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File Amended Return

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File Amended Return

File amended return 6. File amended return   How To Report Table of Contents Where To ReportGifts. File amended return Statutory employees. File amended return Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. File amended return Standard mileage rate. File amended return Actual expenses. File amended return Car rentals. File amended return Hours of service limits. File amended return Allocating your reimbursement. File amended return 1. File amended return Limit on meals and entertainment. File amended return 2. File amended return Limit on miscellaneous itemized deductions. File amended return 3. File amended return Limit on total itemized deductions. File amended return Special Rules This chapter explains where and how to report the expenses discussed in this publication. File amended return It discusses reimbursements and how to treat them under accountable and nonaccountable plans. File amended return It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. File amended return The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. File amended return Where To Report This section provides general information on where to report the expenses discussed in this publication. File amended return Self-employed. File amended return   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. File amended return You do not use Form 2106 or 2106-EZ. File amended return    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. File amended return You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. File amended return   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. File amended return Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. File amended return   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. File amended return You can only include 50% of your meals and entertainment in that total. File amended return If you include car expenses, you must also complete Part III of the form. File amended return    If you file Schedule F (Form 1040): Report your car expenses on line 10. File amended return Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. File amended return Report all other business expenses discussed in this publication on line 32. File amended return You can only include 50% of your meals and entertainment on that line. File amended return See your form instructions for more information on how to complete your tax return. File amended return Both self-employed and an employee. File amended return   If you are both self-employed and an employee, you must keep separate records for each business activity. File amended return Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. File amended return Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. File amended return Employees. File amended return    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. File amended return However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. File amended return You are an employee deducting expenses attributable to your job. File amended return You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). File amended return If you claim car expenses, you use the standard mileage rate. File amended return   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. File amended return Gifts. File amended return   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. File amended return Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). File amended return Statutory employees. File amended return    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). File amended return Do not complete Form 2106 or 2106-EZ. File amended return   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. File amended return If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. File amended return Reimbursement for personal expenses. File amended return    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. File amended return You cannot deduct personal expenses. File amended return Income-producing property. File amended return   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. File amended return   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. File amended return See Publication 527, Residential Rental Property, for more information on the rental of real estate. File amended return If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. File amended return Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. File amended return The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. File amended return You cannot use the standard mileage rate. File amended return Value reported on Form W-2. File amended return   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). File amended return Your employer must separately state the amount if 100% of the annual lease value was included in your income. File amended return If you are unsure of the amount included on your Form W-2, ask your employer. File amended return Full value included in your income. File amended return   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. File amended return On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. File amended return    To claim your expenses, complete Form 2106, Part II, Sections A and C. File amended return Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. File amended return Complete the rest of the form. File amended return Less than full value included in your income. File amended return   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. File amended return Do not enter this value on your Form 2106 because it is not deductible. File amended return   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. File amended return Examples of costs that you may have are gas, oil, and repairs. File amended return Complete Form 2106, Part II, Sections A and C. File amended return Enter your actual costs on line 23 of Section C and leave line 25 blank. File amended return Complete the rest of the form. File amended return Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. File amended return If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. File amended return This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. File amended return It also covers rules for independent contractors. File amended return No reimbursement. File amended return   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. File amended return In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. File amended return Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. File amended return Reimbursement, allowance, or advance. File amended return   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. File amended return Arrangements include per diem and car allowances. File amended return    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. File amended return (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. File amended return ) A car allowance is an amount your employer gives you for the business use of your car. File amended return   Your employer should tell you what method of reimbursement is used and what records you must provide. File amended return Employers. File amended return   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. File amended return Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. File amended return Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. File amended return See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. File amended return Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. File amended return You must adequately account to your employer for