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Turbo Tax 2005

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Turbo Tax 2005

Turbo tax 2005 1. Turbo tax 2005   Filing Information Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Filing RequirementsWhen To File and Pay Foreign Currency Does My Return Have To Be On Paper? Where To File Nonresident Alien Spouse Treated as a ResidentSocial Security Number (SSN) How To Make the Choice Suspending the Choice Ending the Choice Estimated Tax Other Forms You May Have To File Topics - This chapter discusses: Whether you have to file a return, When to file your return and pay any tax due, How to treat foreign currency, How to file electronically, Where to file your return, When you can treat your nonresident alien spouse as a resident, and When you may have to make estimated tax payments. Turbo tax 2005 Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 519 U. Turbo tax 2005 S. Turbo tax 2005 Tax Guide for Aliens 970 Tax Benefits for Education Form (and Instructions) 1040-ES Estimated Tax for Individuals 1040X Amended U. Turbo tax 2005 S. Turbo tax 2005 Individual Income Tax Return 2350 Application for Extension of Time To File U. Turbo tax 2005 S. Turbo tax 2005 Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 4868 Application for Automatic Extension of Time To File U. Turbo tax 2005 S. Turbo tax 2005 Individual Income Tax Return 8822 Change of Address See chapter 7 for information about getting these publications and forms. Turbo tax 2005 Filing Requirements If you are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Turbo tax 2005 Your income, filing status, and age generally determine whether you must file an income tax return. Turbo tax 2005 Generally, you must file a return for 2013 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table. Turbo tax 2005 Filing Status*   Amount Single $10,000 65 or older $11,500 Head of household $12,850 65 or older $14,350 Qualifying widow(er) $16,100 65 or older $17,300 Married filing jointly $20,000 Not living with spouse at end of year $3,900 One spouse 65 or older $21,200 Both spouses 65 or older $22,400 Married filing separately $3,900 *If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return. Turbo tax 2005 Gross income. Turbo tax 2005   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. Turbo tax 2005   For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount. Turbo tax 2005 If you are self-employed, your gross income includes the amount on Part I, line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business. Turbo tax 2005 Self-employed individuals. Turbo tax 2005   If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Turbo tax 2005 Net earnings from self-employment are defined in Publication 334, Tax Guide for Small Business. Turbo tax 2005 65 or older. Turbo tax 2005   You are considered to be age 65 on the day before your 65th birthday. Turbo tax 2005 For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. Turbo tax 2005 Residents of U. Turbo tax 2005 S. Turbo tax 2005 possessions. Turbo tax 2005   If you are (or were) a bona fide resident of a U. Turbo tax 2005 S. Turbo tax 2005 possession, you may be required to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. Turbo tax 2005 S. Turbo tax 2005 Possession. Turbo tax 2005 See the instructions for the form for more information. Turbo tax 2005 When To File and Pay If you file on a calendar year basis, the due date for filing your return is April 15 of the following year. Turbo tax 2005 If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. Turbo tax 2005 In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return. Turbo tax 2005 When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. Turbo tax 2005 — falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Turbo tax 2005 A tax return delivered by the U. Turbo tax 2005 S. Turbo tax 2005 mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. Turbo tax 2005 See your Form 1040 or Form 1040A instructions for a list of designated delivery services. Turbo tax 2005 Foreign wire transfers. Turbo tax 2005   If you have a U. Turbo tax 2005 S. Turbo tax 2005 bank account, you can use: EFTPS (Electronic Federal Tax Payment System), or Federal Tax Application (same-day wire transfer). Turbo tax 2005 If you do not have a U. Turbo tax 2005 S. Turbo tax 2005 bank account, ask if your financial institution has a U. Turbo tax 2005 S. Turbo tax 2005 affiliate that can help you make same-day wire transfers. Turbo tax 2005   For more information, visit www. Turbo tax 2005 eftps. Turbo tax 2005 gov. Turbo tax 2005 Extensions You can get an extension of time to file your return. Turbo tax 2005 In some circumstances, you also can get an extension of time to file and pay any tax due. Turbo tax 2005 However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Turbo tax 2005 This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet tests. Turbo tax 2005 If you served in a combat zone or qualified hazardous duty area, see Publication 3 for a discussion of extensions of deadlines. Turbo tax 2005 Automatic 2-month extension. Turbo tax 2005   You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien, and on the regular due date of your return: You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Turbo tax 2005   If you use a calendar year, the regular due date of your return is April 15. Turbo tax 2005 Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. Turbo tax 2005 Married taxpayers. Turbo tax 2005   If you file a joint return, either you or your spouse can qualify for the automatic extension. Turbo tax 2005 If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it. Turbo tax 2005 How to get the extension. Turbo tax 2005   To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension. Turbo tax 2005 Automatic 6-month extension. Turbo tax 2005   