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Federal Tax Forms 2011

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Federal Tax Forms 2011

Federal tax forms 2011 Publication 534 - Introductory Material Table of Contents Important Change for 1995 Introduction How To Use This Publication Important Change for 1995 Major changes to Publications 534 and 946. Federal tax forms 2011  This publication, as well as Publication 946,How To Depreciate Property, has been changed. Federal tax forms 2011 Publication 534 has been shortened. Federal tax forms 2011 It no longer contains general information on MACRS and the section 179 deduction. Federal tax forms 2011 It contains a discussion of the accelerated cost recovery system (ACRS), the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property. Federal tax forms 2011 We expanded Publication 946 by adding material taken from Publication 534. Federal tax forms 2011 We added more detail to the discussions of the section 179 deduction, the modified accelerated cost recovery system (MACRS), and listed property. Federal tax forms 2011 We replaced the partialMACRS Percentage Tables with the complete ones from Publication 534. Federal tax forms 2011 We also added the Table of Class Lives and Recovery Periods from Publication 534. Federal tax forms 2011 We made these changes to eliminate most of the duplication that existed in the two publications. Federal tax forms 2011 This will save money and make it easier for you to decide which publication you need. Federal tax forms 2011 Use this publication to figure depreciation on property you placed in service before 1987; use Publication 946 to figure depreciation on property you placed in service after 1986. Federal tax forms 2011 Introduction The law allows you to recover your cost in business or income-producing property through yearly tax deductions. Federal tax forms 2011 You do this by depreciating your property, that is, by deducting some of your cost on your tax return each year. Federal tax forms 2011 You can depreciate both tangible property, such as a car, building, or machinery, and certain intangible property, such as a copyright or a patent. Federal tax forms 2011 The amount you can deduct depends on: How much the property cost, When you began using it, How long it will take to recover your cost, and Which of several depreciation methods you use. Federal tax forms 2011 Depreciation defined. Federal tax forms 2011   Depreciation is a loss in the value of property over the time the property is being used. Federal tax forms 2011 Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. Federal tax forms 2011 You can get back your cost of certain property, such as equipment you use in your business or property used for the production of income by taking deductions for depreciation. Federal tax forms 2011 Black's Law Dictionary Amortization. Federal tax forms 2011   Amortization is similar to depreciation. Federal tax forms 2011 Using amortization, you can recover your cost or basis in certain property proportionately over a specific number of years or months. Federal tax forms 2011 Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution control facilities. Federal tax forms 2011 You can find information on amortization inchapter 12 of Publication 535, Business Expenses. Federal tax forms 2011 Alternative minimum tax. Federal tax forms 2011   If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable for the alternative minimum tax. Federal tax forms 2011 Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight line method. Federal tax forms 2011 For more information, you may wish to see the following: Form 6251, Alternative Minimum Tax-Individuals, and Publication 542, Tax Information on Corporations. Federal tax forms 2011 Ordering publications and forms. Federal tax forms 2011   To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). Federal tax forms 2011 You can also write to the IRS Forms Distribution Center nearest you. Federal tax forms 2011 Check your income tax package for the address. Federal tax forms 2011   If you have access to a personal computer and a modem, you can also get many forms and publications electronically. Federal tax forms 2011 See How To Get Forms and Publications in your income tax package for details. Federal tax forms 2011 Telephone help. Federal tax forms 2011   You can call the IRS with your tax question Monday through Friday during regular business hours. Federal tax forms 2011 Check your telephone book for the local number or you can call1-800-829-1040. Federal tax forms 2011 Telephone help for hearing-impaired persons. Federal tax forms 2011   If you have access to TDD equipment, you can call 1-800-829-4059 with your tax question or to order forms and publications. Federal tax forms 2011 See your tax package for the hours of operation. Federal tax forms 2011 How To Use This Publication This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property placed in service before 1987. Federal tax forms 2011 It is divided into three chapters and contains an appendix. Federal tax forms 2011 Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS). Federal tax forms 2011 Chapter 2 explains the rules for depreciating property first used before 1981. Federal tax forms 2011 Chapter 3 explains the rules for listed property. Federal tax forms 2011 Also this chapter defines listed property. Federal tax forms 2011 The appendix contains the ACRS Percentage Tables. Federal tax forms 2011 Prev  Up  Next   Home   More Online Publications
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Trusts