these expenses within a reasonable period of time. File amended return You must return any excess reimbursement or allowance within a reasonable period of time. File amended return “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. File amended return An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. File amended return Reasonable period of time. File amended return   The definition of reasonable period of time depends on the facts and circumstances of your situation. File amended return However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. File amended return You receive an advance within 30 days of the time you have an expense. File amended return You adequately account for your expenses within 60 days after they were paid or incurred. File amended return You return any excess reimbursement within 120 days after the expense was paid or incurred. File amended return You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. File amended return Employee meets accountable plan rules. File amended return   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. File amended return If your expenses equal your reimbursements, you do not complete Form 2106. File amended return You have no deduction since your expenses and reimbursement are equal. File amended return    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. File amended return Accountable plan rules not met. File amended return   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. File amended return All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). File amended return Failure to return excess reimbursements. File amended return   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. File amended return See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. File amended return Reimbursement of nondeductible expenses. File amended return   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. File amended return The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. File amended return Example. File amended return Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. File amended return The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. File amended return The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. File amended return If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. File amended return Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. File amended return You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. File amended return (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. File amended return ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. File amended return See Per Diem and Car Allowances , later. File amended return You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. File amended return This includes amounts you charged to your employer by credit card or other method. File amended return You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. File amended return You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. File amended return Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. File amended return A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. File amended return Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. File amended return The allowance is similar in form to and not more than the federal rate (defined later). File amended return You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. File amended return You are not related to your employer (as defined next). File amended return If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. File amended return If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. File amended return In this case, you must be able to prove your expenses to the IRS. File amended return Related to employer. File amended return   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. File amended return You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. File amended return The federal rate. File amended return   The federal rate can be figured using any one of the following methods. File amended return For per diem amounts: The regular federal per diem rate. File amended return The standard meal allowance. File amended return The high-low rate. File amended return For car expenses: The standard mileage rate. File amended return A fixed and variable rate (FAVR). File amended return    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. File amended return Regular federal per diem rate. File amended return   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. File amended return The rates are different for different locations. File amended return Your employer should have these rates available. File amended return You can also find federal per diem rates at www. File amended return gsa. File amended return gov/perdiem. File amended return The standard meal allowance. File amended return   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). File amended return The rate for most small localities in the United States is $46 a day. File amended return Most major cities and many other localities qualify for higher rates. File amended return You can find this information on the Internet at www. File amended return gsa. File amended return gov/perdiem. File amended return   You receive an allowance only for meals and incidental expenses when your employer does one of the following. File amended return Provides you with lodging (furnishes it in kind). File amended return Reimburses you, based on your receipts, for the actual cost of your lodging. File amended return Pays the hotel, motel, etc. File amended return , directly for your lodging. File amended return Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. File amended return Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. File amended return High-low rate. File amended return   This is a simplified method of computing the federal per diem rate for travel within the continental United States. File amended return It eliminates the need to keep a current list of the per diem rates for each city. File amended return   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. File amended return All other areas have a per diem amount of $163 (including $52 for M&IE). File amended return For more information, see Notice 2012-63, which can be found on the Internet at www. File amended return irs. File amended return gov/irb/2012-42_IRB/ar12. File amended return html. File amended return    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). File amended return The rate for all other locations increased to $170 (including $52 for M&IE). File amended return Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. File amended return For more information, see Notice 2013-65, which can be found on the Internet at www. File amended return irs. File amended return gov/pub/irs-drop/n-13–65. File amended return pdf and Revenue Procedure 2011-47 at www. File amended return irs. File amended return gov/irb/2011-42_IRB/ar12. File amended return html. File amended return Prorating the standard meal allowance on partial days of travel. File amended return   The standard meal allowance is for a full 24-hour day of travel. File amended return If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. File amended return This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. File amended return   You can use either of the following methods to figure the federal M&IE for that day. File amended return Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. File amended return For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. File amended return Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. File amended return