If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). Turbo tax 2005 To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). Turbo tax 2005 For more information about filing electronically, see E-file options , later. Turbo tax 2005   The form must show your properly estimated tax liability based on the information available to you. Turbo tax 2005    You may not be eligible. Turbo tax 2005 You cannot use the automatic 6-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date. Turbo tax 2005 E-file options. Turbo tax 2005    You can use e-file to get an extension of time to file. Turbo tax 2005 You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. Turbo tax 2005   First, complete Form 4868 to use as a worksheet. Turbo tax 2005 If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Turbo tax 2005    Then, do one of the following. Turbo tax 2005 E-file Form 4868. Turbo tax 2005 You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Turbo tax 2005 You will need to provide certain information from your tax return for 2012. Turbo tax 2005 If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. Turbo tax 2005 If you e-file Form 4868, do not also send a paper Form 4868. Turbo tax 2005 E-file and pay by credit or debit card. Turbo tax 2005 You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. Turbo tax 2005 You can do this by phone or over the Internet. Turbo tax 2005 If you do this, you do not file Form 4868. Turbo tax 2005 For more information, see the instructions for your tax return. Turbo tax 2005 When to file. Turbo tax 2005   Generally, you must request the 6-month extension by the regular due date of your return. Turbo tax 2005 Previous 2-month extension. Turbo tax 2005   If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. Turbo tax 2005 The 2-month period and the 6-month period start at the same time. Turbo tax 2005 You have to request the additional 4 months by the new due date allowed by the 2-month extension. Turbo tax 2005   The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. Turbo tax 2005 You must make an accurate estimate of your tax based on the information available to you. Turbo tax 2005 If you find you cannot pay the full amount due with Form 4868, you can still get the extension. Turbo tax 2005 You will owe interest on the unpaid amount from the original due date of the return. Turbo tax 2005   You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Turbo tax 2005 Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. Turbo tax 2005 In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers). Turbo tax 2005 Additional extension of time for taxpayers out of the country. Turbo tax 2005   In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Turbo tax 2005   To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Turbo tax 2005 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You will not receive any notification from the Internal Revenue Service unless your request is denied. Turbo tax 2005   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed next. Turbo tax 2005 Extension of time to meet tests. Turbo tax 2005   You generally cannot get an extension of more than 6 months. Turbo tax 2005 However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension. Turbo tax 2005   You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. Turbo tax 2005 The tests, the exclusions, and the deduction are explained in chapter 4. Turbo tax 2005   You should request an extension if all three of the following apply. Turbo tax 2005 You are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien. Turbo tax 2005 You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due. Turbo tax 2005 Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies. Turbo tax 2005   If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test. Turbo tax 2005 However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension until after the end of the second year. Turbo tax 2005 How to get an extension. Turbo tax 2005   To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You must file Form 2350 by the due date for filing your return. Turbo tax 2005 Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. Turbo tax 2005 What if tests are not met. Turbo tax 2005   If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted). Turbo tax 2005    You should make any request for an extension early, so that if it is denied you still can file your return on time. Turbo tax 2005 Otherwise, if you file late and additional tax is due, you may be subject to a penalty. Turbo tax 2005 Return filed before test is met. Turbo tax 2005   If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U. Turbo tax 2005 S. Turbo tax 2005 and foreign sources and pay the tax on that income. Turbo tax 2005 If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040X. Turbo tax 2005 Foreign Currency You must express the amounts you report on your U. Turbo tax 2005 S. Turbo tax 2005 tax return in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 How you do this depends on your functional currency. Turbo tax 2005 Your functional currency generally is the U. Turbo tax 2005 S. Turbo tax 2005 dollar unless you are required to use the currency of a foreign country. Turbo tax 2005 You must make all federal income tax determinations in your functional currency. Turbo tax 2005 The U. Turbo tax 2005 S. Turbo tax 2005 dollar is the functional currency for all taxpayers except some qualified business units (QBUs). Turbo tax 2005 A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Turbo tax 2005 Even if you have a QBU, your functional currency is the dollar if any of the following apply. Turbo tax 2005 You conduct the business in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 The principal place of business is located in the United States. Turbo tax 2005 You choose to or are required to use the U. Turbo tax 