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Instructions Michigan 2012 Mi 1040x

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Instructions Michigan 2012 Mi 1040x

Instructions michigan 2012 mi 1040x 26. Instructions michigan 2012 mi 1040x   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Instructions michigan 2012 mi 1040x Parking fees. Instructions michigan 2012 mi 1040x Advertising display on car. Instructions michigan 2012 mi 1040x Car pools. Instructions michigan 2012 mi 1040x Hauling tools or instruments. Instructions michigan 2012 mi 1040x Union members' trips from a union hall. Instructions michigan 2012 mi 1040x Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Instructions michigan 2012 mi 1040x Statutory employees. Instructions michigan 2012 mi 1040x Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. Instructions michigan 2012 mi 1040x  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Instructions michigan 2012 mi 1040x Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. Instructions michigan 2012 mi 1040x Depreciation limits on cars, trucks, and vans. Instructions michigan 2012 mi 1040x  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Instructions michigan 2012 mi 1040x For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Instructions michigan 2012 mi 1040x For more information, see Depreciation limits in Publication 463. Instructions michigan 2012 mi 1040x Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Instructions michigan 2012 mi 1040x An ordinary expense is one that is common and accepted in your trade or business. Instructions michigan 2012 mi 1040x A necessary expense is one that is helpful and appropriate for your business. Instructions michigan 2012 mi 1040x An expense does not have to be required to be considered necessary. Instructions michigan 2012 mi 1040x This chapter explains the following. Instructions michigan 2012 mi 1040x What expenses are deductible. Instructions michigan 2012 mi 1040x How to report your expenses on your return. Instructions michigan 2012 mi 1040x What records you need to prove your expenses. Instructions michigan 2012 mi 1040x How to treat any expense reimbursements you may receive. Instructions michigan 2012 mi 1040x Who does not need to use this chapter. Instructions michigan 2012 mi 1040x   If you are an employee, you will not need to read this chapter if all of the following are true. Instructions michigan 2012 mi 1040x You fully accounted to your employer for your work-related expenses. Instructions michigan 2012 mi 1040x You received full reimbursement for your expenses. Instructions michigan 2012 mi 1040x Your employer required you to return any excess reimbursement and you did so. Instructions michigan 2012 mi 1040x There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Instructions michigan 2012 mi 1040x If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Instructions michigan 2012 mi 1040x See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. Instructions michigan 2012 mi 1040x    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Instructions michigan 2012 mi 1040x Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. Instructions michigan 2012 mi 1040x This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. Instructions michigan 2012 mi 1040x It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. Instructions michigan 2012 mi 1040x Travel expenses defined. Instructions michigan 2012 mi 1040x   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. Instructions michigan 2012 mi 1040x   You will find examples of deductible travel expenses in Table 26-1 . Instructions michigan 2012 mi 1040x Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. Instructions michigan 2012 mi 1040x This rest requirement is not satisfied by merely napping in your car. Instructions michigan 2012 mi 1040x You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. Instructions michigan 2012 mi 1040x Example 1. Instructions michigan 2012 mi 1040x You are a railroad conductor. Instructions michigan 2012 mi 1040x You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Instructions michigan 2012 mi 1040x During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. Instructions michigan 2012 mi 1040x You are considered to be away from home. Instructions michigan 2012 mi 1040x Example 2. Instructions michigan 2012 mi 1040x You are a truck driver. Instructions michigan 2012 mi 1040x You leave your terminal and return to it later the same day. Instructions michigan 2012 mi 1040x You get an hour off at your turnaround point to eat. Instructions michigan 2012 mi 1040x Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. Instructions michigan 2012 mi 1040x Members of the Armed Forces. Instructions michigan 2012 mi 1040x   If you are a member of the U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Instructions michigan 2012 mi 1040x You cannot deduct your expenses for meals and lodging. Instructions michigan 2012 mi 1040x You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. Instructions michigan 2012 mi 1040x If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. Instructions michigan 2012 mi 1040x    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. Instructions michigan 2012 mi 1040x Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Instructions michigan 2012 mi 1040x Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Instructions michigan 2012 mi 1040x It includes the entire city or general area in which your business or work is located. Instructions michigan 2012 mi 1040x If you have more than one regular place of business, your tax home is your main place of business. Instructions michigan 2012 mi 1040x See Main place of business or work , later. Instructions michigan 2012 mi 1040x If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. Instructions michigan 2012 mi 1040x See No main place of business or work , later. Instructions michigan 2012 mi 1040x If you do not have a regular or a main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. Instructions michigan 2012 mi 1040x As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Instructions michigan 2012 mi 1040x Main place of business or work. Instructions michigan 2012 mi 1040x   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. Instructions michigan 2012 mi 1040x The total time you ordinarily spend in each place. Instructions michigan 2012 mi 1040x The level of your business activity in each place. Instructions michigan 2012 mi 1040x Whether your income from each place is significant or insignificant. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Instructions michigan 2012 mi 1040x You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Instructions michigan 2012 mi 1040x Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Instructions michigan 2012 mi 1040x No main place of business or work. Instructions michigan 2012 mi 1040x   You may have a tax home even if you do not have a regular or main place of business or work. Instructions michigan 2012 mi 1040x Your tax home may be the home where you regularly live. Instructions michigan 2012 mi 1040x Factors used to determine tax home. Instructions michigan 2012 mi 1040x   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. Instructions michigan 2012 mi 1040x You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. Instructions michigan 2012 mi 1040x You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Instructions michigan 2012 mi 1040x You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. Instructions michigan 2012 mi 1040x   If you satisfy all three factors, your tax home is the home where you regularly live. Instructions michigan 2012 mi 1040x If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Instructions michigan 2012 mi 1040x If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You are single and live in Boston in an apartment you rent. Instructions michigan 2012 mi 1040x You have worked for your employer in Boston for a number of years. Instructions michigan 2012 mi 1040x Your employer enrolls you in a 12-month executive training program. Instructions michigan 2012 mi 1040x You do not expect to return to work in Boston after you complete your training. Instructions michigan 2012 mi 1040x During your training, you do not do any work in Boston. Instructions michigan 2012 mi 1040x Instead, you receive classroom and on-the-job training throughout the United States. Instructions michigan 2012 mi 1040x You keep your apartment in Boston and return to it frequently. Instructions michigan 2012 mi 1040x You use your apartment to conduct your personal business. Instructions michigan 2012 mi 1040x You also keep up your community contacts in Boston. Instructions michigan 2012 mi 1040x When you complete your training, you are transferred to Los Angeles. Instructions michigan 2012 mi 1040x You do not satisfy factor (1) because you did not work in Boston. Instructions michigan 2012 mi 1040x You satisfy factor (2) because you had duplicate living expenses. Instructions michigan 2012 mi 1040x You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Instructions michigan 2012 mi 1040x Therefore, you have a tax home in Boston. Instructions michigan 2012 mi 1040x Tax home different from family home. Instructions michigan 2012 mi 1040x   If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. Instructions michigan 2012 mi 1040x You also cannot deduct the cost of meals and lodging while at your tax home. Instructions michigan 2012 mi 1040x See Example 1 . Instructions michigan 2012 mi 1040x   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Instructions michigan 2012 mi 1040x See Example 2 . Instructions michigan 2012 mi 1040x Example 1. Instructions michigan 2012 mi 1040x You are a truck driver and you and your family live in Tucson. Instructions michigan 2012 mi 1040x You are employed by a trucking firm that has its terminal in Phoenix. Instructions michigan 2012 mi 1040x At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Instructions michigan 2012 mi 1040x You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Instructions michigan 2012 mi 1040x This is because Phoenix is your tax home. Instructions michigan 2012 mi 1040x Example 2. Instructions michigan 2012 mi 1040x Your family home is in Pittsburgh, where you work 12 weeks a year. Instructions michigan 2012 mi 1040x The rest of the year you work for the same employer in Baltimore. Instructions michigan 2012 mi 1040x In Baltimore, you eat in restaurants and sleep in a rooming house. Instructions michigan 2012 mi 1040x Your salary is the same whether you are in Pittsburgh or Baltimore. Instructions michigan 2012 mi 1040x Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Instructions michigan 2012 mi 1040x You cannot deduct any expenses you have for meals and lodging there. Instructions michigan 2012 mi 1040x However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Instructions michigan 2012 mi 1040x You can deduct the cost of your round trip between Baltimore and Pittsburgh. Instructions michigan 2012 mi 1040x You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Instructions michigan 2012 mi 1040x Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Instructions michigan 2012 mi 1040x It may not be practical to return to your tax home from this other location at the end of each work day. Instructions michigan 2012 mi 1040x Temporary assignment vs. Instructions michigan 2012 mi 1040x indefinite assignment. Instructions michigan 2012 mi 1040x   If your assignment or job away from your main place of work is temporary, your tax home does not change. Instructions michigan 2012 mi 1040x You are considered to be away from home for the whole period you are away from your main place of work. Instructions michigan 