For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. File amended return m. File amended return of one day to 5 p. File amended return m. File amended return of the next day as being no more than the federal rate. File amended return This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. File amended return The standard mileage rate. File amended return   This is a set rate per mile that you can use to compute your deductible car expenses. File amended return For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. File amended return Fixed and variable rate (FAVR). File amended return   This is an allowance your employer may use to reimburse your car expenses. File amended return Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. File amended return ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. File amended return ). File amended return If your employer chooses to use this method, your employer will request the necessary records from you. File amended return Reporting your expenses with a per diem or car allowance. File amended return   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. File amended return The federal rate. File amended return Whether the allowance or your actual expenses were more than the federal rate. File amended return The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. File amended return Allowance less than or equal to the federal rate. File amended return   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. File amended return You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. File amended return   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). File amended return If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. File amended return If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. File amended return Example 1. File amended return In April, Jeremy takes a 2-day business trip to Denver. File amended return The federal rate for Denver is $215 per day. File amended return As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. File amended return His employer reimburses him $215 a day ($430 total) for living expenses. File amended return Jeremy's living expenses in Denver are not more than $215 a day. File amended return Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. File amended return Example 2. File amended return In June, Matt takes a 2-day business trip to Boston. File amended return Matt's employer uses the high-low method to reimburse employees. File amended return Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. File amended return Matt's actual expenses totaled $700. File amended return Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. File amended return Matt completes Form 2106 (showing all of his expenses and reimbursements). File amended return He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . File amended return Example 3. File amended return Nicole drives 10,000 miles in 2013 for business. File amended return Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. File amended return Her employer pays her a mileage allowance of 40 cents a mile. File amended return Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. File amended return Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. File amended return Allowance more than the federal rate. File amended return   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. File amended return This amount is not taxable. File amended return However, the excess allowance will be included in box 1 of your Form W-2. File amended return You must report this part of your allowance as if it were wage income. File amended return   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. File amended return   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. File amended return You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. File amended return You should be able to prove these amounts to the IRS. File amended return Example 1. File amended return Laura lives and works in Austin. File amended return In July her employer sent her to Albuquerque for 4 days on business. File amended return Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. File amended return Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. File amended return Table 6-1. File amended return Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. File amended return No amount. File amended return No amount. File amended return Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. File amended return The excess amount as wages in box 1. File amended return No amount. File amended return Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. File amended return No amount. File amended return All expenses and reimbursements only if excess expenses are claimed. File amended return Otherwise, form is not filed. File amended return Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. File amended return The excess amount as wages in box 1. File amended return The amount up to the federal rate is reported only in box 12—it is not reported in box 1. File amended return No amount. File amended return Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. File amended return The excess amount as wages in box 1. File amended return The amount up to the federal rate is reported only in box 12—it is not reported in box 1. File amended return All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. File amended return Otherwise, form is not filed. File amended return A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. File amended return The entire amount as wages in box 1. File amended return All expenses. File amended return No reimbursement plan: The entire amount as wages in box 1. File amended return All expenses. File amended return * You may be able to use Form 2106-EZ. File amended return See Completing Forms 2106 and 2106-EZ . File amended return Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. File amended return Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. File amended return This amount is not included in Laura's income. File amended return Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). File amended return Example 2. File amended return Joe also lives in Austin and works for the same employer as Laura. File amended return In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. File amended return The employer reimbursed Joe $75 a day for his meals and incidental expenses. File amended return The federal rate for San Diego is $71 a day. File amended return Joe can prove that his actual meal expenses totaled $380. File amended return His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. File amended return However, he does account for the time, place, and business purpose of the trip. File amended return This is Joe's only business trip this year. File amended return Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). File amended return The employer includes the $16 as income on Joe's Form W-2 in box 1. File amended return The employer also enters $284 in box 12 of Joe's Form W-2. File amended return Joe completes Form 2106 to figure his deductible expenses. File amended return He enters the total of his actual expenses for the year ($380) on Form 2106. File amended return He also enters the reimbursements that were not included in his income ($284). File amended return His total deductible expense, before the 50% limit, is $96. File amended return After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. File amended return Example 3. File amended return Debbie drives 10,000 miles in 2013 for business. File amended return Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. File amended return Her total