It is a common misconception that trusts, or trust funds as they are commonly called, are only useful for wealthy people. When set up properly, trusts can be appropriate for people with minor children or those who want to avoid having their estate go through probate upon death. These are basic facts about trusts – but, be sure to consult a licensed attorney experienced with estate planning and trust matters before making any final decisions about if one is right for you.

How Trusts Work

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. In some situations the grantor, trustee, and beneficiary are all the same person. In this case, the grantor should also appoint a successor trustee and beneficiary in case he or she dies or becomes incapacitated. A trust is a helpful estate planning tool because after death a trust doesn’t go through the probate process like a will does.

Reasons To Set Up A Trust

Some common reasons for setting up a trust include:

  • Providing for minor children or family members who are inexperienced or unable to handle financial matters
  • Providing for management of personal assets should one become unable to handle them oneself
  • Avoiding probate and immediately transferring assets to beneficiaries upon death
  • Reducing estate taxes and providing liquid assets to help pay for them
  • The terms of a will are public while the terms of a trust are not so privacy makes a trust an attractive option

Types of Trusts

Trusts can be living (inter vivos) or after-death (testamentary). A living trust is one that a grantor sets up while still alive and an after-death trust is usually established by a will after one’s death. Living trusts can be irrevocable (can’t be changed) or revocable (can be changed) although revocable trusts don’t receive the same tax shelter benefits as irrevocable ones do. The most popular type is the revocable living trust. If there’s a specific purpose in mind for the trust, dozens of different options exist. Some examples include charitable trusts, bypass trusts, spendthrift trusts, and life insurance trusts. New laws have even established a trust that will care for a pet after one’s death.

Setting Up A Trust

Once you’ve decided to set up a trust it is important to remember that a trust, by design, can be very flexible and a grantor has the right – and should take advantage of this right - within the law, to tailor it to meet the anticipated the needs of the beneficiary. Working with an experienced attorney that specializes in estate and trust issues and knows the specific state regulations can help get the maximum benefit from the trust.
Some things to consider when setting up the trust include:

  • The grantor has the right to specify exactly how the money in the trust is invested. The grantor and the trustee might have very different ideas about investment strategies, so make sure this gets clearly defined.
  • The grantor has the right to specify exactly how the assets should be divvied up down to details like including an annual cost of living adjustment for the beneficiary or paying for travel expenses for others to visit the beneficiary in the case of illness.
  • Always be sure to include a “trustee removal clause” – trusts that don’t have this clause take away the beneficiary’s right to fire the trustee if unsatisfied with the service being provided. Remember that the grantor can always add a provision that requires the beneficiary to select a new trustee from legitimate bank trust departments. Contact your state Department of Financial Institutions to get a list of licensed trust departments.
  • If the grantor wants to ensure that upon death any assets that remain outside of the trust are transferred to it, he or she should consider having a “pour-over” will to accomplish this.

Upon establishment of the trust the grantor must complete the process of setting up the trust by transferring his or her assets into the trust. Failure to do this properly makes the trust null and void. This means that upon the grantor’s death the state will decide who gets the assets and cares for minor children.

Protect Yourself From Trust Scams and Fraud

If someone approaches you to set up a trust be very cautious. Before signing any papers to create a living trust, will or other kind of trust make sure to explore all options and shop around for this service just as you would for any other. Also:

  • Avoid high-pressure sales tactics and high speed sales pitches.
  • Avoid salespeople who give the impression that AARP is backing or selling the product – AARP does not endorse living trust products.
  • Do your homework and get information about local probate laws from the Clerk or Register of Wills.
  • If someone tries to sell a living trust to you ask if they are an attorney. Some states restrict sales of living trusts by licensed attorneys.
  • If you buy a trust in your home or another location that is not the seller’s permanent place of business remember you are entitled to take advantage of the Cooling Off Rule and cancel the transaction within 3 business days.

