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Tax Chart

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Tax Chart

Tax chart Tax Changes for Individuals Table of Contents 2001 ChangesNew 5-Year Carryback Rule for Net Operating Losses (NOLs) Wash Sale Rules Do Not Apply to Section 1256 Contracts Other 2001 Changes 2002 ChangesDeduction for Educator Expenses Personal Credits Still Allowed Against Alternative Minimum Tax Later ChangeChild and Dependent Care Expenses 2001 Changes New 5-Year Carryback Rule for Net Operating Losses (NOLs) If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL to the 5 tax years before the NOL year (the carryback period). Tax chart However, you can still choose to use the previous carryback period. Tax chart You also can choose not to carry back an NOL and only carry it forward. Tax chart Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. Tax chart The instructions for this form will be revised to reflect the new law. Tax chart Wash Sale Rules Do Not Apply to Section 1256 Contracts The wash sale rules that generally apply to losses from the sale of stock or securities, do not apply to any loss arising from a section 1256 contract. Tax chart A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. Tax chart Wash sales and section 1256 contracts are explained in detail in Publication 550, Investment Income and Expenses. Tax chart Other 2001 Changes Other changes are discussed in the following chapters. Tax chart Chapter 4 Car Expenses Chapter 5 Depreciation 2002 Changes Deduction for Educator Expenses If you are an eligible educator, you can deduct as an adjustment to income up to $250 in qualified expenses. Tax chart You can deduct these expenses even if you do not itemize deductions on Schedule A (Form 1040). Tax chart This adjustment to income is for expenses paid or incurred in tax years beginning during 2002 or 2003. Tax chart Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limit. Tax chart Eligible educator. Tax chart   You are an eligible educator if, for the tax year, you meet the following requirements. Tax chart You are a kindergarten through grade 12: Teacher, Instructor, Counselor, Principal, or Aide. Tax chart You work at least 900 hours during a school year in a school that provides elementary or secondary education, as determined under state law. Tax chart Qualified expenses. Tax chart   These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. Tax chart For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics. Tax chart   To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the tax year. Tax chart The interest on qualified U. Tax chart S. Tax chart savings bonds that you excluded from income because you paid qualified higher education expenses, Any distribution from a qualified tuition program that you excluded from income, or Any tax-free withdrawals from your Coverdell education savings account. Tax chart Personal Credits Still Allowed Against Alternative Minimum Tax The provision that allowed certain nonrefundable personal credits to reduce both your regular tax and any alternative minimum tax (AMT) has been extended and will be in effect for 2002 and 2003. Tax chart This provision, as it applies to the AMT, was originally scheduled to expire after 2001. Tax chart Without the extension, these credits could not have been used to reduce any AMT in 2002 or 2003. Tax chart Later Change Child and Dependent Care Expenses For the purpose of figuring the child and dependent care credit, your spouse is treated as having at least a minimum amount of earned income for any month that he or she is a full-time student or not able to care for himself or herself. Tax chart Beginning in 2003, this amount is increased to $250 a month if there is one qualifying person and to $500 a month if there are two or more qualifying persons. Tax chart Before 2003, the amounts were $200 and $400. Tax chart The same rule applies for the exclusion of employer-provided dependent care benefits. Tax chart For more information about the credit and exclusion, see Publication 503, Child and Dependent Care Expenses. Tax chart Prev  Up  Next   Home   More Online Publications
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The Tax Chart

Tax chart 1. Tax chart   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. Tax chart Business associate. Tax chart Bona fide business purpose. Tax chart Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. Tax chart This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. Tax chart It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. Tax chart Travel expenses defined. Tax chart   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Tax chart   An ordinary expense is one that is common and accepted in your trade or business. Tax chart A necessary expense is one that is helpful and appropriate for your business. Tax chart An expense does not have to be required to be considered necessary. Tax chart   You will find examples of deductible travel expenses in Table 1-1 , later. Tax chart 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. Tax chart This rest requirement is not satisfied by merely napping in your car. Tax chart 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. Tax chart Example 1. Tax chart You are a railroad conductor. Tax chart You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Tax chart 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. Tax chart You are considered to be away from home. Tax chart Example 2. Tax chart You are a truck driver. Tax chart You leave your terminal and return to it later the same day. Tax chart You get an hour off at your turnaround point to eat. Tax chart 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. Tax chart Members of the Armed Forces. Tax chart   If you are a member of the U. Tax chart S. Tax chart Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Tax chart You cannot deduct your expenses for meals and lodging. Tax chart 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. Tax chart 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. Tax chart   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. Tax chart Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Tax chart Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Tax chart It includes the entire city or general area in which your business or work is located. Tax chart If you have more than one regular place of business, your tax home is your main place of business. Tax chart See Main place of business or work , later. Tax chart 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. Tax chart See No main place of business or work , later. Tax chart If you do not have a regular or 