reimbursement is $6,000. File amended return Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. File amended return That amount is not taxable. File amended return Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. File amended return This is the reimbursement that is more than the standard mileage rate. File amended return If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. File amended return If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). File amended return She would then claim the excess expenses as an itemized deduction. File amended return Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. File amended return Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. File amended return For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. File amended return “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. File amended return Travel advance. File amended return   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. File amended return Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. File amended return   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). File amended return Unproved amounts. File amended return   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. File amended return If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). File amended return Per diem allowance more than federal rate. File amended return   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. File amended return However, the difference will be reported as wages on your Form W-2. File amended return This excess amount is considered paid under a nonaccountable plan (discussed later). File amended return Example. File amended return Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. File amended return The federal per diem for meals and incidental expenses for Phoenix is $71. File amended return Your trip lasts only 3 days. File amended return Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. File amended return For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). File amended return However, the $27 will be reported on your Form W-2 as wages. File amended return Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. File amended return In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. File amended return See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. File amended return An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. File amended return This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. File amended return If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. File amended return Reporting your expenses under a nonaccountable plan. File amended return   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. File amended return Your employer will report the total in box 1 of your Form W-2. File amended return    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. File amended return Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. File amended return Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. File amended return Example 1. File amended return Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. File amended return Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. File amended return Kim is being reimbursed under a nonaccountable plan. File amended return Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. File amended return If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. File amended return Example 2. File amended return Kevin is paid $2,000 a month by his employer. File amended return On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. File amended return Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. File amended return No part of the $50 a day designated by his employer is treated as paid under an accountable plan. File amended return Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. File amended return The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. File amended return You are considered an independent contractor if you are self-employed and you perform services for a customer or client. File amended return Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. File amended return If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. File amended return You must keep adequate records of these expenses whether or not you account to your client for these expenses. File amended return If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. File amended return See 50% Limit in chapter 2. File amended return Adequate accounting. File amended return   As a self-employed person, you adequately account by reporting your actual expenses. File amended return You should follow the recordkeeping rules in chapter 5 . File amended return How to report. File amended return   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. File amended return Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. File amended return However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. File amended return Contractor adequately accounts. File amended return   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . File amended return Use your records as proof for a deduction on your tax return. File amended return If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. File amended return If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. File amended return Contractor does not adequately account. File amended return    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. File amended return You are not subject to the 50% limit on entertainment in this case. File amended return You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. File amended return However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. File amended return How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. File amended return The Two Substantiation Methods High-low method. File amended return   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. File amended return Notice 2012–63, available at www. File amended return irs. File amended return gov/irb/2012–42_IRB/ar12. File amended return html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. File amended return For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. File amended return   Notice 2013–65, available at www. File amended return irs. File amended return gov/pub/irs-drop/n-13–65. File amended return pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. File amended return For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). File amended return Regular federal per diem rate method. File amended return   Regular federal per diem rates are published by the General Services Administration (GSA). File amended return Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. File amended return The rates listed for FY2013 at www. File amended return gsa. File amended return gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. File amended return The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). File amended return For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). File amended return Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. File amended return During this period, you generally may change to the new rates or finish out the year with the rates you had been using. File amended return High-low method. File amended return   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. File amended return However, you must continue using the high-low method for the rest of the calendar year (through December 31). File amended return If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. File amended return   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. File amended return