2005 S. Turbo tax 2005 dollar as your functional currency. Turbo tax 2005 The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. Turbo tax 2005 Make all income tax determinations in your functional currency. Turbo tax 2005 If your functional currency is the U. Turbo tax 2005 S. Turbo tax 2005 dollar, you must immediately translate into U. Turbo tax 2005 S. Turbo tax 2005 dollars all items of income, expense, etc. Turbo tax 2005 (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Turbo tax 2005 Use the exchange rate prevailing when you receive, pay, or accrue the item. Turbo tax 2005 If there is more than one exchange rate, use the one that most properly reflects your income. Turbo tax 2005 You can generally get exchange rates from banks and U. Turbo tax 2005 S. Turbo tax 2005 Embassies. Turbo tax 2005 If your functional currency is not the U. Turbo tax 2005 S. Turbo tax 2005 dollar, make all income tax determinations in your functional currency. Turbo tax 2005 At the end of the year, translate the results, such as income or loss, into U. Turbo tax 2005 S. Turbo tax 2005 dollars to report on your income tax return. Turbo tax 2005 Blocked Income You generally must report your foreign income in terms of U. Turbo tax 2005 S. Turbo tax 2005 dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 If, because of restrictions in a foreign country, your income is not readily convertible into U. Turbo tax 2005 S. Turbo tax 2005 dollars or into other money or property that is readily convertible into U. Turbo tax 2005 S. Turbo tax 2005 dollars, your income is “blocked” or “deferrable” income. Turbo tax 2005 You can report this income in one of two ways: Report the income and pay your federal income tax with U. Turbo tax 2005 S. Turbo tax 2005 dollars that you have in the United States or in some other country, or Postpone the reporting of the income until it becomes unblocked. Turbo tax 2005 If you choose to postpone the reporting of the income, you must file an information return with your tax return. Turbo tax 2005 For this information return, you should use another Form 1040 labeled “Report of Deferrable Foreign Income, pursuant to Rev. Turbo tax 2005 Rul. Turbo tax 2005 74-351. Turbo tax 2005 ” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. Turbo tax 2005 You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. Turbo tax 2005 You must report your income on your information return using the foreign currency in which you received that income. Turbo tax 2005 If you have blocked income from more than one foreign country, include a separate information return for each country. Turbo tax 2005 Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U. Turbo tax 2005 S. Turbo tax 2005 dollars or into other money or property that is convertible into U. Turbo tax 2005 S. Turbo tax 2005 currency. Turbo tax 2005 Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable. Turbo tax 2005 If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. Turbo tax 2005 If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked. Turbo tax 2005 If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. Turbo tax 2005 To apply for permission, file Form 3115, Application for Change in Accounting Method. Turbo tax 2005 You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. Turbo tax 2005 See the instructions for Form 3115 for information on changing your accounting method. Turbo tax 2005 Fulbright Grant All income must be reported in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 In most cases, the tax also must be paid in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U. Turbo tax 2005 S. Turbo tax 2005 tax that is based on the blocked income. Turbo tax 2005 Paying U. Turbo tax 2005 S. Turbo tax 2005 tax in foreign currency. Turbo tax 2005   To qualify for this method of payment, you must prepare a statement that shows the following information. Turbo tax 2005 You were a Fulbright grantee and were paid in nonconvertible foreign currency. Turbo tax 2005 The total grant you received during the year and the amount you received in nonconvertible foreign currency. Turbo tax 2005 At least 70% of the grant was paid in nonconvertible foreign currency. Turbo tax 2005 The statement must be certified by the U. Turbo tax 2005 S. Turbo tax 2005 educational foundation or commission paying the grant or other person having control of grant payments to you. Turbo tax 2005   You should prepare at least two copies of this statement. Turbo tax 2005 Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency. Turbo tax 2005 Figuring actual tax. Turbo tax 2005   When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. Turbo tax 2005 If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula. Turbo tax 2005   Adjusted gross income that is blocked income × Total U. Turbo tax 2005 S. Turbo tax 2005 tax = Tax on blocked income     Total adjusted  gross income     You must attach all of the following to the return. Turbo tax 2005 A copy of the certified statement discussed earlier. Turbo tax 2005 A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U. Turbo tax 2005 S. Turbo tax 2005 dollars. Turbo tax 2005 The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency. Turbo tax 2005 Figuring estimated tax on nonconvertible foreign currency. Turbo tax 2005   If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula. Turbo tax 2005   Adjusted gross income that is blocked income × Total estimated U. Turbo tax 2005 S. Turbo tax 2005 tax = Estimated tax on blocked income     Total adjusted  gross income     If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income. Turbo tax 2005 Deposit of foreign currency with disbursing officer. Turbo tax 2005   Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located. Turbo tax 2005 Estimated tax installments. Turbo tax 2005   You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. Turbo