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. Tax chart As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Tax chart Main place of business or work. Tax chart   If you have more than one place of work, consider the following when determining which one is your main place of business or work. Tax chart The total time you ordinarily spend in each place. Tax chart The level of your business activity in each place. Tax chart Whether your income from each place is significant or insignificant. Tax chart Example. Tax chart You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Tax chart You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Tax chart Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Tax chart No main place of business or work. Tax chart   You may have a tax home even if you do not have a regular or main place of work. Tax chart Your tax home may be the home where you regularly live. Tax chart Factors used to determine tax home. Tax chart   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. Tax chart 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. Tax chart You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Tax chart 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. Tax chart   If you satisfy all three factors, your tax home is the home where you regularly live. Tax chart If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Tax chart If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Tax chart Example 1. Tax chart You are single and live in Boston in an apartment you rent. Tax chart You have worked for your employer in Boston for a number of years. Tax chart Your employer enrolls you in a 12-month executive training program. Tax chart You do not expect to return to work in Boston after you complete your training. Tax chart During your training, you do not do any work in Boston. Tax chart Instead, you receive classroom and on-the-job training throughout the United States. Tax chart You keep your apartment in Boston and return to it frequently. Tax chart You use your apartment to conduct your personal business. Tax chart You also keep up your community contacts in Boston. Tax chart When you complete your training, you are transferred to Los Angeles. Tax chart You do not satisfy factor (1) because you did not work in Boston. Tax chart You satisfy factor (2) because you had duplicate living expenses. Tax chart 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. Tax chart Therefore, you have a tax home in Boston. Tax chart Example 2. Tax chart You are an outside salesperson with a sales territory covering several states. Tax chart Your employer's main office is in Newark, but you do not conduct any business there. Tax chart Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. Tax chart You have a room in your married sister's house in Dayton. Tax chart You stay there for one or two weekends a year, but you do no work in the area. Tax chart You do not pay your sister for the use of the room. Tax chart You do not satisfy any of the three factors listed earlier. Tax chart You are an itinerant and have no tax home. Tax chart Tax Home Different From Family Home 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. Tax chart You also cannot deduct the cost of meals and lodging while at your tax home. Tax chart See Example 1 , later. Tax chart If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Tax chart See Example 2 , later. Tax chart Example 1. Tax chart You are a truck driver and you and your family live in Tucson. Tax chart You are employed by a trucking firm that has its terminal in Phoenix. Tax chart At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Tax chart You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Tax chart This is because Phoenix is your tax home. Tax chart Example 2. Tax chart Your family home is in Pittsburgh, where you work 12 weeks a year. Tax chart The rest of the year you work for the same employer in Baltimore. Tax chart In Baltimore, you eat in restaurants and sleep in a rooming house. Tax chart Your salary is the same whether you are in Pittsburgh or Baltimore. Tax chart Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Tax chart You cannot deduct any expenses you have for meals and lodging there. Tax chart However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Tax chart You can deduct the cost of your round trip between Baltimore and Pittsburgh. Tax chart You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Tax chart Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Tax chart It may not be practical to return to your tax home from this other location at the end of each work day. Tax chart Temporary assignment vs. Tax chart indefinite assignment. Tax chart   If your assignment or job away from your main place of work is temporary, your tax home does not change. Tax chart You are considered to be away from home for the whole period you are away from your main place of work. Tax chart You can deduct your travel expenses if they otherwise qualify for deduction. Tax chart 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. Tax chart    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. Tax chart 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. Tax chart   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. Tax chart You may be able to deduct the cost of relocating to your new tax home as a moving expense. Tax chart See Publication 521 for more information. Tax chart Exception for federal crime investigations or prosecutions. Tax chart   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Tax chart 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. Tax chart   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, prosecute, or provide support services for the investigation or prosecution of a federal crime. Tax chart Determining temporary or indefinite. Tax chart   You must determine whether your assignment is temporary or indefinite when you start work. Tax chart 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. Tax chart An assignment or job that is initially temporary may become indefinite due to changed circumstances. Tax chart 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. Tax chart   The following examples illustrate whether an assignment or job is temporary or indefinite. Tax chart Example 1. Tax chart You are a construction worker. Tax chart You live and regularly work in Los Angeles. Tax chart You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Tax chart Your tax home is Los Angeles. Tax chart Because of a shortage of work, you took a job on a construction project in Fresno. Tax chart Your job was scheduled to end in 8 months. Tax chart The job actually lasted 10 months. Tax chart You