2012 mi 1040x You can deduct your travel expenses if they otherwise qualify for deduction. Instructions michigan 2012 mi 1040x Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. Instructions michigan 2012 mi 1040x   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. Instructions michigan 2012 mi 1040x An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. Instructions michigan 2012 mi 1040x   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. Instructions michigan 2012 mi 1040x You may be able to deduct the cost of relocating to your new tax home as a moving expense. Instructions michigan 2012 mi 1040x See Publication 521 for more information. Instructions michigan 2012 mi 1040x Exception for federal crime investigations or prosecutions. Instructions michigan 2012 mi 1040x   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Instructions michigan 2012 mi 1040x This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year, provided you meet the other requirements for deductibility. Instructions michigan 2012 mi 1040x   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate or prosecute, or provide support services for the investigation or prosecution of a federal crime. Instructions michigan 2012 mi 1040x Determining temporary or indefinite. Instructions michigan 2012 mi 1040x   You must determine whether your assignment is temporary or indefinite when you start work. Instructions michigan 2012 mi 1040x If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. Instructions michigan 2012 mi 1040x An assignment or job that is initially temporary may become indefinite due to changed circumstances. Instructions michigan 2012 mi 1040x A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. Instructions michigan 2012 mi 1040x Going home on days off. Instructions michigan 2012 mi 1040x   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. Instructions michigan 2012 mi 1040x You cannot deduct the cost of your meals and lodging there. Instructions michigan 2012 mi 1040x However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Instructions michigan 2012 mi 1040x You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Instructions michigan 2012 mi 1040x   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Instructions michigan 2012 mi 1040x In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. Instructions michigan 2012 mi 1040x Probationary work period. Instructions michigan 2012 mi 1040x   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. Instructions michigan 2012 mi 1040x You cannot deduct any of your expenses for meals and lodging during the probationary period. Instructions michigan 2012 mi 1040x What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. Instructions michigan 2012 mi 1040x You can deduct ordinary and necessary expenses you have when you travel away from home on business. Instructions michigan 2012 mi 1040x The type of expense you can deduct depends on the facts and your circumstances. Instructions michigan 2012 mi 1040x Table 26-1 summarizes travel expenses you may be able to deduct. Instructions michigan 2012 mi 1040x You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Instructions michigan 2012 mi 1040x When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. Instructions michigan 2012 mi 1040x You can use a log, diary, notebook, or any other written record to keep track of your expenses. Instructions michigan 2012 mi 1040x The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. Instructions michigan 2012 mi 1040x Separating costs. Instructions michigan 2012 mi 1040x   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. Instructions michigan 2012 mi 1040x You must have a reasonable basis for making this allocation. Instructions michigan 2012 mi 1040x For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Instructions michigan 2012 mi 1040x Travel expenses for another individual. Instructions michigan 2012 mi 1040x   If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. Instructions michigan 2012 mi 1040x Employee. Instructions michigan 2012 mi 1040x   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. Instructions michigan 2012 mi 1040x Business associate. Instructions michigan 2012 mi 1040x   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. Instructions michigan 2012 mi 1040x A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. Instructions michigan 2012 mi 1040x A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Instructions michigan 2012 mi 1040x Bona fide business purpose. Instructions michigan 2012 mi 1040x   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Instructions michigan 2012 mi 1040x Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x Jerry drives to Chicago on business and takes his wife, Linda, with him. Instructions michigan 2012 mi 1040x Linda is not Jerry's employee. Instructions michigan 2012 mi 1040x Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Instructions michigan 2012 mi 1040x The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Instructions michigan 2012 mi 1040x Her expenses are not deductible. Instructions michigan 2012 mi 1040x Jerry pays $199 a day for a double room. Instructions michigan 2012 mi 1040x A single room costs $149 a day. Instructions michigan 2012 mi 1040x He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Instructions michigan 2012 mi 1040x If he uses public transportation, he can deduct only his fare. Instructions michigan 2012 mi 1040x Table 26-1. Instructions michigan 2012 mi 1040x Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. Instructions michigan 2012 mi 1040x IF you have expenses for. Instructions michigan 2012 mi 1040x . Instructions michigan 2012 mi 1040x . Instructions michigan 2012 mi 1040x THEN you can deduct the cost of. Instructions michigan 2012 mi 1040x . Instructions michigan 2012 mi 1040x . Instructions michigan 2012 mi 1040x transportation travel by airplane, train, bus, or car between your home and your business destination. Instructions michigan 2012 mi 1040x If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Instructions michigan 2012 mi 1040x If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. Instructions michigan 2012 mi 1040x taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. Instructions michigan 2012 mi 1040x baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Instructions michigan 2012 mi 1040x car operating and maintaining your car when traveling away from home on business. Instructions michigan 2012 mi 1040x You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. Instructions michigan 2012 mi 1040x If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Instructions michigan 2012 mi 1040x lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Instructions michigan 2012 mi 1040x Meals include amounts spent for food, beverages, taxes, and related tips. Instructions michigan 2012 mi 1040x See Meals and Incidental Expenses for additional rules and limits. Instructions michigan 2012 mi 1040x cleaning dry cleaning and laundry. Instructions michigan 2012 mi 1040x telephone business calls while on your business trip. Instructions michigan 2012 mi 1040x This includes business communication by fax machine or other communication devices. Instructions michigan 2012 mi 1040x tips tips you pay for any expenses in this chart. Instructions michigan 2012 mi 1040x other other similar ordinary and necessary expenses related to your business travel. Instructions michigan 2012 mi 1040x These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. Instructions michigan 2012 mi 1040x Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. Instructions michigan 2012 mi 1040x It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Instructions michigan 2012 mi 1040x The meal is business-related entertainment. Instructions michigan 2012 mi 1040x Business-related entertainment is discussed under Entertainment Expenses , later. Instructions michigan 2012 mi 1040x The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. Instructions michigan 2012 mi 1040x Lavish or extravagant. Instructions michigan 2012 mi 1040x   You cannot deduct expenses for meals that are lavish or extravagant. Instructions michigan 2012 mi 1040x An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Instructions michigan 2012 mi 1040x Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Instructions michigan 2012 mi 1040x 50% limit on meals. Instructions michigan 2012 mi 1040x   You can figure your meal expenses using either of the following methods. Instructions michigan 2012 mi 1040x Actual cost. Instructions michigan 2012 mi 1040x The standard meal allowance. Instructions michigan 2012 mi 1040x Both of these methods are explained below. Instructions michigan 2012 mi 1040x But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Instructions michigan 2012 mi 1040x   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. Instructions michigan 2012 mi 1040x If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Instructions michigan 2012 mi 1040x The 50% limit is explained later under Entertainment Expenses . Instructions michigan 2012 mi 1040x Accountable and nonaccountable plans are discussed later under Reimbursements . Instructions michigan 2012 mi 1040x Actual cost. Instructions michigan 2012 mi 1040x   You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. Instructions michigan 2012 mi 1040x If you use this method, you must keep records of your actual cost. Instructions michigan 2012 mi 1040x Standard meal allowance. Instructions michigan 2012 mi 1040x   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Instructions michigan 2012 mi 1040x It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. Instructions michigan 2012 mi 1040x The set amount varies depending on where and when you travel. Instructions michigan 2012 mi 1040x In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Instructions michigan 2012 mi 1040x If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Instructions michigan 2012 mi 1040x See Recordkeeping , later. Instructions michigan 2012 mi 1040x Incidental expenses. Instructions michigan 2012 mi 1040x   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Instructions michigan 2012 mi 1040x Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. Instructions michigan 2012 mi 1040x Incidental expenses only method. Instructions michigan 2012 mi 1040x   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Instructions michigan 2012 mi 1040x The amount of the deduction is $5 a day. Instructions michigan 2012 mi 1040x You can use this method only if you did not pay or incur any meal expenses. Instructions michigan 2012 mi 1040x You cannot use this method on any day that you use the standard meal allowance. Instructions michigan 2012 mi 1040x    Federal employees should refer to the Federal Travel Regulations at  www. Instructions michigan 2012 mi 1040x gsa. Instructions michigan 2012 mi 1040x gov. Instructions michigan 2012 mi 1040x Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Instructions michigan 2012 mi 1040x 50% limit may apply. Instructions michigan 2012 mi 1040x   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. Instructions michigan 2012 mi 1040x If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. Instructions michigan 2012 mi 1040x The 50% limit is explained later under Entertainment Expenses . Instructions michigan 2012 mi 1040x Accountable and nonaccountable plans are discussed later under Reimbursements . Instructions michigan 2012 mi 1040x There is no optional standard lodging amount similar to the standard meal allowance. Instructions michigan 2012 mi 1040x Your allowable lodging expense deduction is your actual cost. Instructions michigan 2012 mi 1040x Who can use the standard meal allowance. Instructions michigan 