The Federal Tax Forms 2011

Federal tax forms 2011 27. Federal tax forms 2011   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Federal tax forms 2011 Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Federal tax forms 2011  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. Federal tax forms 2011 For more information, see Transportation Expenses under What Expenses Can Be Deducted. Federal tax forms 2011 Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Federal tax forms 2011 To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Federal tax forms 2011 If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Federal tax forms 2011 Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Federal tax forms 2011 See chapter 28. Federal tax forms 2011 If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Federal tax forms 2011 Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Federal tax forms 2011 You may qualify for these other benefits even if you do not meet the requirements listed earlier. Federal tax forms 2011 Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Federal tax forms 2011 Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Federal tax forms 2011 When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Federal tax forms 2011 Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Federal tax forms 2011 This is education that meets at least one of the following two tests. Federal tax forms 2011 The education is required by your employer or the law to keep your present salary, status, or job. Federal tax forms 2011 The required education must serve a bona fide business purpose of your employer. Federal tax forms 2011 The education maintains or improves skills needed in your present work. Federal tax forms 2011 However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Federal tax forms 2011 You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Federal tax forms 2011 Use Figure 27-A, later, as a quick check to see if your education qualifies. Federal tax forms 2011 Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Federal tax forms 2011 This additional education is qualifying work-related education if all three of the following requirements are met. Federal tax forms 2011 It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Federal tax forms 2011 When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Federal tax forms 2011 See Education To Maintain or Improve Skills , later. Federal tax forms 2011 Example. Federal tax forms 2011 You are a teacher who has satisfied the minimum requirements for teaching. Federal tax forms 2011 Your employer requires you to take an additional college course each year to keep your teaching job. Federal tax forms 2011 If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Federal tax forms 2011 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Federal tax forms 2011 This could include refresher courses, courses on current developments, and academic or vocational courses. Federal tax forms 2011 Example. Federal tax forms 2011 You repair televisions, radios, and stereo systems for XYZ Store. Federal tax forms 2011 To keep up with the latest changes, you take special courses in radio and stereo service. Federal tax forms 2011 These courses maintain and improve skills required in your work. Federal tax forms 2011 Maintaining skills vs. Federal tax forms 2011 qualifying for new job. Federal tax forms 2011   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Federal tax forms 2011 Education during temporary absence. Federal tax forms 2011   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Federal tax forms 2011 Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Federal tax forms 2011 Example. Federal tax forms 2011 You quit your biology research job to become a full-time biology graduate student for one year. Federal tax forms 2011 If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Federal tax forms 2011 Education during indefinite absence. Federal tax forms 2011   If you stop work for more than a year, your absence from your job is considered indefinite. Federal tax forms 2011 Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Federal tax forms 2011 Therefore, it is not qualifying work-related education. Federal tax forms 2011 Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Federal tax forms 2011 The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Federal tax forms 2011 Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Federal tax forms 2011 This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Federal tax forms 2011 You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Federal tax forms 2011 Example 1. Federal tax forms 2011 You are a full-time engineering student. Federal tax forms 2011 Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Federal tax forms 2011 Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Federal tax forms 2011 The education is not qualifying work-related education. Federal tax forms 2011 Example 2. Federal tax forms 2011 You are an accountant and you have met the minimum educational requirements of your employer. Federal tax forms 2011 Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Federal tax forms 2011 These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Federal tax forms 2011 Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Federal tax forms 2011 The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Federal tax forms 2011 If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Federal tax forms 2011 The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Federal tax forms 2011 You generally will be considered a faculty member when one or more of the following occurs. Federal tax forms 2011 You have tenure. Federal tax forms 2011 Your years of service count toward obtaining tenure. Federal tax forms 2011 