You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. File amended return irs. File amended return gov/irb. File amended return Federal per diem rate method. File amended return   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. File amended return Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). File amended return However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. File amended return   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. File amended return Go to www. File amended return gsa. File amended return gov/perdiem. File amended return Per diem rates for localities listed for FY2014 may change at any time. File amended return To be sure you have the most current rate, check www. File amended return gsa. File amended return gov/perdiem. File amended return Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. File amended return Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. File amended return The instructions for the forms have more information on completing them. File amended return If you are self-employed, do not file Form 2106 or 2106-EZ. File amended return Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). File amended return See the instructions for the form that you must file. File amended return Form 2106-EZ. File amended return   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. File amended return You can use this form if you meet all the following conditions. File amended return You are an employee deducting ordinary and necessary expenses attributable to your job. File amended return You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). File amended return If you are claiming car expenses, you are using the standard mileage rate. File amended return Car expenses. File amended return   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. File amended return These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. File amended return Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. File amended return Information on use of cars. File amended return   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. File amended return The information relates to the following items. File amended return Date placed in service. File amended return Mileage (total, business, commuting, and other personal mileage). File amended return Percentage of business use. File amended return After-work use. File amended return Use of other vehicles. File amended return Whether you have evidence to support the deduction. File amended return Whether or not the evidence is written. File amended return Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. File amended return Standard mileage rate. File amended return   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. File amended return The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. File amended return In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. File amended return If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. File amended return See Standard Mileage Rate in chapter 4 for information on using this rate. File amended return Actual expenses. File amended return   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. File amended return You must complete Form 2106, Part II, Section C. File amended return In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. File amended return   If you are still using a car that is fully depreciated, continue to complete Section C. File amended return Since you have no depreciation deduction, enter zero on line 28. File amended return In this case, do not complete Section D. File amended return Car rentals. File amended return   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. File amended return If so, you can show your car expenses and any inclusion amount as follows. File amended return Compute the inclusion amount without taking into account your business use percentage for the tax year. File amended return Report the inclusion amount from (1) on Form 2106, Part II, line 24b. File amended return Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). File amended return The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. File amended return Transportation expenses. File amended return   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. File amended return Also include on this line business expenses you have for parking fees and tolls. File amended return Do not include expenses of operating your car or expenses of commuting between your home and work. File amended return Employee business expenses other than meals and entertainment. File amended return   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. File amended return Do not include expenses for meals and entertainment on those lines. File amended return Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. File amended return    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. File amended return Claim these amounts directly on Schedule A (Form 1040), line 21. File amended return List the type and amount of each expense on the dotted lines and include the total on line 21. File amended return Meal and entertainment expenses. File amended return   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. File amended return Include meals while away from your tax home overnight and other business meals and entertainment. File amended return Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. File amended return   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. File amended return Enter the result on line 5. File amended return Hours of service limits. File amended return   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. File amended return Reimbursements. File amended return   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. File amended return This includes any amount reported under code L in box 12 of Form W-2. File amended return Allocating your reimbursement. File amended return   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. File amended return This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. File amended return You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. File amended return Example. File amended return Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. File amended return The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. File amended return The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. File amended return Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). File amended return Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. File amended return To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. File amended return His completed worksheet follows. File amended return Reimbursement Allocation Worksheet (Keep for your records)   1. File amended return Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. File amended return Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. File amended return Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. File amended return Divide line 3 by line 2. File amended return Enter the result as a decimal (rounded to at least three places) . File amended return 529   5. File amended return Multiply line 1 by line 4. File amended return Enter the result here and in Column B, line 7 3,703   6. File amended return Subtract line 5 from line 1. File amended return Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. File amended return After you complete the form. File amended return   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. File amended return For most taxpayers, this is line 21 of Schedule A (Form 1040). File amended return However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. File