2012 mi 1040x   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. Instructions michigan 2012 mi 1040x   Use of the standard meal allowance for other travel. Instructions michigan 2012 mi 1040x    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Instructions michigan 2012 mi 1040x You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Instructions michigan 2012 mi 1040x You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Instructions michigan 2012 mi 1040x Amount of standard meal allowance. Instructions michigan 2012 mi 1040x   The standard meal allowance is the federal M&IE rate. Instructions michigan 2012 mi 1040x For travel in 2013, the daily rate for most small localities in the United States is $46. Instructions michigan 2012 mi 1040x   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Instructions michigan 2012 mi 1040x You can find this information (organized by state) on the Internet at www. Instructions michigan 2012 mi 1040x gsa. Instructions michigan 2012 mi 1040x gov. Instructions michigan 2012 mi 1040x Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. Instructions michigan 2012 mi 1040x However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. Instructions michigan 2012 mi 1040x You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. Instructions michigan 2012 mi 1040x   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. Instructions michigan 2012 mi 1040x If you work in the transportation industry, however, see Special rate for transportation workers , later. Instructions michigan 2012 mi 1040x Standard meal allowance for areas outside the continental United States. Instructions michigan 2012 mi 1040x    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Instructions michigan 2012 mi 1040x The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Instructions michigan 2012 mi 1040x The Department of State establishes per diem rates for all other foreign areas. Instructions michigan 2012 mi 1040x    You can access per diem rates for non-foreign areas outside the continental United States at: www. Instructions michigan 2012 mi 1040x defensetravel. Instructions michigan 2012 mi 1040x dod. Instructions michigan 2012 mi 1040x mil/site/perdiemCalc. Instructions michigan 2012 mi 1040x cfm. Instructions michigan 2012 mi 1040x You can access all other foreign per diem rates at www. Instructions michigan 2012 mi 1040x state. Instructions michigan 2012 mi 1040x gov/travel/. Instructions michigan 2012 mi 1040x Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. Instructions michigan 2012 mi 1040x Special rate for transportation workers. Instructions michigan 2012 mi 1040x   You can use a special standard meal allowance if you work in the transportation industry. Instructions michigan 2012 mi 1040x You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. Instructions michigan 2012 mi 1040x If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). Instructions michigan 2012 mi 1040x   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. Instructions michigan 2012 mi 1040x If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. Instructions michigan 2012 mi 1040x Travel for days you depart and return. Instructions michigan 2012 mi 1040x   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). Instructions michigan 2012 mi 1040x You can do so by one of two methods. Instructions michigan 2012 mi 1040x Method 1: You can claim 3/4 of the standard meal allowance. Instructions michigan 2012 mi 1040x Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x Jen is employed in New Orleans as a convention planner. Instructions michigan 2012 mi 1040x In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Instructions michigan 2012 mi 1040x She left her home in New Orleans at 10 a. Instructions michigan 2012 mi 1040x m. Instructions michigan 2012 mi 1040x on Wednesday and arrived in Washington, DC, at 5:30 p. Instructions michigan 2012 mi 1040x m. Instructions michigan 2012 mi 1040x After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Instructions michigan 2012 mi 1040x m. Instructions michigan 2012 mi 1040x Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Instructions michigan 2012 mi 1040x Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. Instructions michigan 2012 mi 1040x Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Instructions michigan 2012 mi 1040x For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. Instructions michigan 2012 mi 1040x Travel in the United States The following discussion applies to travel in the United States. Instructions michigan 2012 mi 1040x For this purpose, the United States includes only the 50 states and the District of Columbia. Instructions michigan 2012 mi 1040x The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. Instructions michigan 2012 mi 1040x See Part of Trip Outside the United States , later. Instructions michigan 2012 mi 1040x Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. Instructions michigan 2012 mi 1040x If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses. Instructions michigan 2012 mi 1040x These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You work in Atlanta and take a business trip to New Orleans in May. Instructions michigan 2012 mi 1040x On your way home, you stop in Mobile to visit your parents. Instructions michigan 2012 mi 1040x You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Instructions michigan 2012 mi 1040x If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. Instructions michigan 2012 mi 1040x You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. Instructions michigan 2012 mi 1040x The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Instructions michigan 2012 mi 1040x Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Instructions michigan 2012 mi 1040x However, you can deduct any expenses you have while at your destination that are directly related to your business. Instructions michigan 2012 mi 1040x A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. Instructions michigan 2012 mi 1040x The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. Instructions michigan 2012 mi 1040x Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. Instructions michigan 2012 mi 1040x For the part of your trip that is inside the United States, use the rules for travel in the United States. Instructions michigan 2012 mi 1040x Travel outside the United States does not include travel from one point in the United States to another point in the United States. Instructions michigan 2012 mi 1040x The following discussion can help you determine whether your trip was entirely within the United States. Instructions michigan 2012 mi 1040x Public transportation. Instructions michigan 2012 mi 1040x   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Instructions michigan 2012 mi 1040x Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You fly from New York to Puerto Rico with a scheduled stop in Miami. Instructions michigan 2012 mi 1040x You return to New York nonstop. Instructions michigan 2012 mi 1040x The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Instructions michigan 2012 mi 1040x Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Instructions michigan 2012 mi 1040x Private car. Instructions michigan 2012 mi 1040x   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You travel by car from Denver to Mexico City and return. Instructions michigan 2012 mi 1040x Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. Instructions michigan 2012 mi 1040x The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Instructions michigan 2012 mi 1040x Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. Instructions michigan 2012 mi 1040x For this purpose, the United States includes only the 50 states and the District of Columbia. Instructions michigan 2012 mi 1040x How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. Instructions michigan 2012 mi 1040x See chapter 1 of Publication 463 for information on luxury water travel. Instructions michigan 2012 mi 1040x Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. Instructions michigan 2012 mi 1040x Travel entirely for business. Instructions michigan 2012 mi 1040x   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Instructions michigan 2012 mi 1040x Travel considered entirely for business. Instructions michigan 2012 mi 1040x   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. Instructions michigan 2012 mi 1040x Exception 1 - No substantial control. Instructions michigan 2012 mi 1040x   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Instructions michigan 2012 mi 1040x The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Instructions michigan 2012 mi 1040x   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. Instructions michigan 2012 mi 1040x    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . Instructions michigan 2012 mi 1040x   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. Instructions michigan 2012 mi 1040x    A self-employed person generally has substantial control over arranging business trips. Instructions michigan 2012 mi 1040x Exception 2 - Outside United States no more than a week. Instructions michigan 2012 mi 1040x   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Instructions michigan 2012 mi 1040x One week means 7 consecutive days. Instructions michigan 2012 mi 1040x In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. Instructions michigan 2012 mi 1040x Exception 3 - Less than 25% of time on personal activities. Instructions michigan 2012 mi 1040x   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. Instructions michigan 2012 mi 1040x For this purpose, count both the day your trip began and the day it ended. Instructions michigan 2012 mi 1040x Exception 4 - Vacation not a major consideration. Instructions michigan 2012 mi 1040x   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. Instructions michigan 2012 mi 1040x Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. Instructions michigan 2012 mi 1040x You can only deduct the business portion of your cost of getting to and from your destination. Instructions michigan 2012 mi 1040x You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. Instructions michigan 2012 mi 1040x These travel allocation rules are discussed in chapter 1 of Publication 463. Instructions michigan 2012 mi 1040x You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. Instructions michigan 2012 mi 1040x In those cases, you can deduct the total cost of getting to and from your destination. Instructions michigan 2012 mi 1040x Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. Instructions michigan 2012 mi 1040x If you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. Instructions michigan 2012 mi 1040x Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Instructions michigan 2012 mi 1040x You cannot deduct the travel expenses for your family. Instructions michigan 2012 mi 1040x If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Instructions michigan 2012 mi 1040x Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Instructions michigan 2012 mi 1040x You can deduct your travel expenses only if your attendance is connected to your own trade or business. Instructions michigan 2012 mi 1040x Convention agenda. Instructions michigan 2012 mi 1040x   The convention agenda or program generally shows the purpose of the convention. Instructions michigan 2012 mi 1040x You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. Instructions michigan 2012 mi 1040x The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. Instructions michigan 2012 mi 1040x Conventions held outside the North American area. Instructions michigan 2012 mi 1040x    See chapter 1 of Publication 463 for information on conventions held outside the