cost of getting to and from your destination. Aarp org taxaide You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. Aarp org taxaide These travel allocation rules are discussed in chapter 1 of Publication 463. Aarp org taxaide You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. Aarp org taxaide In those cases, you can deduct the total cost of getting to and from your destination. Aarp org taxaide Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. Aarp org taxaide If you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. Aarp org taxaide Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Aarp org taxaide You cannot deduct the travel expenses for your family. Aarp org taxaide If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Aarp org taxaide Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Aarp org taxaide You can deduct your travel expenses only if your attendance is connected to your own trade or business. Aarp org taxaide Convention agenda. Aarp org taxaide   The convention agenda or program generally shows the purpose of the convention. Aarp org taxaide You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. Aarp org taxaide The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. Aarp org taxaide Conventions held outside the North American area. Aarp org taxaide    See chapter 1 of Publication 463 for information on conventions held outside the North American area. Aarp org taxaide Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Aarp org taxaide You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. Aarp org taxaide Directly-related test. Aarp org taxaide Associated test. Aarp org taxaide Both of these tests are explained in chapter 2 of Publication 463. Aarp org taxaide The amount you can deduct for entertainment expenses may be limited. Aarp org taxaide Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Aarp org taxaide This limit is discussed next. Aarp org taxaide 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Aarp org taxaide (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. Aarp org taxaide See Individuals subject to “hours of service” limits , later. Aarp org taxaide ) 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. Aarp org taxaide Figure 26-A summarizes the general rules explained in this section. Aarp org taxaide 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. Aarp org taxaide Included expenses. Aarp org taxaide   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. Aarp org taxaide However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Aarp org taxaide Application of 50% limit. Aarp org taxaide   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 in this section. Aarp org taxaide   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Aarp org taxaide It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. Aarp org taxaide It also applies to the cost of meals included in deductible educational expenses. Aarp org taxaide When to apply the 50% limit. Aarp org taxaide   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Aarp org taxaide You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. Aarp org taxaide Example 1. Aarp org taxaide You spend $200 for a business-related meal. Aarp org taxaide If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Aarp org taxaide Your deduction cannot be more than $45 (. Aarp org taxaide 50 × $90). Aarp org taxaide Example 2. Aarp org taxaide You purchase two tickets to a concert and give them to a client. Aarp org taxaide You purchased the tickets through a ticket agent. Aarp org taxaide You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Aarp org taxaide Your deduction cannot be more than $80 (. Aarp org taxaide 50 × $160). Aarp org taxaide Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Aarp org taxaide Figure 26-A can help you determine if the 50% limit applies to you. Aarp org taxaide Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Aarp org taxaide Employee's reimbursed expenses. Aarp org taxaide   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. Aarp org taxaide Accountable plans are discussed later under Reimbursements . Aarp org taxaide Individuals subject to “hours of service” limits. Aarp org taxaide   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. Aarp org taxaide The percentage is 80%. Aarp org taxaide   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Aarp org taxaide Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Aarp org taxaide Interstate truck operators and bus drivers who are under Department of Transportation regulations. Aarp org taxaide Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Aarp org taxaide Certain merchant mariners who are under Coast Guard regulations. Aarp org taxaide Other exceptions. Aarp org taxaide   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. Aarp org taxaide These are discussed in Publication 463. Aarp org taxaide Figure 26-A. Aarp org taxaide Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Aarp org taxaide See Exceptions to the 50% Limit . Aarp org taxaide Please click here for the text description of the image. Aarp org taxaide Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Aarp org taxaide Entertainment. Aarp org taxaide    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Aarp org taxaide Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. Aarp org taxaide A meal as a form of entertainment. Aarp org taxaide   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. Aarp org taxaide A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Aarp org taxaide To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Aarp org taxaide You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Aarp org taxaide Separating costs. Aarp org taxaide   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. Aarp org taxaide You must have a reasonable basis for making this allocation. Aarp org taxaide For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Aarp org taxaide Taking turns paying for meals or entertainment. Aarp org taxaide   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Aarp org taxaide Lavish or extravagant expenses. Aarp org taxaide   You cannot deduct expenses for entertainment that are lavish or extravagant. Aarp org taxaide An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Aarp org taxaide 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. Aarp org taxaide Trade association meetings. Aarp org taxaide    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. Aarp org taxaide These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Aarp org taxaide Entertainment tickets. Aarp org taxaide   