amended return Limits on employee business expenses. File amended return   Your employee business expenses may be subject to either of the limits described next. File amended return They are figured in the following order on the specified form. File amended return 1. File amended return Limit on meals and entertainment. File amended return   Certain meal and entertainment expenses are subject to a 50% limit. File amended return If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. File amended return (See 50% Limit in chapter 2. File amended return ) 2. File amended return Limit on miscellaneous itemized deductions. File amended return   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). File amended return Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. File amended return This limit is figured on line 26 of Schedule A (Form 1040). File amended return 3. File amended return Limit on total itemized deductions. File amended return   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. File amended return See your form instructions for information on how to figure this limit. File amended return Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. File amended return Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. File amended return The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. File amended return See Per Diem and Car Allowances , earlier, for more information. File amended return Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. File amended return Member of a reserve component. File amended return   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. File amended return How to report. File amended return   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. File amended return Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File amended return Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. File amended return   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. File amended return Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. File amended return Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). File amended return Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. File amended return They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. File amended return If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File amended return Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. File amended return To qualify, you must meet all of the following requirements. File amended return During the tax year, you perform services in the performing arts as an employee for at least two employers. File amended return You receive at least $200 each from any two of these employers. File amended return Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. File amended return Your adjusted gross income is not more than $16,000 before deducting these business expenses. File amended return Special rules for married persons. File amended return   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. File amended return If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. File amended return However, requirement (4) applies to your and your spouse's combined adjusted gross income. File amended return Where to report. File amended return   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. File amended return Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. File amended return   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. File amended return Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. File amended return Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. File amended return After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. File amended return Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. File amended return Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. File amended return You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. File amended return You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. File amended return Example 1. File amended return You are blind. File amended return You must use a reader to do your work. File amended return You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. File amended return The reader's services are only for your work. File amended return You can deduct your expenses for the reader as business expenses. File amended return Example 2. File amended return You are deaf. File amended return You must use a sign language interpreter during meetings while you are at work. File amended return The interpreter's services are used only for your work. File amended return You can deduct your expenses for the interpreter as business expenses. File amended return Prev  Up  Next   Home   More Online Publications
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  • National Runaway Safeline to Call for Help  – Call 1-800-RUNAWAY if you are a teenager thinking of running from home, if you have a friend who has run and is looking for help, or if you are a runaway ready to go home.
  • Pension Benefits  – Employee Benefits Security Administration regional offices will inform you of your rights and help you claim your benefits.
  • Radon  – Call the hotline to learn about radon and indoor air quality in your home.
  • Veterans Employment and Training  –  Key contacts for grants and employment and training assistance for veterans.
  • Worker Issues  – E-mail or mail the Department of Labor.
  • Workplace Safety  – E-mail a complaint to the Occupational Health and Safety Administration (OSHA).
  • Workplace Safety for the Federal Workplace  – E-mail or call for program information to improve the health and safety of the government workforce.

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Military and Veterans

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Money and Business

  • Antitrust and Competition  – E-mail the Federal Trade Commission with a question or comment on an antitrust matter.
  • Antitrust Violations  – E-mail, call, or mail a report of a possible antitrust violation or potential anti-competitive activity, whether civil or criminal, to the Department of Justice.
  • Bank Complaints  – File a complaint about a bank or other financial institution
  • Bankruptcy Fraud  – Report suspected bankruptcy fraud to the U.S. Trustee Program of the Department of Justice.
  • Banks  – Mail consumer complaints about banks to the Federal Reserve Board.
  • Business and Electronic Commerce Practices  – E-mail complaints (stores, finance companies, auto dealers, mortgage companies, credit bureaus, spam e-mail, etc.) to the Federal Trade Commission.
  • Charities  – E-mail complaints to the Federal Trade Commission.
  •  – E-mail or call with questions or comments, or report fraud to the National Credit Union Administration.
  • Deposit Insurance  – E-mail for assistance from the Federal Deposit Insurance Commission.
  • Economic and Humanitarian Assistance Activities Overseas  – E-mail, call or write comments or questions to the U.S. Agency for International Development.
  • Export Assistance  – E-mail, call, fax or mail the Department of Commerce.
  • Export Control or Boycott Related Violation  – E-mail a lead or a tip to the Bureau of Industry and Security.
  • Investors  – E-mail, fax or mail concerns and problems of individual investors to the Securities and Exchange Commission (SEC).
  • IRS (Internal Revenue Service) Reform  – E-mail an idea, issue or suggestion to the Taxpayer Advocacy Panel.
  • IRS Taxpayer Advocate Service  – The Taxpayer Advocate Service helps individuals and small businesses resolve problems with the IRS
  • Patents and Trademarks  –  E-mail, call or mail questions about patents and trademarks.