You have a vote in faculty decisions. Federal tax forms 2011 Your school makes contributions for you to a retirement plan other than social security or a similar program. Federal tax forms 2011 Example 1. Federal tax forms 2011 The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Federal tax forms 2011 In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Federal tax forms 2011 If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Federal tax forms 2011 However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Federal tax forms 2011 Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Federal tax forms 2011 If you have all the required education except the fifth year, you have met the minimum educational requirements. Federal tax forms 2011 The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Federal tax forms 2011 Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Federal tax forms 2011 Figure 27-A. Federal tax forms 2011 Does Your Work-Related Education Qualify?" Example 2. Federal tax forms 2011 Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Federal tax forms 2011 The additional four education courses can be qualifying work-related education. Federal tax forms 2011 Although you do not have all the required courses, you have already met the minimum educational requirements. Federal tax forms 2011 Example 3. Federal tax forms 2011 Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Federal tax forms 2011 The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Federal tax forms 2011 They are needed to meet the minimum educational requirements for employment as a teacher. Federal tax forms 2011 Example 4. Federal tax forms 2011 You have a bachelor's degree and you work as a temporary instructor at a university. Federal tax forms 2011 At the same time, you take graduate courses toward an advanced degree. Federal tax forms 2011 The rules of the university state that you can become a faculty member only if you get a graduate degree. Federal tax forms 2011 Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Federal tax forms 2011 You have not met the minimum educational requirements to qualify you as a faculty member. Federal tax forms 2011 The graduate courses are not qualifying work-related education. Federal tax forms 2011 Certification in a new state. Federal tax forms 2011   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Federal tax forms 2011 This is true even if you must get additional education to be certified in another state. Federal tax forms 2011 Any additional education you need is qualifying work-related education. Federal tax forms 2011 You have already met the minimum requirements for teaching. Federal tax forms 2011 Teaching in another state is not a new trade or business. Federal tax forms 2011 Example. Federal tax forms 2011 You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Federal tax forms 2011 You move to State B and are promptly hired as a teacher. Federal tax forms 2011 You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Federal tax forms 2011 These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Federal tax forms 2011 Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Federal tax forms 2011 This is true even if you do not plan to enter that trade or business. Federal tax forms 2011 If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Federal tax forms 2011 Example 1. Federal tax forms 2011 You are an accountant. Federal tax forms 2011 Your employer requires you to get a law degree at your own expense. Federal tax forms 2011 You register at a law school for the regular curriculum that leads to a law degree. Federal tax forms 2011 Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Federal tax forms 2011 Example 2. Federal tax forms 2011 You are a general practitioner of medicine. Federal tax forms 2011 You take a 2-week course to review developments in several specialized fields of medicine. Federal tax forms 2011 The course does not qualify you for a new profession. Federal tax forms 2011 It is qualifying work-related education because it maintains or improves skills required in your present profession. Federal tax forms 2011 Example 3. Federal tax forms 2011 While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Federal tax forms 2011 The program will lead to qualifying you to practice psychoanalysis. Federal tax forms 2011 The psychoanalytic training does not qualify you for a new profession. Federal tax forms 2011 It is qualifying work-related education because it maintains or improves skills required in your present profession. Federal tax forms 2011 Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Federal tax forms 2011 They are part of a program of study that can qualify you for a new profession. Federal tax forms 2011 Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Federal tax forms 2011 A change in duties in any of the following ways is not considered a change to a new business. Federal tax forms 2011 Elementary school teacher to secondary school teacher. Federal tax forms 2011 Teacher of one subject, such as biology, to teacher of another subject, such as art. Federal tax forms 2011 Classroom teacher to guidance counselor. Federal tax forms 2011 Classroom teacher to school administrator. Federal tax forms 2011 What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. Federal tax forms 2011 If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Federal tax forms 2011 You cannot deduct expenses related to tax-exempt and excluded income. Federal tax forms 2011 Deductible expenses. Federal tax forms 2011   The following education expenses can be deducted. Federal tax forms 2011 Tuition, books, supplies, lab fees, and similar items. Federal tax forms 2011 Certain transportation and travel costs. Federal tax forms 2011 Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Federal