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Aarp org taxaide 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. Aarp org taxaide What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Aarp org taxaide Club dues and membership fees. Aarp org taxaide   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Aarp org taxaide 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. Aarp org taxaide   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Aarp org taxaide 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. Aarp org taxaide Entertainment facilities. Aarp org taxaide   Generally, you cannot deduct any expense for the use of an entertainment facility. Aarp org taxaide This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Aarp org taxaide   An entertainment facility is any property you own, rent, or use for entertainment. Aarp org taxaide 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. Aarp org taxaide Out-of-pocket expenses. Aarp org taxaide   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. Aarp org taxaide These are not expenses for the use of an entertainment facility. Aarp org taxaide However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. Aarp org taxaide Additional information. Aarp org taxaide   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. Aarp org taxaide Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Aarp org taxaide This section explains the limits and rules for deducting the costs of gifts. Aarp org taxaide $25 limit. Aarp org taxaide   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Aarp org taxaide A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Aarp org taxaide   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Aarp org taxaide This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. Aarp org taxaide   If you and your spouse both give gifts, both of you are treated as one taxpayer. Aarp org taxaide It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Aarp org taxaide If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Aarp org taxaide Incidental costs. Aarp org taxaide   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Aarp org taxaide   A cost is incidental only if it does not add substantial value to the gift. Aarp org taxaide For example, the cost of customary gift wrapping is an incidental cost. Aarp org taxaide However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Aarp org taxaide Exceptions. Aarp org taxaide   The following items are not considered gifts for purposes of the $25 limit. Aarp org taxaide An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Aarp org taxaide Examples include pens, desk sets, and plastic bags and cases. Aarp org taxaide Signs, display racks, or other promotional material to be used on the business premises of the recipient. Aarp org taxaide Gift or entertainment. Aarp org taxaide   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Aarp org taxaide However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Aarp org taxaide    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. Aarp org taxaide You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Aarp org taxaide    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Aarp org taxaide You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Aarp org taxaide Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . Aarp org taxaide These expenses include the cost of transportation by air, rail, bus, taxi, etc. Aarp org taxaide , and the cost of driving and maintaining your car. Aarp org taxaide Transportation expenses include the ordinary and necessary costs of all of the following. Aarp org taxaide Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. Aarp org taxaide (Tax home is defined earlier under Travel Expenses . Aarp org taxaide ) Visiting clients or customers. Aarp org taxaide Going to a business meeting away from your regular workplace. Aarp org taxaide Getting from your home to a temporary workplace when you have one or more regular places of work. Aarp org taxaide These temporary workplaces can be either within the area of your tax home or outside that area. Aarp org taxaide Transportation expenses do not include expenses you have while traveling away from home overnight. Aarp org taxaide Those expenses are travel expenses, discussed earlier. Aarp org taxaide However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Aarp org taxaide See Car Expenses , later. Aarp org taxaide Illustration of transportation expenses. Aarp org taxaide    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. Aarp org taxaide You may want to refer to it when deciding whether you can deduct your transportation expenses. Aarp org taxaide Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Aarp org taxaide However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. Aarp org taxaide Temporary work location. Aarp org taxaide   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Aarp org taxaide   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Aarp org taxaide   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Aarp org taxaide   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Aarp org taxaide It will not be treated as temporary after the date you determine it will last more than 1 year. Aarp org taxaide   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Aarp org taxaide You may have deductible travel expenses as discussed earlier in this chapter. Aarp org taxaide No regular place of work. Aarp org taxaide   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Aarp org taxaide   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Aarp org taxaide   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Aarp org taxaide These are nondeductible commuting expenses. Aarp org taxaide Two places of work. Aarp org taxaide   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Aarp org taxaide However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Aarp org taxaide   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Aarp org taxaide You cannot deduct them. Aarp org taxaide Armed Forces reservists. Aarp org taxaide   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Aarp org taxaide You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. Aarp org taxaide   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Aarp org taxaide In this case, your transportation generally is a nondeductible commuting expense. Aarp org taxaide However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Aarp org taxaide   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Aarp org taxaide   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Aarp org taxaide These expenses are discussed