realistically expected the job in Fresno to last 8 months. Tax chart The job actually did last less than 1 year. Tax chart The job is temporary and your tax home is still in Los Angeles. Tax chart Example 2. Tax chart The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. Tax chart The job actually was completed in 10 months. Tax chart Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. Tax chart You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. Tax chart Example 3. Tax chart The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. Tax chart After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). Tax chart Initially, you realistically expected the job in Fresno to last for only 9 months. Tax chart However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. Tax chart You can only deduct your travel expenses for the first 8 months. Tax chart You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. Tax chart Going home on days off. Tax chart   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. Tax chart You cannot deduct the cost of your meals and lodging there. Tax chart However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Tax chart You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Tax chart   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Tax chart 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. Tax chart Probationary work period. Tax chart   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. Tax chart You cannot deduct any of your expenses for meals and lodging during the probationary period. Tax chart 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. Tax chart You can deduct ordinary and necessary expenses you have when you travel away from home on business. Tax chart The type of expense you can deduct depends on the facts and your circumstances. Tax chart Table 1-1 summarizes travel expenses you may be able to deduct. Tax chart You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Tax chart 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. Tax chart You can use a log, diary, notebook, or any other written record to keep track of your expenses. Tax chart The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). Tax chart Separating costs. Tax chart   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. Tax chart You must have a reasonable basis for making this allocation. Tax chart For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Tax chart Travel expenses for another individual. Tax chart    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. Tax chart Employee. Tax chart   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. Tax chart Business associate. Tax chart   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. Tax chart A business associate is someone with whom you could reasonably expect to actively conduct business. Tax chart A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Tax chart Bona fide business purpose. Tax chart   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Tax chart Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Tax chart Table 1-1. Tax chart Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. Tax chart IF you have expenses for. Tax chart . Tax chart . Tax chart THEN you can deduct the cost of. Tax chart . Tax chart . Tax chart transportation travel by airplane, train, bus, or car between your home and your business destination. Tax chart If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Tax chart If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. Tax chart 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. Tax chart baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Tax chart car operating and maintaining your car when traveling away from home on business. Tax chart You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. Tax chart If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Tax chart 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. Tax chart Meals include amounts spent for food, beverages, taxes, and related tips. Tax chart See Meals for additional rules and limits. Tax chart cleaning dry cleaning and laundry. Tax chart telephone business calls while on your business trip. Tax chart This includes business communication by fax machine or other communication devices. Tax chart tips tips you pay for any expenses in this chart. Tax chart other other similar ordinary and necessary expenses related to your business travel. Tax chart 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. Tax chart Example. Tax chart Jerry drives to Chicago on business and takes his wife, Linda, with him. Tax chart Linda is not Jerry's employee. Tax chart Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Tax chart The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Tax chart Her expenses are not deductible. Tax chart Jerry pays $199 a day for a double room. Tax chart A single room costs $149 a day. Tax chart He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Tax chart If he uses public transportation, he can deduct only his fare. Tax chart Meals You can deduct the cost of meals in either of the following situations. Tax chart It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Tax chart The meal is business-related entertainment. Tax chart Business-related entertainment is discussed in chapter 2 . Tax chart The following discussion deals only with meals that are not business-related entertainment. Tax chart Lavish or extravagant. Tax chart   You cannot deduct expenses for meals that are lavish or extravagant. Tax chart An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Tax chart 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. Tax chart 50% limit on meals. Tax chart   You can figure your meals expense using either of the following methods. Tax chart Actual cost. Tax chart The standard meal allowance. Tax chart Both of these methods are explained below. Tax chart But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Tax chart   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. Tax chart If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Tax chart Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. Tax chart Actual Cost 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. Tax chart If you use this method, you must keep records of your actual cost. Tax chart Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Tax chart 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. Tax chart The set amount varies depending on where and when you travel. Tax chart In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Tax chart If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Tax chart See the recordkeeping rules for travel in chapter 5 . Tax chart Incidental expenses. Tax chart   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Tax chart   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. Tax chart Incidental-expenses-only method. Tax chart   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Tax chart The amount of the deduction is $5 a day. Tax chart You can use this method only if you did not pay or incur any meal expenses. Tax chart You cannot use this method on any day that you use the standard meal allowance. Tax chart This method is subject to the proration rules for partial days. Tax chart See Travel for days you depart and return , later in this chapter. Tax chart Note. Tax chart The incidental-expenses-only method is not subject to the 50% limit discussed below. Tax chart Federal employees should refer to the Federal Travel Regulations at www. Tax chart gsa. Tax chart gov. Tax chart Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Tax chart 50% limit may apply. Tax chart   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. Tax chart 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. Tax chart The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. Tax chart There is no optional standard lodging amount similar to the standard meal allowance. Tax chart Your allowable lodging expense deduction is your actual cost. Tax chart Who can use the standard meal allowance. Tax chart   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. Tax chart Use of the standard meal allowance for other travel. Tax chart   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Tax chart You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Tax chart You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Tax chart Amount of standard meal allowance. Tax chart   The standard meal allowance is the federal M&IE rate. Tax chart For travel in 2013, the rate for most small localities in the United States is $46 a day. Tax chart    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Tax chart    You can find this information (organized by state) on the Internet at www. Tax chart gsa. Tax chart gov/perdiem. Tax chart Enter a zip code or select a city and state for the per diem rates for the current fiscal year. Tax chart Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. Tax chart ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. Tax chart You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. Tax chart   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. Tax chart If you work in the transportation industry, however, see Special rate for transportation workers , later. Tax chart Standard meal allowance for areas outside the continental United States. Tax chart   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Tax chart The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Tax chart S. Tax chart Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Tax chart The Department of State establishes per diem rates for all other foreign areas. Tax chart    You can access per diem rates for non-foreign areas outside the continental United States at: www. Tax chart defensetravel. Tax chart dod. Tax chart mil/site/perdiemCalc. Tax chart cfm. Tax chart You can access all other foreign per diem rates at: www. Tax chart state. Tax chart gov/travel/. Tax chart Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. Tax chart Special rate for transportation workers. Tax chart   You can use a special standard meal allowance if you work in the transportation industry. Tax chart 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. Tax chart If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). Tax chart   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. Tax chart 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. Tax chart Travel for days you depart and return. Tax chart   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). Tax chart You can do so by one of two methods. Tax chart Method 1: You can claim 3/4 of the standard meal allowance. Tax chart Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Tax chart Example. Tax chart Jen is employed in New Orleans as a convention planner. Tax chart In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Tax chart She left her home in New Orleans at 10 a. Tax chart m. Tax chart on Wednesday and arrived in Washington, DC, at 5:30 p. Tax chart m. Tax chart After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Tax chart m. Tax chart Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Tax chart 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. Tax chart Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Tax chart 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. Tax chart Travel in the United States The following discussion applies to travel in the United States. Tax chart For this purpose, the United States includes the 50 states and the District of Columbia. Tax chart 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. Tax chart See Part of Trip Outside the United States , later. Tax chart Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. Tax chart 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 only your business-related travel expenses. Tax chart These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Tax chart Example. Tax chart You work in Atlanta and take a business trip to New Orleans in May. Tax chart Your business travel totals 850 miles round trip. Tax chart On your way, you stop in Mobile to visit your parents. Tax chart You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Tax chart If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. Tax chart You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. Tax chart The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Tax chart 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. Tax chart However, you can deduct any expenses you have while at your destination that are directly related to your business. Tax chart 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. Tax chart 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. Tax chart Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. Tax chart For the part of your trip that is inside the United States, use the rules for travel in the United States. Tax chart Travel outside the United States does not include travel from one point in the United States to another point in the United States. Tax chart The following discussion can help you determine whether your trip was entirely within the United States. Tax chart Public transportation. Tax chart   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. Tax chart 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 . Tax chart Example. Tax chart You fly from New York to Puerto