  • Securities and Exchange Commission  – Contact the SEC's Office of Investor Education and Advocacy for individual assistance at help@sec.gov
  • Statistics  – Contacts to assist with locating and using Bureau of Labor Statistics data, publications and services.
  • Tax Help  – E-mail or call with comments and feedback.
  • Taxpayer Advocacy Panel Application  – Volunteer for this unique opportunity to influence how the IRS delivers services to the public by becoming a member of the Taxpayer Advocacy Panel (TAP).
  • Tax Refund Status  –  Check your federal tax refund status online.
  • Trade Barriers  – Call to receive assistance in resolving problems.
  • Workplace Safety  – E-mail a complaint to the Occupational Health and Safety Administration (OSHA).

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Travel and Transportation

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The File Amended Return

File amended return Car Expenses Table of Contents Introduction Depreciation of CarSpecial Depreciation Allowance Depreciation Limit Amended Return Election Not To Claim Special Allowance If you purchased a car after September 10, 2001, for use in your business (or as an employee) and figure your deductible expenses using the actual car expense method, new law contains provisions that may affect your depreciation deduction for that car. File amended return Publication 463, Travel, Entertainment, Gift, and Car Expenses, contains information on figuring depreciation on your car. File amended return However, Publication 463 does not contain the new provisions because it was printed before the law was enacted. File amended return The new provisions are in the Supplement to Publication 463, which is reprinted below. File amended return Supplement to Publication 463 Travel, Entertainment, Gift, and Car Expenses   Introduction This supplemental publication is for taxpayers who purchased a car for business purposes after September 10, 2001, and figure their deductible expenses, including a deduction for depreciation, using the actual car expense method. File amended return After Publication 463 was printed, the Job Creation and Worker Assistance Act of 2002 was signed into law by the President. File amended return Certain provisions of this new law may reduce your taxes for 2001. File amended return The new law contains the following provisions. File amended return A new depreciation deduction, the special depreciation allowance. File amended return An increase in the limit on depreciation for any car for which you claim the new special depreciation allowance. File amended return If you have already filed your 2001 return, you may wish to file an amended return to claim any of these benefits. File amended return See Amended Return, later. File amended return Depreciation of Car If you used the actual car expense method to figure your deduction for a car you own and use in your business (or as an employee), you generally can claim a depreciation deduction. File amended return However, there is a limit on the depreciation deduction you can take for your car each year. File amended return See Depreciation Limit later. File amended return Special Depreciation Allowance The new law allows you to claim a special depreciation allowance. File amended return This special allowance is a deduction equal to 30% of the depreciable basis of qualified property. File amended return You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS). File amended return See Depreciation Deduction under Actual Car Expenses in chapter 4 of Publication 463 for information about MACRS. File amended return You can claim the special depreciation allowance only for the year the qualified property is placed in service. File amended return Qualified property. File amended return   Qualified property includes a car (any four-wheeled vehicle, including a truck or van not more than 6,000 pounds, that is made primarily for use on public streets, roads, and highways) that meets all of the following requirements. File amended return You bought it new. File amended return You bought it after September 10, 2001. File amended return (But a car is not qualified property if a binding written contract for you to buy the car was in effect before September 11, 2001. File amended return ) You began using it for business after September 10, 2001, and used it more than 50% in a qualified business use. File amended return Example. File amended return Bob bought a new car on October 15, 2001, for $20,000 and placed it in service immediately, using it 75% for business. File amended return Bob's car is qualified property. File amended return Bob chooses not to take a section 179 deduction for the car. File amended return He does claim the new special depreciation allowance. File amended return Bob first must figure the car's depreciable basis, which is $15,000 ($20,000 × . File amended return 75). File amended return He then figures the special depreciation allowance of $4,500 ($15,000 × . File amended return 30). File amended return The remaining depreciable