earlier under Travel Expenses . Aarp org taxaide   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. Aarp org taxaide See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. Aarp org taxaide Commuting expenses. Aarp org taxaide   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Aarp org taxaide These costs are personal commuting expenses. Aarp org taxaide You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Aarp org taxaide You cannot deduct commuting expenses even if you work during the commuting trip. Aarp org taxaide Example. Aarp org taxaide You sometimes use your cell phone to make business calls while commuting to and from work. Aarp org taxaide Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Aarp org taxaide These activities do not change the trip from personal to business. Aarp org taxaide You cannot deduct your commuting expenses. Aarp org taxaide Parking fees. Aarp org taxaide   Fees you pay to park your car at your place of business are nondeductible commuting expenses. Aarp org taxaide You can, however, deduct business-related parking fees when visiting a customer or client. Aarp org taxaide Advertising display on car. Aarp org taxaide   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Aarp org taxaide If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Aarp org taxaide Car pools. Aarp org taxaide   You cannot deduct the cost of using your car in a nonprofit car pool. Aarp org taxaide Do not include payments you receive from the passengers in your income. Aarp org taxaide These payments are considered reimbursements of your expenses. Aarp org taxaide However, if you operate a car pool for a profit, you must include payments from passengers in your income. Aarp org taxaide You can then deduct your car expenses (using the rules in this chapter). Aarp org taxaide Hauling tools or instruments. Aarp org taxaide   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Aarp org taxaide However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Aarp org taxaide Union members' trips from a union hall. Aarp org taxaide   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Aarp org taxaide Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Aarp org taxaide Office in the home. Aarp org taxaide   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Aarp org taxaide (See chapter 28 for information on determining if your home office qualifies as a principal place of business. Aarp org taxaide ) Figure 26-B. Aarp org taxaide When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Aarp org taxaide (Do not use this chart if your home is your principal place of business. Aarp org taxaide See Office in the home . Aarp org taxaide ) Please click here for the text description of the image. Aarp org taxaide Figure 26-B. Aarp org taxaide Local Transportation Examples of deductible transportation. Aarp org taxaide   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Aarp org taxaide Example 1. Aarp org taxaide You regularly work in an office in the city where you live. Aarp org taxaide Your employer sends you to a 1-week training session at a different office in the same city. Aarp org taxaide You travel directly from your home to the training location and return each day. Aarp org taxaide You can deduct the cost of your daily round-trip transportation between your home and the training location. Aarp org taxaide Example 2. Aarp org taxaide Your principal place of business is in your home. Aarp org taxaide You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Aarp org taxaide Example 3. Aarp org taxaide You have no regular office, and you do not have an office in your home. Aarp org taxaide In this case, the location of your first business contact inside the metropolitan area is considered your office. Aarp org taxaide Transportation expenses between your home and this first contact are nondeductible commuting expenses. Aarp org taxaide Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Aarp org taxaide While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. Aarp org taxaide With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. Aarp org taxaide Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. Aarp org taxaide You generally can use one of the two following methods to figure your deductible expenses. Aarp org taxaide Standard mileage rate. Aarp org taxaide Actual car expenses. Aarp org taxaide If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Aarp org taxaide See Leasing a car under Actual Car Expenses, later. Aarp org taxaide In this chapter, “car” includes a van, pickup, or panel truck. Aarp org taxaide Rural mail carriers. Aarp org taxaide   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Aarp org taxaide Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. Aarp org taxaide   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Aarp org taxaide You must complete Form 2106 and attach it to your Form 1040. Aarp org taxaide   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Aarp org taxaide It is given as an equipment maintenance allowance (EMA) to employees of the U. Aarp org taxaide S. Aarp org taxaide Postal Service. Aarp org taxaide It is at the rate contained in the 1991 collective bargaining agreement. Aarp org taxaide Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Aarp org taxaide See your employer for information on your reimbursement. Aarp org taxaide If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Aarp org taxaide Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Aarp org taxaide For 2013, the standard mileage rate for business use is 56½ cents per mile. Aarp org taxaide If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. Aarp org taxaide You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Aarp org taxaide See Reimbursements under How To Report, later. Aarp org taxaide Choosing the standard mileage rate. Aarp org taxaide   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Aarp org taxaide Then in later years, you can choose to use either the standard mileage rate or actual expenses. Aarp org taxaide   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Aarp org taxaide   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Aarp org taxaide You cannot revoke the choice. Aarp org taxaide However, in a later year, you can switch from the standard mileage rate to the actual expenses method. Aarp org taxaide If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Aarp org taxaide Example. Aarp org taxaide Larry is an employee who occasionally uses his own car for business purposes. Aarp org taxaide He purchased the car in 2011, but he did not claim any unreimburse