tax forms 2011 Nondeductible expenses. Federal tax forms 2011   You cannot deduct personal or capital expenses. Federal tax forms 2011 For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Federal tax forms 2011 This amount is a personal expense. Federal tax forms 2011 Unclaimed reimbursement. Federal tax forms 2011   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Federal tax forms 2011 Example. Federal tax forms 2011 Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Federal tax forms 2011 You do not file a voucher, and you do not get reimbursed. Federal tax forms 2011 Because you did not file a voucher, you cannot deduct the expenses on your tax return. Federal tax forms 2011 Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Federal tax forms 2011 If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Federal tax forms 2011 Temporary basis. Federal tax forms 2011   You go to school on a temporary basis if either of the following situations applies to you. Federal tax forms 2011 Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Federal tax forms 2011 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Federal tax forms 2011 Your attendance is temporary up to the date you determine it will last more than 1 year. Federal tax forms 2011 Note. Federal tax forms 2011 If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Federal tax forms 2011 Attendance not on a temporary basis. Federal tax forms 2011   You do not go to school on a temporary basis if either of the following situations apply to you. Federal tax forms 2011 Your attendance at school is realistically expected to last more than 1 year. Federal tax forms 2011 It does not matter how long you actually attend. Federal tax forms 2011 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Federal tax forms 2011 Your attendance is not temporary after the date you determine it will last more than 1 year. Federal tax forms 2011 Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Federal tax forms 2011 This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Federal tax forms 2011 Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Federal tax forms 2011 Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Federal tax forms 2011 Example 1. Federal tax forms 2011 You regularly work in a nearby town, and go directly from work to home. Federal tax forms 2011 You also attend school every work night for 3 months to take a course that improves your job skills. Federal tax forms 2011 Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Federal tax forms 2011 This is true regardless of the distance traveled. Federal tax forms 2011 Example 2. Federal tax forms 2011 Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Federal tax forms 2011 You can deduct your transportation expenses from your regular work site to school and then home. Federal tax forms 2011 Example 3. Federal tax forms 2011 Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Federal tax forms 2011 Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Federal tax forms 2011 Example 4. Federal tax forms 2011 Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Federal tax forms 2011 Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Federal tax forms 2011 If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Federal tax forms 2011 If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Federal tax forms 2011 Using your car. Federal tax forms 2011   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Federal tax forms 2011 The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Federal tax forms 2011 Whichever method you use, you can also deduct parking fees and tolls. Federal tax forms 2011 See chapter 26 for information on deducting your actual expenses of using a car. Federal tax forms 2011 Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Federal tax forms 2011 Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Federal tax forms 2011 For more information, see chapter 26. Federal tax forms 2011 You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Federal tax forms 2011 Mainly personal travel. Federal tax forms 2011   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Federal tax forms 2011 You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Federal tax forms 2011   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Federal tax forms 2011 An important factor is the comparison of time spent on personal activities with time spent on educational activities. Federal tax forms 2011 If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Federal tax forms 2011 Example 1. Federal tax forms 2011 John works in Newark, New Jersey. Federal tax forms 2011 He traveled to Chicago to take a deductible 1-week course at the request of his employer. Federal tax forms 2011 His main reason for going to Chicago was to take the course. Federal tax forms 2011 While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Federal tax forms 2011 Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Federal tax forms 2011 He cannot deduct his transportation expenses of going to Pleasantville. Federal tax forms 2011 He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Federal tax forms 2011 Example 2. Federal tax forms 2011 Sue works in Boston. Federal tax forms 2011 She went to a university in Michigan to take a course for work. Federal tax forms 2011 The course is qualifying work-related education. Federal tax forms 2011 She took one course, which is one-fourth of a full course load of study. Federal tax forms 2011 She spent the rest of the time on personal activities. Federal tax forms 2011 Her reasons for taking the course in Michigan were all personal. Federal tax forms 2011 Sue's trip is mainly personal because three-fourths of her time is considered personal time. Federal tax forms 2011 She cannot deduct the