North American area. Instructions michigan 2012 mi 1040x Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Instructions michigan 2012 mi 1040x You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. Instructions michigan 2012 mi 1040x Directly-related test. Instructions michigan 2012 mi 1040x Associated test. Instructions michigan 2012 mi 1040x Both of these tests are explained in chapter 2 of Publication 463. Instructions michigan 2012 mi 1040x The amount you can deduct for entertainment expenses may be limited. Instructions michigan 2012 mi 1040x Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Instructions michigan 2012 mi 1040x This limit is discussed next. Instructions michigan 2012 mi 1040x 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Instructions michigan 2012 mi 1040x (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Instructions michigan 2012 mi 1040x See Individuals subject to “hours of service” limits , later. Instructions michigan 2012 mi 1040x ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Instructions michigan 2012 mi 1040x Figure 26-A summarizes the general rules explained in this section. Instructions michigan 2012 mi 1040x The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Instructions michigan 2012 mi 1040x Included expenses. Instructions michigan 2012 mi 1040x   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Instructions michigan 2012 mi 1040x However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Instructions michigan 2012 mi 1040x Application of 50% limit. Instructions michigan 2012 mi 1040x   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. Instructions michigan 2012 mi 1040x   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Instructions michigan 2012 mi 1040x It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. Instructions michigan 2012 mi 1040x It also applies to the cost of meals included in deductible educational expenses. Instructions michigan 2012 mi 1040x When to apply the 50% limit. Instructions michigan 2012 mi 1040x   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Instructions michigan 2012 mi 1040x You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. Instructions michigan 2012 mi 1040x Example 1. Instructions michigan 2012 mi 1040x You spend $200 for a business-related meal. Instructions michigan 2012 mi 1040x If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Instructions michigan 2012 mi 1040x Your deduction cannot be more than $45 (. Instructions michigan 2012 mi 1040x 50 × $90). Instructions michigan 2012 mi 1040x Example 2. Instructions michigan 2012 mi 1040x You purchase two tickets to a concert and give them to a client. Instructions michigan 2012 mi 1040x You purchased the tickets through a ticket agent. Instructions michigan 2012 mi 1040x You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Instructions michigan 2012 mi 1040x Your deduction cannot be more than $80 (. Instructions michigan 2012 mi 1040x 50 × $160). Instructions michigan 2012 mi 1040x Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Instructions michigan 2012 mi 1040x Figure 26-A can help you determine if the 50% limit applies to you. Instructions michigan 2012 mi 1040x Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Instructions michigan 2012 mi 1040x Employee's reimbursed expenses. Instructions michigan 2012 mi 1040x   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Instructions michigan 2012 mi 1040x Accountable plans are discussed later under Reimbursements . Instructions michigan 2012 mi 1040x Individuals subject to “hours of service” limits. Instructions michigan 2012 mi 1040x   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Instructions michigan 2012 mi 1040x The percentage is 80%. Instructions michigan 2012 mi 1040x   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Instructions michigan 2012 mi 1040x Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Instructions michigan 2012 mi 1040x Interstate truck operators and bus drivers who are under Department of Transportation regulations. Instructions michigan 2012 mi 1040x Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Instructions michigan 2012 mi 1040x Certain merchant mariners who are under Coast Guard regulations. Instructions michigan 2012 mi 1040x Other exceptions. Instructions michigan 2012 mi 1040x   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. Instructions michigan 2012 mi 1040x These are discussed in Publication 463. Instructions michigan 2012 mi 1040x Figure 26-A. Instructions michigan 2012 mi 1040x Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Instructions michigan 2012 mi 1040x See Exceptions to the 50% Limit . Instructions michigan 2012 mi 1040x Please click here for the text description of the image. Instructions michigan 2012 mi 1040x Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Instructions michigan 2012 mi 1040x Entertainment. Instructions michigan 2012 mi 1040x    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Instructions michigan 2012 mi 1040x Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. Instructions michigan 2012 mi 1040x A meal as a form of entertainment. Instructions michigan 2012 mi 1040x   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Instructions michigan 2012 mi 1040x A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Instructions michigan 2012 mi 1040x To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Instructions michigan 2012 mi 1040x You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Instructions michigan 2012 mi 1040x Separating costs. Instructions michigan 2012 mi 1040x   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Instructions michigan 2012 mi 1040x You must have a reasonable basis for making this allocation. Instructions michigan 2012 mi 1040x For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Instructions michigan 2012 mi 1040x Taking turns paying for meals or entertainment. Instructions michigan 2012 mi 1040x   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Instructions michigan 2012 mi 1040x Lavish or extravagant expenses. Instructions michigan 2012 mi 1040x   You cannot deduct expenses for entertainment that are lavish or extravagant. Instructions michigan 2012 mi 1040x An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Instructions michigan 2012 mi 1040x Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Instructions michigan 2012 mi 1040x Trade association meetings. Instructions michigan 2012 mi 1040x    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Instructions michigan 2012 mi 1040x These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Instructions michigan 2012 mi 1040x Entertainment tickets. Instructions michigan 2012 mi 1040x   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Instructions michigan 2012 mi 1040x For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Instructions michigan 2012 mi 1040x What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Instructions michigan 2012 mi 1040x Club dues and membership fees. Instructions michigan 2012 mi 1040x   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Instructions michigan 2012 mi 1040x This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. Instructions michigan 2012 mi 1040x   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Instructions michigan 2012 mi 1040x You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Instructions michigan 2012 mi 1040x Entertainment facilities. Instructions michigan 2012 mi 1040x   Generally, you cannot deduct any expense for the use of an entertainment facility. Instructions michigan 2012 mi 1040x This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Instructions michigan 2012 mi 1040x   An entertainment facility is any property you own, rent, or use for entertainment. Instructions michigan 2012 mi 1040x Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Instructions michigan 2012 mi 1040x Out-of-pocket expenses. Instructions michigan 2012 mi 1040x   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Instructions michigan 2012 mi 1040x These are not expenses for the use of an entertainment facility. Instructions michigan 2012 mi 1040x However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. Instructions michigan 2012 mi 1040x Additional information. Instructions michigan 2012 mi 1040x   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. Instructions michigan 2012 mi 1040x Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Instructions michigan 2012 mi 1040x This section explains the limits and rules for deducting the costs of gifts. Instructions michigan 2012 mi 1040x $25 limit. Instructions michigan 2012 mi 1040x   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Instructions michigan 2012 mi 1040x A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Instructions michigan 2012 mi 1040x   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Instructions michigan 2012 mi 1040x This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. Instructions michigan 2012 mi 1040x   If you and your spouse both give gifts, both of you are treated as one taxpayer. Instructions michigan 2012 mi 1040x It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Instructions michigan 2012 mi 1040x If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Instructions michigan 2012 mi 1040x Incidental costs. Instructions michigan 2012 mi 1040x   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Instructions michigan 2012 mi 1040x   A cost is incidental only if it does not add substantial value to the gift. Instructions michigan 2012 mi 1040x For example, the cost of customary gift wrapping is an incidental cost. Instructions michigan 2012 mi 1040x However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Instructions michigan 2012 mi 1040x Exceptions. Instructions michigan 2012 mi 1040x   The following items are not considered gifts for purposes of the $25 limit. Instructions michigan 2012 mi 1040x An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Instructions michigan 2012 mi 1040x Examples include pens, desk sets, and plastic bags and cases. Instructions michigan 2012 mi 1040x Signs, display racks, or other promotional material to be used on the business premises of the recipient. Instructions michigan 2012 mi 1040x Gift or entertainment. Instructions michigan 2012 mi 1040x   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Instructions michigan 2012 mi 1040x However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Instructions michigan 2012 mi 1040x    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Instructions michigan 2012 mi 1040x You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Instructions michigan 2012 mi 1040x    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Instructions michigan 2012 mi 1040x You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Instructions michigan 2012 mi 1040x Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . Instructions michigan 2012 mi 1040x These expenses include the cost of transportation by air, rail, bus, taxi, etc. Instructions michigan 2012 mi 1040x , and the cost of driving and maintaining your car. Instructions michigan 2012 mi 1040x Transportation expenses include the ordinary and necessary costs of all of the following. Instructions michigan 2012 mi 1040x Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. Instructions michigan 2012 mi 1040x (Tax home is defined earlier under Travel Expenses . Instructions michigan 2012 mi 1040x ) Visiting clients or customers. Instructions michigan 2012 mi 1040x Going to a business meeting away from your regular workplace. Instructions michigan 2012 mi 1040x Getting from your home to a temporary workplace when you have one or more regular places of work. Instructions michigan 2012 