Rico with a scheduled stop in Miami. Tax chart You return to New York nonstop. Tax chart 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. Tax chart Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Tax chart Private car. Tax chart   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. Tax chart Example. Tax chart You travel by car from Denver to Mexico City and return. Tax chart 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. Tax chart The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Tax chart 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. Tax chart For this purpose, the United States includes the 50 states and the District of Columbia. Tax chart 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. Tax chart 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. Tax chart Travel entirely for business. Tax chart   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Tax chart Travel considered entirely for business. Tax chart   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. Tax chart Exception 1 - No substantial control. Tax chart   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Tax chart The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Tax chart   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. Tax chart    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . Tax chart   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. Tax chart   A self-employed person generally has substantial control over arranging business trips. Tax chart Exception 2 - Outside United States no more than a week. Tax chart   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Tax chart One week means 7 consecutive days. Tax chart 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. Tax chart Example. Tax chart You traveled to Brussels primarily for business. Tax chart You left Denver on Tuesday and flew to New York. Tax chart On Wednesday, you flew from New York to Brussels, arriving the next morning. Tax chart On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. Tax chart You flew back to New York, arriving Wednesday afternoon. Tax chart On Thursday, you flew back to Denver. Tax chart Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. Tax chart This is because the day you depart does not count as a day outside the United States. Tax chart You can deduct your cost of the round-trip flight between Denver and Brussels. Tax chart You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. Tax chart However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. Tax chart Exception 3 - Less than 25% of time on personal activities. Tax chart   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. Tax chart For this purpose, count both the day your trip began and the day it ended. Tax chart Example. Tax chart You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. Tax chart You then flew back to Seattle. Tax chart You spent 1 day flying in each direction. Tax chart Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. Tax chart The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. Tax chart Exception 4 - Vacation not a major consideration. Tax chart   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. Tax chart Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. Tax chart You can only deduct the business portion of your cost of getting to and from your destination. Tax chart You must allocate the costs between your business and other activities to determine your deductible amount. Tax chart See Travel allocation rules , later. Tax chart You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . Tax chart In those cases, you can deduct the total cost of getting to and from your destination. Tax chart Travel allocation rules. Tax chart   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. Tax chart The days you depart from and return to the United States are both counted as days outside the United States. Tax chart   To figure the deductible amount of your round-trip travel expenses, use the following fraction. Tax chart The numerator (top number) is the total number of business days outside the United States. Tax chart The denominator (bottom number) is the total number of business and nonbusiness days of travel. Tax chart Counting business days. Tax chart   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. Tax chart Transportation day. Tax chart   Count as a business day any day you spend traveling to or from a business destination. Tax chart However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. Tax chart Extra days for side trips or nonbusiness activities cannot be counted as business days. Tax chart Presence required. Tax chart   Count as a business day any day your presence is required at a particular place for a specific business purpose. Tax chart Count it as a business day even if you spend most of the day on nonbusiness activities. Tax chart Day spent on business. Tax chart   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Tax chart Also, count as a business day any day you are prevented from working because of circumstances beyond your control. Tax chart Certain weekends and holidays. Tax chart   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. Tax chart But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. Tax chart Example 1. Tax chart Your tax home is New York City. Tax chart You travel to Quebec, where you have a business appointment on Friday. Tax chart You have another appointment on the following Monday. Tax chart Because your presence was required on both Friday and Monday, they are business days. Tax chart Because the weekend is between business days, Saturday and Sunday are counted as business days. Tax chart This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. Tax chart Example 2. Tax chart If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. Tax chart Nonbusiness activity on the way to or from your business destination. Tax chart   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Tax chart   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. Tax chart   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Tax chart The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Tax chart Example. Tax chart You live in New York. Tax chart On May 4 you flew to Paris to attend a business conference that began on May 5. Tax chart The conference ended at noon on May 14. Tax chart That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. Tax chart The primary purpose for the trip was to attend the conference. Tax chart If you had not stopped in Dublin, you would have arrived home the evening of May 14. Tax chart You do not meet any of the exceptions that would allow you to consider your travel entirely for