basis of $10,500 ($15,000 - $4,500) is depreciated using MACRS (200% declining balance method, half-year convention) and results in a deduction of $2,100 ($10,500 × . File amended return 20), for a total depreciation deduction for 2001 of $6,600 ($4,500 + $2,100). File amended return However, Bob's depreciation deduction is limited to $5,745 ($7,660 × . File amended return 75), as discussed next. File amended return Depreciation Limit The limit on your depreciation deduction for 2001 is increased to $7,660 for a car that is qualified property (defined above) and for which you claim the special depreciation allowance. File amended return The limit is increased to $23,080 if the car is an electric car. File amended return The section 179 deduction is treated as depreciation for purposes of this limit. File amended return If you use a car less than 100% in your business or work, the limit is $7,660 (or $23,080 for an electric car) multiplied by the percentage of business and investment use during the year. File amended return For cars that do not qualify for (or for which you choose not to claim) the special depreciation allowance, the limit remains $3,060 ($9,280 for electric cars). File amended return Amended Return If you filed your 2001 calendar year return before June 1, 2002, and did not claim the new special depreciation allowance for a qualified car, you can claim it by filing an amended return on Form 1040X, Amended U. File amended return S. File amended return Individual Income Tax Return, by April 15, 2003. File amended return At the top of the Form 1040X, print “Filed pursuant to Revenue Procedure 2002–33. File amended return ” If you are an employee, attach Form 2106, Employee Business Expenses (revised March 2002). File amended return If you are self-employed, attach Form 4562, Depreciation and Amortization (revised March 2002). File amended return Or, you can claim the special depreciation allowance by filing Form 3115, Application for Change in Accounting Method, with your 2002 return. File amended return For details, see Revenue Procedure 2002–33. File amended return (But, filing Form 1040X for 2001 enables you to claim the special allowance earlier than attaching Form 3115 to your 2002 return. File amended return ) You cannot claim the special depreciation allowance on an amended return (or by using Form 3115) if you made, or are treated as having made, the election not to claim it described later. File amended return Example. File amended return The facts are the same as in the previous example except that Bob filed his original 2001 income tax return on April 15, 2002, and claimed a $3,000 ($20,000 x . File amended return 75 x . File amended return 20) depreciation deduction for his new car using MACRS. File amended return Bob now wishes to claim the special depreciation allowance for his new car on an amended 2001 return. File amended return Bob, who is an employee, files Form 1040X, by April 15, 2003, with an updated Form 2106 (revised March 2002) attached, increasing his total depreciation deduction to $5,745, as figured in the earlier example. File amended return Bob's new filled-in Form 2106 is shown later. File amended return Election Not To Claim Special Allowance You can elect not to claim the special depreciation allowance for a car by making a statement attached to, or written on, your return indicating that you are electing not to claim the special depreciation allowance for 5-year property. File amended return As a general rule, you must make this election by the due date (including extensions) of your return. File amended return You can have an automatic extension of 6 months from the due date of your return (excluding extensions) to make the election with an amended return. File amended return To get this extension, you must have filed your original return by the due date (including extensions). File amended return At the top of the statement, print “Filed pursuant to section 301. File amended return 9100–2. File amended return ” If you elect not to claim the special depreciation allowance for a car, you cannot claim it for any other 5-year property placed in service during the same year. File amended return Unless you elect (or are treated as electing) not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. File amended return Deemed election for return filed before June 1, 2002. File amended return   If you did not make the election not to claim the special depreciation allowance in the time and manner described above, you will still be treated as electing not to claim it if all of the following apply. File amended return You filed your 2001 return before June 1, 2002. File amended return You claimed depreciation on your return but did not claim the special depreciation allowance. File amended return You did not file an amended 2001 return by April 15, 2003, or a Form 3115 with your 2002 return, to claim the special depreciation allowance. File amended return Form 2106, Page 1, for Bob Smith Form 2106, Page 2, for Bob Smith Prev  Up  Next   Home   More Online Publications