mi 1040x These temporary workplaces can be either within the area of your tax home or outside that area. Instructions michigan 2012 mi 1040x Transportation expenses do not include expenses you have while traveling away from home overnight. Instructions michigan 2012 mi 1040x Those expenses are travel expenses, discussed earlier. Instructions michigan 2012 mi 1040x However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Instructions michigan 2012 mi 1040x See Car Expenses , later. Instructions michigan 2012 mi 1040x Illustration of transportation expenses. Instructions michigan 2012 mi 1040x    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. Instructions michigan 2012 mi 1040x You may want to refer to it when deciding whether you can deduct your transportation expenses. Instructions michigan 2012 mi 1040x Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Instructions michigan 2012 mi 1040x However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. Instructions michigan 2012 mi 1040x Temporary work location. Instructions michigan 2012 mi 1040x   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Instructions michigan 2012 mi 1040x   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Instructions michigan 2012 mi 1040x   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Instructions michigan 2012 mi 1040x   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Instructions michigan 2012 mi 1040x It will not be treated as temporary after the date you determine it will last more than 1 year. Instructions michigan 2012 mi 1040x   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Instructions michigan 2012 mi 1040x You may have deductible travel expenses as discussed earlier in this chapter. Instructions michigan 2012 mi 1040x No regular place of work. Instructions michigan 2012 mi 1040x   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Instructions michigan 2012 mi 1040x   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Instructions michigan 2012 mi 1040x   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Instructions michigan 2012 mi 1040x These are nondeductible commuting expenses. Instructions michigan 2012 mi 1040x Two places of work. Instructions michigan 2012 mi 1040x   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Instructions michigan 2012 mi 1040x However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Instructions michigan 2012 mi 1040x   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Instructions michigan 2012 mi 1040x You cannot deduct them. Instructions michigan 2012 mi 1040x Armed Forces reservists. Instructions michigan 2012 mi 1040x   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Instructions michigan 2012 mi 1040x You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. Instructions michigan 2012 mi 1040x   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Instructions michigan 2012 mi 1040x In this case, your transportation generally is a nondeductible commuting expense. Instructions michigan 2012 mi 1040x However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Instructions michigan 2012 mi 1040x   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Instructions michigan 2012 mi 1040x   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Instructions michigan 2012 mi 1040x These expenses are discussed earlier under Travel Expenses . Instructions michigan 2012 mi 1040x   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. Instructions michigan 2012 mi 1040x See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. Instructions michigan 2012 mi 1040x Commuting expenses. Instructions michigan 2012 mi 1040x   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Instructions michigan 2012 mi 1040x These costs are personal commuting expenses. Instructions michigan 2012 mi 1040x You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Instructions michigan 2012 mi 1040x You cannot deduct commuting expenses even if you work during the commuting trip. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You sometimes use your cell phone to make business calls while commuting to and from work. Instructions michigan 2012 mi 1040x Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Instructions michigan 2012 mi 1040x These activities do not change the trip from personal to business. Instructions michigan 2012 mi 1040x You cannot deduct your commuting expenses. Instructions michigan 2012 mi 1040x Parking fees. Instructions michigan 2012 mi 1040x   Fees you pay to park your car at your place of business are nondeductible commuting expenses. Instructions michigan 2012 mi 1040x You can, however, deduct business-related parking fees when visiting a customer or client. Instructions michigan 2012 mi 1040x Advertising display on car. Instructions michigan 2012 mi 1040x   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Instructions michigan 2012 mi 1040x If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Instructions michigan 2012 mi 1040x Car pools. Instructions michigan 2012 mi 1040x   You cannot deduct the cost of using your car in a nonprofit car pool. Instructions michigan 2012 mi 1040x Do not include payments you receive from the passengers in your income. Instructions michigan 2012 mi 1040x These payments are considered reimbursements of your expenses. Instructions michigan 2012 mi 1040x However, if you operate a car pool for a profit, you must include payments from passengers in your income. Instructions michigan 2012 mi 1040x You can then deduct your car expenses (using the rules in this chapter). Instructions michigan 2012 mi 1040x Hauling tools or instruments. Instructions michigan 2012 mi 1040x   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Instructions michigan 2012 mi 1040x However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Instructions michigan 2012 mi 1040x Union members' trips from a union hall. Instructions michigan 2012 mi 1040x   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Instructions michigan 2012 mi 1040x Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Instructions michigan 2012 mi 1040x Office in the home. Instructions michigan 2012 mi 1040x   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Instructions michigan 2012 mi 1040x (See chapter 28 for information on determining if your home office qualifies as a principal place of business. Instructions michigan 2012 mi 1040x ) Figure 26-B. Instructions michigan 2012 mi 1040x When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Instructions michigan 2012 mi 1040x (Do not use this chart if your home is your principal place of business. Instructions michigan 2012 mi 1040x See Office in the home . Instructions michigan 2012 mi 1040x ) Please click here for the text description of the image. Instructions michigan 2012 mi 1040x Figure 26-B. Instructions michigan 2012 mi 1040x Local Transportation Examples of deductible transportation. Instructions michigan 2012 mi 1040x   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Instructions michigan 2012 mi 1040x Example 1. Instructions michigan 2012 mi 1040x You regularly work in an office in the city where you live. Instructions michigan 2012 mi 1040x Your employer sends you to a 1-week training session at a different office in the same city. Instructions michigan 2012 mi 1040x You travel directly from your home to the training location and return each day. Instructions michigan 2012 mi 1040x You can deduct the cost of your daily round-trip transportation between your home and the training location. Instructions michigan 2012 mi 1040x Example 2. Instructions michigan 2012 mi 1040x Your principal place of business is in your home. Instructions michigan 2012 mi 1040x You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Instructions michigan 2012 mi 1040x Example 3. Instructions michigan 2012 mi 1040x You have no regular office, and you do not have an office in your home. Instructions michigan 2012 mi 1040x In this case, the location of your first business contact inside the metropolitan area is considered your office. Instructions michigan 2012 mi 1040x Transportation expenses between your home and this first contact are nondeductible commuting expenses. Instructions michigan 2012 mi 1040x Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Instructions michigan 2012 mi 1040x While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. Instructions michigan 2012 mi 1040x With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. Instructions michigan 2012 mi 1040x Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. Instructions michigan 2012 mi 1040x You generally can use one of the two following methods to figure your deductible expenses. Instructions michigan 2012 mi 1040x Standard mileage rate. Instructions michigan 2012 mi 1040x Actual car expenses. Instructions michigan 2012 mi 1040x If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Instructions michigan 2012 mi 1040x See Leasing a car under Actual Car Expenses, later. Instructions michigan 2012 mi 1040x In this chapter, “car” includes a van, pickup, or panel truck. Instructions michigan 2012 mi 1040x Rural mail carriers. Instructions michigan 2012 mi 1040x   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Instructions michigan 2012 mi 1040x Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. Instructions michigan 2012 mi 1040x   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Instructions michigan 2012 mi 1040x You must complete Form 2106 and attach it to your Form 1040. Instructions michigan 2012 mi 1040x   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Instructions michigan 2012 mi 1040x It is given as an equipment maintenance allowance (EMA) to employees of the U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x Postal Service. Instructions michigan 2012 mi 1040x It is at the rate contained in the 1991 collective bargaining agreement. Instructions michigan 2012 mi 1040x Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Instructions michigan 2012 mi 1040x See your employer for information on your reimbursement. Instructions michigan 2012 mi 1040x If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Instructions michigan 2012 mi 1040x Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Instructions michigan 2012 mi 1040x For 2013, the standard mileage rate for business use is 56½ cents per mile. Instructions michigan 2012 mi 1040x If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. Instructions michigan 2012 mi 1040x You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Instructions michigan 2012 mi 1040x See Reimbursements under How To Report, later. Instructions michigan 2012 mi 1040x Choosing the standard mileage rate. Instructions michigan 2012 mi 1040x   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Instructions michigan 2012 mi 1040x Then in later years, you can choose to use either the standard mileage rate or actual expenses. Instructions michigan 2012 mi 1040x   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Instructions michigan 2012 mi 1040x   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Instructions michigan 2012 mi 1040x You cannot revoke the choice. Instructions michigan 2012 mi 1040x However, in a later year, you can switch from the standard mileage rate to the actual expenses method. Instructions michigan 2012 mi 1040x If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x Larry is an employee who occasionally uses his own car for business purposes. Instructions michigan 2012 mi 1040x He purchased the car in 2011, but he did not claim any unreimburse
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Understanding your CP2006 Notice

 
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What you need to do

  • Read your notice carefully.