business. Tax chart May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. Tax chart You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. Tax chart You cannot deduct your expenses while in Dublin. Tax chart You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. Tax chart You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. Tax chart Round-trip airfare from New York to Dublin would have been $1,250. Tax chart You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). Tax chart Your deductible air travel expense is $1,364 ($1,850 − $486). Tax chart Nonbusiness activity at, near, or beyond business destination. Tax chart   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. Tax chart   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. Tax chart   You determine the nonbusiness portion of that expense by multiplying it by a fraction. Tax chart The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. Tax chart   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. Tax chart Example. Tax chart Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. Tax chart You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. Tax chart In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. Tax chart You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. Tax chart (Assume these expenses total $4,939. Tax chart ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. Tax chart Other methods. Tax chart   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. Tax chart 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. Tax chart However, 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. Tax chart Example. Tax chart The university from which you graduated has a continuing education program for members of its alumni association. Tax chart This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. Tax chart However, none of the conferences are directed toward specific occupations or professions. Tax chart It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. Tax chart Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. Tax chart These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Tax chart Professional conference directors schedule and conduct the sessions. Tax chart Participants can choose those sessions they wish to attend. Tax chart You can participate in this program since you are a member of the alumni association. Tax chart You and your family take one of the trips. Tax chart You spend about 2 hours at each of the planned sessions. Tax chart The rest of the time you go touring and sightseeing with your family. Tax chart The trip lasts less than 1 week. Tax chart Your travel expenses for the trip are not deductible since the trip was primarily a vacation. Tax chart However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. Tax chart These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. Tax chart Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. Tax chart The limit is twice the highest federal per diem rate allowable at the time of your travel. Tax chart (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. Tax chart ) Daily limit on luxury water travel. Tax chart   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. Tax chart   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. Tax chart 1 – Mar. Tax chart 31 $367 $734   Apr. Tax chart 1 – June 30 312 624   July 1 – Aug. Tax chart 31 310 620   Sept. Tax chart 1 – Sept. Tax chart 30 366 732   Oct. Tax chart 1 – Dec. Tax chart 31 374 748 Example. Tax chart Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Tax chart Her expense for the 6-day cruise was $5,200. Tax chart Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). Tax chart Meals and entertainment. Tax chart   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. Tax chart For a discussion of the 50% Limit , see chapter 2. Tax chart Example. Tax chart In the previous example, Caroline's luxury water travel had a total cost of $5,200. Tax chart Of that amount, $3,700 was separately stated as meals and entertainment. Tax chart Caroline, who is self-employed, is not reimbursed for any of her travel expenses. Tax chart Caroline figures her deductible travel expenses as follows. Tax chart Meals and entertainment $3,700   50% limit × . Tax chart 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. Tax chart Not separately stated. Tax chart   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. Tax chart Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. Tax chart See Cruise Ships under Conventions. Tax chart Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Tax chart You cannot deduct the travel expenses for your family. Tax chart If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Tax chart Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Tax chart You can deduct your travel expenses only if your attendance is connected to your own trade or business. Tax chart Convention agenda. Tax chart   The convention agenda or program generally shows the purpose of the convention. Tax chart 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. Tax chart 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. Tax chart Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. Tax chart See Reasonableness test , later. Tax chart If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . Tax chart North American area. Tax chart   The North American area includes the following locations. Tax chart American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. Tax chart S. Tax chart Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. Tax chart S. Tax chart islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. Tax chart Reasonableness test. Tax chart   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. Tax chart The purpose of the meeting and the activities taking place at the meeting. Tax chart The purposes and activities of the sponsoring organizations or groups. Tax chart The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. Tax chart Other relevant factors you may present. Tax chart Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. Tax chart All ships that sail are considered cruise ships. Tax chart You can deduct these expenses only if all of the following requirements are met. Tax chart The convention, seminar, or meeting is directly related to your trade or business. Tax chart The cruise ship is a vessel registered in the United States. Tax chart All of the cruise ship's ports of call are in the United States or in possessions of the United States. Tax chart You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. Tax chart You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. Tax chart Prev  Up  Next   Home   More Online Publications