cost of her round-trip train ticket to Michigan. Federal tax forms 2011 She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Federal tax forms 2011 Example 3. Federal tax forms 2011 Dave works in Nashville and recently traveled to California to take a 2-week seminar. Federal tax forms 2011 The seminar is qualifying work-related education. Federal tax forms 2011 While there, he spent an extra 8 weeks on personal activities. Federal tax forms 2011 The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Federal tax forms 2011 Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Federal tax forms 2011 He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Federal tax forms 2011 Cruises and conventions. Federal tax forms 2011   Certain cruises and conventions offer seminars or courses as part of their itinerary. Federal tax forms 2011 Even if the seminars or courses are work-related, your deduction for travel may be limited. Federal tax forms 2011 This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Federal tax forms 2011   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Federal tax forms 2011 50% limit on meals. Federal tax forms 2011   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Federal tax forms 2011 You cannot have been reimbursed for the meals. Federal tax forms 2011   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Federal tax forms 2011 Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Federal tax forms 2011 Example. Federal tax forms 2011 You are a French language teacher. Federal tax forms 2011 While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Federal tax forms 2011 You chose your itinerary and most of your activities to improve your French language skills. Federal tax forms 2011 You cannot deduct your travel expenses as education expenses. Federal tax forms 2011 This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Federal tax forms 2011 No Double Benefit Allowed You cannot do either of the following. Federal tax forms 2011 Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Federal tax forms 2011 Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Federal tax forms 2011 See Adjustments to Qualifying Work-Related Education Expenses , next. Federal tax forms 2011 Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Federal tax forms 2011 You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Federal tax forms 2011 For more information, see chapter 12 of Publication 970. Federal tax forms 2011 Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Federal tax forms 2011 Amounts that do not reduce qualifying work-related education expenses. Federal tax forms 2011   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Federal tax forms 2011   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Federal tax forms 2011 Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Federal tax forms 2011 There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Federal tax forms 2011 You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Federal tax forms 2011 For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Federal tax forms 2011 Deducting Business Expenses Self-employed persons and employees report business expenses differently. Federal tax forms 2011 The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Federal tax forms 2011 Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Federal tax forms 2011 If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Federal tax forms 2011 See the instructions for the form you file for information on how to complete it. Federal tax forms 2011 Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Federal tax forms 2011 If either (1) or (2) applies, you can deduct the total qualifying cost. Federal tax forms 2011 If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Federal tax forms 2011 In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. Federal tax forms 2011 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Federal tax forms 2011 ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Federal tax forms 2011 See chapter 28. Federal tax forms 2011 Form 2106 or 2106-EZ. Federal tax forms 2011   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Federal tax forms 2011 Form not required. Federal tax forms 2011   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Federal tax forms 2011   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Federal tax forms 2011 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Federal tax forms 2011 ) Using Form 2106-EZ. Federal tax forms 2011   This form is shorter and easier to use than Form 2106. Federal tax forms 2011 Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Federal tax forms 2011   If you do not meet both of these requirements, use Form 2106. Federal tax forms 2011 Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Federal tax forms 2011 Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Federal tax forms 2011 You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Federal tax forms 2011 You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Federal tax forms 2011 For more information on qualified performing artists, see chapter 6 of Publication 463. Federal tax forms 2011 Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. Federal tax forms 2011 They are not subject to the 2%-of-adjusted-gross-income limit. Federal tax forms 2011 To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Federal tax forms 2011 For more information on impairment-related work expenses, see chapter 6 of Publication 463. Federal tax forms 2011 Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Federal tax forms 2011 Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Federal tax forms 2011 For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. Federal tax forms 2011 Prev  Up  Next   Home   More Online Publications