  • You don't have to do anything.
  • You don't have to answer the notice.
  • If you have a payment plan for another IRS debt, keep making your payments.

You may want to...

  • Fill out and send us a Form 2848, Power of Attorney and Declaration of Representative to allow someone (such as an accountant) to contact us on your behalf.
  • Keep a copy of your notice for your files.
  • Contact us by mail or by calling the toll free number on your notice with any questions we haven't answered below.

Answers to Common Questions

Why did it take you so long to contact me about this matter?
Our computer systems match the information you report on your tax return with information reported by employers, banks, businesses, and others. This matching takes several months to complete.

I got a deficiency notice. It says I have 90 days to petition the U.S. Tax Court. Does this notice give me more time?
No, you still only have 90 days.

The deficiency notice I got says I have 150 days to petition the U.S. Tax Court. Why doesn't it say 90 days?
You have 150 days for deficiency notices sent outside the U.S. The new notice you just received does not extend the 150 days.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 28-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
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The Instructions Michigan 2012 Mi 1040x

Instructions michigan 2012 mi 1040x 11. Instructions michigan 2012 mi 1040x   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Instructions michigan 2012 mi 1040x It explains the following topics. Instructions michigan 2012 mi 1040x How to figure whether your benefits are taxable. Instructions michigan 2012 mi 1040x How to use the social security benefits worksheet (with examples). Instructions michigan 2012 mi 1040x How to report your taxable benefits. Instructions michigan 2012 mi 1040x How to treat repayments that are more than the benefits you received during the year. Instructions michigan 2012 mi 1040x Social security benefits include monthly retirement, survivor, and disability benefits. Instructions michigan 2012 mi 1040x They do not include supplemental security income (SSI) payments, which are not taxable. Instructions michigan 2012 mi 1040x Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Instructions michigan 2012 mi 1040x They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Instructions michigan 2012 mi 1040x If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Instructions michigan 2012 mi 1040x These forms show the amounts received and repaid, and taxes withheld for the year. Instructions michigan 2012 mi 1040x You may receive more than one of these forms for the same year. Instructions michigan 2012 mi 1040x You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Instructions michigan 2012 mi 1040x See the Appendix at the end of Publication 915 for more information. Instructions michigan 2012 mi 1040x Note. Instructions michigan 2012 mi 1040x When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Instructions michigan 2012 mi 1040x What is not covered in this chapter. Instructions michigan 2012 mi 1040x   This chapter does not cover the tax rules for the following railroad retirement benefits. Instructions michigan 2012 mi 1040x Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Instructions michigan 2012 mi 1040x Tier 2 benefits. Instructions michigan 2012 mi 1040x Vested dual benefits. Instructions michigan 2012 mi 1040x Supplemental annuity benefits. Instructions michigan 2012 mi 1040x For information on these benefits, see Publication 575, Pension and Annuity Income. Instructions michigan 2012 mi 1040x   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Instructions michigan 2012 mi 1040x For information about these benefits, see Publication 519, U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Instructions michigan 2012 mi 1040x   This chapter also does not cover the tax rules for foreign social security benefits. Instructions michigan 2012 mi 1040x These benefits are taxable as annuities, unless they are exempt from U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x tax or treated as a U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x social security benefit under a tax treaty. Instructions michigan 2012 mi 1040x Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Instructions michigan 2012 mi 1040x When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Instructions michigan 2012 mi 1040x Children's benefits. Instructions michigan 2012 mi 1040x   The rules in this chapter apply to benefits received by children. Instructions michigan 2012 mi 1040x See Who is taxed , later. Instructions michigan 2012 mi 1040x Figuring total income. Instructions michigan 2012 mi 1040x   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Instructions michigan 2012 mi 1040x If the total is more than your base amount, part of your benefits may be taxable. Instructions michigan 2012 mi 1040x    If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Instructions michigan 2012 mi 1040x Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Instructions michigan 2012 mi 1040x    If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Instructions michigan 2012 mi 1040x If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Instructions michigan 2012 mi 1040x Base amount. Instructions michigan 2012 mi 1040x   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Instructions michigan 2012 mi 1040x Worksheet 11-1. Instructions michigan 2012 mi 1040x   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Instructions michigan 2012 mi 1040x This is a quick way to check whether some of your benefits may be taxable. Instructions michigan 2012 mi 1040x Worksheet 11-1. Instructions michigan 2012 mi 1040x A Quick Way To Check if Your Benefits May Be Taxable A. Instructions michigan 2012 mi 1040x Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Instructions michigan 2012 mi 1040x Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Instructions michigan 2012 mi 1040x (If you received more than one form, combine the amounts from box 5 and enter the total. Instructions michigan 2012 mi 1040x ) A. Instructions michigan 2012 mi 1040x   Note. Instructions michigan 2012 mi 1040x If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Instructions michigan 2012 mi 1040x B. Instructions michigan 2012 mi 1040x Enter one-half of the amount on line A B. Instructions michigan 2012 mi 1040x   C. Instructions michigan 2012 mi 1040x Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Instructions michigan 2012 mi 1040x   D. Instructions michigan 2012 mi 1040x Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Instructions michigan 2012 mi 1040x   E. Instructions michigan 2012 mi 1040x Add lines B, C, and D E. Instructions michigan 2012 mi 1040x   Note. Instructions michigan 2012 mi 1040x Compare the amount on line E to your base amount for your filing status. Instructions michigan 2012 mi 1040x If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Instructions michigan 2012 mi 1040x If the amount on line E is more than your base amount, some of your benefits may be taxable. Instructions michigan 2012 mi 1040x You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Instructions michigan 2012 mi 1040x If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Instructions michigan 2012 mi 1040x In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Instructions michigan 2012 mi 1040x Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Instructions michigan 2012 mi 1040x You also received a taxable pension of $22,800 and interest income of $500. Instructions michigan 2012 mi 1040x You did not have any tax-exempt interest income. Instructions michigan 2012 mi 1040x Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Instructions michigan 2012 mi 1040x Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Instructions michigan 2012 mi 1040x Filled-in Worksheet 11-1. Instructions michigan 2012 mi 1040x A Quick Way To Check if Your Benefits May Be Taxable A. Instructions michigan 2012 mi 1040x Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Instructions michigan 2012 mi 1040x Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Instructions michigan 2012 mi 1040x (If you received more than one form, combine the amounts from box 5 and enter the total. Instructions michigan 2012 mi 1040x ) A. Instructions michigan 2012 mi 1040x $11,000 Note. Instructions michigan 2012 mi 1040x If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Instructions michigan 2012 mi 1040x B. Instructions michigan 2012 mi 1040x Enter one-half of the amount on line A B. Instructions michigan 2012 mi 1040x 5,500 C. Instructions michigan 2012 mi 1040x Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Instructions michigan 2012 mi 1040x 23,300 D. Instructions michigan 2012 mi 1040x Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Instructions michigan 2012 mi 1040x -0- E. Instructions michigan 2012 mi 1040x Add lines B, C, and D E. Instructions michigan 2012 mi 1040x $28,800 Note. Instructions michigan 2012 mi 1040x Compare the amount on line E to your base amount for your filing status. Instructions michigan 2012 mi 1040x If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Instructions michigan 2012 mi 1040x If the amount on line E is more than your base amount, some of your benefits may be taxable. Instructions michigan 2012 mi 1040x You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Instructions michigan 2012 mi 1040x If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Instructions michigan 2012 mi 1040x Who is taxed. Instructions michigan 2012 mi 1040x   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Instructions michigan 2012 mi 1040x For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Instructions michigan 2012 mi 1040x One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Instructions michigan 2012 mi 1040x Repayment of benefits. Instructions michigan 2012 mi 1040x   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Instructions michigan 2012 mi 1040x It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Instructions michigan 2012 mi 1040x If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Instructions michigan 2012 mi 1040x   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Instructions michigan 2012 mi 1040x Your repayments are shown in box 4. Instructions michigan 2012 mi 1040x The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Instructions michigan 2012 mi 1040x Use the amount in box 5 to figure whether any of your benefits are taxable. Instructions michigan 2012 mi 1040x Tax withholding and estimated tax. Instructions michigan 2012 mi 1040x   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Instructions michigan 2012 mi 1040x If you choose to do this, you must complete a Form W-4V. Instructions michigan 2012 mi 1040x   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Instructions michigan 2012 mi 1040x For details, see Publication 505 or the instructions for Form 1040-ES. Instructions michigan 2012 mi 1040x How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Instructions michigan 2012 mi 1040x You cannot use Form 1040EZ. Instructions michigan 2012 mi 1040x Reporting on Form 1040. Instructions michigan 2012 mi 1040x   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Instructions michigan 2012 mi 1040x Reporting on Form 1040A. Instructions michigan 2012 mi 1040x   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Instructions michigan 2012 mi 1040x Benefits not taxable. Instructions michigan 2012 mi 1040x   If you are filing Form 1040EZ, do not report any benefits on your tax return. Instructions michigan 2012 mi 1040x If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Instructions michigan 2012 mi 1040x How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Instructions michigan 2012 mi 1040x Generally, the higher that total amount, the greater the taxable part of your benefits. Instructions michigan 2012 mi 1040x Maximum taxable part. Instructions michigan 2012 mi 1040x   Generally, up to 50% of your benefits will be taxable. Instructions michigan 2012 mi 1040x However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Instructions michigan 2012 mi 1040x The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Instructions michigan 2012 mi 1040x You are married filing separately and lived with your spouse at any time during 2013. Instructions michigan 2012 mi 1040x Which worksheet to use. Instructions michigan 2012 mi 1040x   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Instructions michigan 2012 mi 1040x You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Instructions michigan 2012 mi 1040x You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Instructions michigan 2012 mi 1040x In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Instructions michigan 2012 mi 1040x Situation (1) does not apply and you take an exclusion for interest from qualified U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Instructions michigan 2012 mi 1040x In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Instructions michigan 2012 mi 1040x You received a lump-sum payment for an earlier year. Instructions michigan 2012 mi 1040x In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Instructions michigan 2012 mi 1040x See Lump-sum election next. Instructions michigan 2012 mi 1040x Lump-sum election. Instructions michigan 2012 mi 1040x   You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Instructions michigan 2012 mi 1040x    This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Instructions michigan 2012 mi 1040x No part of the lump-sum death benefit is subject to tax. Instructions michigan 2012 mi 1040x   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Instructions michigan 2012 mi 1040x However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Instructions michigan 2012 mi 1040x You can elect this method if it lowers your taxable benefits. Instructions michigan 2012 mi 1040x Making the election. Instructions michigan 2012 mi 1040x   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Instructions michigan 2012 mi 1040x That discussion also explains how to make the election. Instructions michigan 2012 mi 1040x    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Instructions michigan 2012 mi 1040x Do not file an amended return for the earlier year. Instructions michigan 2012 mi 1040x Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Instructions michigan 2012 mi 1040x Example 1. Instructions michigan 2012 mi 1040x George White is single and files Form 1040 for 2013. Instructions michigan 2012 mi 1040x He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Instructions michigan 2012 mi 1040x The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Instructions michigan 2012 mi 1040x To figure his taxable benefits, George completes the worksheet shown here. Instructions michigan 2012 mi 1040x Filled-in Worksheet 1. Instructions michigan 2012 mi 1040x Figuring Your Taxable Benefits 1. Instructions michigan 2012 mi 1040x Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Instructions michigan 2012 mi 1040x Enter one-half of line 1 2,990 3. Instructions michigan 2012 mi 1040x Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Instructions michigan 2012 mi 1040x     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Instructions michigan 2012 mi 1040x Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Instructions michigan 2012 mi 1040x Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Instructions michigan 2012 mi 1040x Combine lines 2, 3, 4, and 5 31,980 7. Instructions michigan 2012 mi 1040x Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Instructions michigan 2012 mi 1040x     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Instructions michigan 2012 mi 1040x Is the amount on line 7 less than the amount on line 6?     No. Instructions michigan 2012 mi 1040x None of your social security benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Instructions michigan 2012 mi 1040x   Yes. Instructions michigan 2012 mi 1040x Subtract line 7 from line 6 31,980 9. Instructions michigan 2012 mi 1040x If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 25,000   Note. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Instructions michigan 2012 mi 1040x 85) and enter the result on line 17. Instructions michigan 2012 mi 1040x Then go to line 18. Instructions michigan 2012 mi 1040x   10. Instructions michigan 2012 mi 1040x Is the amount on line 9 less than the amount on line 8?     No. Instructions michigan 2012 mi 1040x None of your benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Instructions michigan 2012 mi 1040x     Yes. Instructions michigan 2012 mi 1040x Subtract line 9 from line 8 6,980 11. Instructions michigan 2012 mi 1040x Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 9,000 12. Instructions michigan 2012 mi 1040x Subtract line 11 from line 10. Instructions michigan 2012 mi 1040x If zero or less, enter -0- -0- 13. Instructions michigan 2012 mi 1040x Enter the smaller of line 10 or line 11 6,980 14. Instructions michigan 2012 mi 1040x Enter one-half of line 13 3,490 15. Instructions michigan 2012 mi 1040x Enter the smaller of line 2 or line 14 2,990 16. Instructions michigan 2012 mi 1040x Multiply line 12 by 85% (. Instructions michigan 2012 mi 1040x 85). Instructions michigan 2012 mi 1040x If line 12 is zero, enter -0- -0- 17. Instructions michigan 2012 mi 1040x Add lines 15 and 16 2,990 18. Instructions michigan 2012 mi 1040x Multiply line 1 by 85% (. Instructions michigan 2012 mi 1040x 85) 5,083 19. Instructions michigan 2012 mi 1040x Taxable benefits. Instructions michigan 2012 mi 1040x Enter the smaller of line 17 or line 18. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Instructions michigan 2012 mi 1040x On line 20a of his Form 1040, George enters his net benefits of $5,980. Instructions michigan 2012 mi 1040x On line 20b, he enters his taxable benefits of $2,990. Instructions michigan 2012 mi 1040x Example 2. Instructions michigan 2012 mi 1040x Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Instructions michigan 2012 mi 1040x Ray is retired and received a fully taxable pension of $15,500. Instructions michigan 2012 mi 1040x He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Instructions michigan 2012 mi 1040x Alice worked during the year and had wages of $14,000. Instructions michigan 2012 mi 1040x She made a deductible payment to her IRA account of $1,000. Instructions michigan 2012 mi 1040x Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Instructions michigan 2012 mi 1040x They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Instructions michigan 2012 mi 1040x They find none of Ray's social security benefits are taxable. Instructions michigan 2012 mi 1040x On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Instructions michigan 2012 mi 1040x Filled-in Worksheet 1. Instructions michigan 2012 mi 1040x Figuring Your Taxable Benefits 1. Instructions michigan 2012 mi 1040x Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Instructions michigan 2012 mi 1040x Enter one-half of line 1 2,800 3. Instructions michigan 2012 mi 1040x Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Instructions michigan 2012 mi 1040x     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Instructions michigan 2012 mi 1040x Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Instructions michigan 2012 mi 1040x Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Instructions michigan 2012 mi 1040x Combine lines 2, 3, 4, and 5 32,550 7. Instructions michigan 2012 mi 1040x Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Instructions michigan 2012 mi 1040x     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Instructions michigan 2012 mi 1040x Is the amount on line 7 less than the amount on line 6?     No. Instructions michigan 2012 mi 1040x None of your social security benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Instructions michigan 2012 mi 1040x   Yes. Instructions michigan 2012 mi 1040x Subtract line 7 from line 6 31,550 9. Instructions michigan 2012 mi 1040x If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Instructions michigan 2012 mi 1040x 85) and enter the result on line 17. Instructions michigan 2012 mi 1040x Then go to line 18. Instructions michigan 2012 mi 1040x   10. Instructions michigan 2012 mi 1040x Is the amount on line 9 less than the amount on line 8?     No. Instructions michigan 2012 mi 1040x None of your benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Instructions michigan 2012 mi 1040x     Yes. Instructions michigan 2012 mi 1040x Subtract line 9 from line 8   11. Instructions michigan 2012 mi 1040x Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013   12. Instructions michigan 2012 mi 1040x Subtract line 11 from line 10. Instructions michigan 2012 mi 1040x If zero or less, enter -0-   13. Instructions michigan 2012 mi 1040x Enter the smaller of line 10 or line 11   14. Instructions michigan 2012 mi 1040x Enter one-half of line 13   15. Instructions michigan 2012 mi 1040x Enter the smaller of line 2 or line 14   16. Instructions michigan 2012 mi 1040x Multiply line 12 by 85% (. Instructions michigan 2012 mi 1040x 85). Instructions michigan 2012 mi 1040x If line 12 is zero, enter -0-   17. Instructions michigan 2012 mi 1040x Add lines 15 and 16   18. Instructions michigan 2012 mi 1040x Multiply line 1 by 85% (. Instructions michigan 2012 mi 1040x 85)   19. Instructions michigan 2012 mi 1040x Taxable benefits. Instructions michigan 2012 mi 1040x Enter the smaller of line 17 or line 18. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Instructions michigan 2012 mi 1040x Joe and Betty Johnson file a joint return on Form 1040 for 2013. Instructions michigan 2012 mi 1040x Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Instructions michigan 2012 mi 1040x Joe's Form RRB-1099 shows $10,000 in box 5. Instructions michigan 2012 mi 1040x Betty is a retired government worker and receives a fully taxable pension of $38,000. Instructions michigan 2012 mi 1040x They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x savings bond. Instructions michigan 2012 mi 1040x The savings bond interest qualified for the exclusion. Instructions michigan 2012 mi 1040x They figure their taxable benefits by completing Worksheet 1. Instructions michigan 2012 mi 1040x Because they have qualified U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Instructions michigan 2012 mi 1040x On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Instructions michigan 2012 mi 1040x Filled-in Worksheet 1. Instructions michigan 2012 mi 1040x Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Instructions michigan 2012 mi 1040x • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Instructions michigan 2012 mi 1040x None of your benefits are taxable for 2013. Instructions michigan 2012 mi 1040x For more information, see Repayments More Than Gross Benefits. Instructions michigan 2012 mi 1040x • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Instructions michigan 2012 mi 1040x S. Instructions michigan 2012 mi 1040x Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Instructions michigan 2012 mi 1040x Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Instructions michigan 2012 mi 1040x 1. Instructions michigan 2012 mi 1040x Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Instructions michigan 2012 mi 1040x Enter one-half of line 1 5,000 3. Instructions michigan 2012 mi 1040x Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Instructions michigan 2012 mi 1040x     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Instructions michigan 2012 mi 1040x Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Instructions michigan 2012 mi 1040x Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Instructions michigan 2012 mi 1040x Combine lines 2, 3, 4, and 5 45,500 7. Instructions michigan 2012 mi 1040x Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Instructions michigan 2012 mi 1040x     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Instructions michigan 2012 mi 1040x Is the amount on line 7 less than the amount on line 6?     No. Instructions michigan 2012 mi 1040x None of your social security benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Instructions michigan 2012 mi 1040x   Yes. Instructions michigan 2012 mi 1040x Subtract line 7 from line 6 45,500 9. Instructions michigan 2012 mi 1040x If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Instructions michigan 2012 mi 1040x 85) and enter the result on line 17. Instructions michigan 2012 mi 1040x Then go to line 18. Instructions michigan 2012 mi 1040x   10. Instructions michigan 2012 mi 1040x Is the amount on line 9 less than the amount on line 8?     No. Instructions michigan 2012 mi 1040x None of your benefits are taxable. Instructions michigan 2012 mi 1040x Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Instructions michigan 2012 mi 1040x If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Instructions michigan 2012 mi 1040x     Yes. Instructions michigan 2012 mi 1040x Subtract line 9 from line 8 13,500 11. Instructions michigan 2012 mi 1040x Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 12,000 12. Instructions michigan 2012 mi 1040x Subtract line 11 from line 10. Instructions michigan 2012 mi 1040x If zero or less, enter -0- 1,500 13. Instructions michigan 2012 mi 1040x Enter the smaller of line 10 or line 11 12,000 14. Instructions michigan 2012 mi 1040x Enter one-half of line 13 6,000 15. Instructions michigan 2012 mi 1040x Enter the smaller of line 2 or line 14 5,000 16. Instructions michigan 2012 mi 1040x Multiply line 12 by 85% (. Instructions michigan 2012 mi 1040x 85). Instructions michigan 2012 mi 1040x If line 12 is zero, enter -0- 1,275 17. Instructions michigan 2012 mi 1040x Add lines 15 and 16 6,275 18. Instructions michigan 2012 mi 1040x Multiply line 1 by 85% (. Instructions michigan 2012 mi 1040x 85) 8,500 19. Instructions michigan 2012 mi 1040x Taxable benefits. Instructions michigan 2012 mi 1040x Enter the smaller of line 17 or line 18. Instructions michigan 2012 mi 1040x Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Instructions michigan 2012 mi 1040x Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Instructions michigan 2012 mi 1040x Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Instructions michigan 2012 mi 1040x Disability payments. Instructions michigan 2012 mi 1040x   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Instructions michigan 2012 mi 1040x If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Instructions michigan 2012 mi 1040x If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Instructions michigan 2012 mi 1040x Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Instructions michigan 2012 mi 1040x Legal expenses. Instructions michigan 2012 mi 1040x   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Instructions michigan 2012 mi 1040x   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Instructions michigan 2012 mi 1040x Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Instructions michigan 2012 mi 1040x If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Instructions michigan 2012 mi 1040x Do not use a worksheet in this case. Instructions michigan 2012 mi 1040x If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Instructions michigan 2012 mi 1040x If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Instructions michigan 2012 mi 1040x Joint return. Instructions michigan 2012 mi 1040x   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Instructions michigan 2012 mi 1040x You do this to get your net benefits when figuring if your combined benefits are taxable. Instructions michigan 2012 mi 1040x Example. Instructions michigan 2012 mi 1040x John and Mary file a joint return for 2013. Instructions michigan 2012 mi 1040x John received Form SSA-1099 showing $3,000 in box 5. Instructions michigan 2012 mi 1040x Mary also received Form SSA-1099 and the amount in box 5 was ($500). Instructions michigan 2012 mi 1040x John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Instructions michigan 2012 mi 1040x Repayment of benefits received in an earlier year. Instructions michigan 2012 mi 1040x   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Instructions michigan 2012 mi 1040x Deduction $3,000 or less. Instructions michigan 2012 mi 1040x   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Instructions michigan 2012 mi 1040x Claim it on Schedule A (Form 1040), line 23. Instructions michigan 2012 mi 1040x Deduction more than $3,000. Instructions michigan 2012 mi 1040x    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Instructions michigan 2012 mi 1040x Figure your tax for 2013 in the following steps. Instructions michigan 2012 mi 1040x Figure the tax without the itemized deduction included on Schedule A, line 28. Instructions michigan 2012 mi 1040x For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Instructions michigan 2012 mi 1040x Then refigure the tax for that year. Instructions michigan 2012 mi 1040x Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Instructions michigan 2012 mi 1040x Subtract the result in (c) from the result in (a). Instructions michigan 2012 mi 1040x Compare the tax figured in methods (1) and (2). Instructions michigan 2012 mi 1040x Your tax for 2013 is the smaller of the two amounts. Instructions michigan 2012 mi 1040x If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Instructions michigan 2012 mi 1040x If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Instructions michigan 2012 mi 1040x Check box d and enter “I. Instructions michigan 2012 mi 1040x R. Instructions michigan 2012 mi 1040x C. Instructions michigan 2012 mi 1040x 1341” in the space next to that box. Instructions michigan 2012 mi 1040x If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Instructions michigan 2012 mi 1040x Prev  Up  Next   Home   More Online Publications