tax 2005 See Estimated Tax , later. Turbo tax 2005 Deposit receipt. Turbo tax 2005   Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. Turbo tax 2005 The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U. Turbo tax 2005 S. Turbo tax 2005 dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. Turbo tax 2005 Keep the copy for your records. Turbo tax 2005 Does My Return Have To Be On Paper? IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. Turbo tax 2005 IRS e-file offers accurate, safe, and fast alternatives to filing on paper. Turbo tax 2005 IRS computers quickly and automatically check for errors or other missing information. Turbo tax 2005 Even returns with a foreign address can be e-filed! How to e-file. Turbo tax 2005   There are three ways you can e-file. Turbo tax 2005 Use your personal computer. Turbo tax 2005 Use a volunteer. Turbo tax 2005 Many programs offering free tax help can e-file your return. Turbo tax 2005 Use a tax professional. Turbo tax 2005 Most tax professionals can e-file your return. Turbo tax 2005 These methods are explained in detail in the instructions for your tax return. Turbo tax 2005 Where To File If any of the following situations apply to you, do not file your return with the service center listed for your home state. Turbo tax 2005 You claim the foreign earned income exclusion. Turbo tax 2005 You claim the foreign housing exclusion or deduction. Turbo tax 2005 You live in a foreign country. Turbo tax 2005 Instead, use one of the following special addresses. Turbo tax 2005 If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 USA If you are enclosing a check or money order, file your return with: Internal Revenue Service Center P. Turbo tax 2005 O. Turbo tax 2005 Box 1303 Charlotte, NC 28201-1303 USA If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above. Turbo tax 2005 However, you should not file with the addresses listed above if you are a bona fide resident of the U. Turbo tax 2005 S. Turbo tax 2005 Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year. Turbo tax 2005 Resident of U. Turbo tax 2005 S. Turbo tax 2005 Virgin Islands (USVI). Turbo tax 2005   If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U. Turbo tax 2005 S. Turbo tax 2005 return. Turbo tax 2005 However, you must file a return with the USVI. Turbo tax 2005    Send your return to the:     Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Turbo tax 2005 Thomas, Virgin Islands 00802 Non-USVI resident with USVI income. Turbo tax 2005   If you are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. Turbo tax 2005 File the original return with the United States and file a signed copy of the U. Turbo tax 2005 S. Turbo tax 2005 return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue. Turbo tax 2005   You must complete Form 8689, Allocation of Individual Income Tax to the U. Turbo tax 2005 S. Turbo tax 2005 Virgin Islands, and attach a copy to both your U. Turbo tax 2005 S. Turbo tax 2005 return and your USVI return. Turbo tax 2005 You should file your U. Turbo tax 2005 S. Turbo tax 2005 return with the address listed under Where To File. Turbo tax 2005   See Publication 570, Tax Guide for Individuals With Income From U. Turbo tax 2005 S. Turbo tax 2005 Possessions, for information about filing Virgin Islands returns. Turbo tax 2005 Resident of Guam. Turbo tax 2005   If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam. Turbo tax 2005    Send your return to the:     Department of Revenue and Taxation Government of Guam P. Turbo tax 2005 O. Turbo tax 2005 Box 23607 GMF, GU 96921   However, if you have income from sources within Guam and you are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. Turbo tax 2005 Send your return to the address listed under Where To File. Turbo tax 2005   See Publication 570 for information about filing Guam returns. Turbo tax 2005 Resident of the Commonwealth of the Northern Mariana Islands. Turbo tax 2005   If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you should file a return with the Northern Mariana Islands. Turbo tax 2005    Send your return to the:      Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Turbo tax 2005 O. Turbo tax 2005 Box 5234, CHRB Saipan, MP 96950   However, if you have income from sources within the CNMI and you are a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. Turbo tax 2005 Send your return to the address listed under Where To File. Turbo tax 2005   See Publication 570 for information about filing Northern Mariana Islands returns. Turbo tax 2005 Nonresident Alien Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. Turbo tax 2005 S. Turbo tax 2005 citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U. Turbo tax 2005 S. Turbo tax 2005 resident. Turbo tax 2005 This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year. Turbo tax 2005 If you make this choice, the following two rules apply. Turbo tax 2005 You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect. Turbo tax 2005 You must file a joint income tax return for the year you make the choice. Turbo tax 2005 This means that neither of you can claim under any tax treaty not to be a U. Turbo tax 2005 S. Turbo tax 2005 resident for a tax year for which the choice is in effect. Turbo tax 2005 You can file joint or separate returns in years after the year in which you make the choice. Turbo tax 2005 Example 1. Turbo tax 2005 Pat Smith, a U. Turbo tax 2005 S. Turbo tax 2005 citizen, is married to Norman, a nonresident alien. Turbo tax 2005 Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. Turbo tax 2005 Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. Turbo tax 2005 Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years. Turbo tax 2005 Example 2. Turbo tax 2005 When Bob and Sharon Williams got married, both were nonresident aliens. Turbo tax 2005 In June of last year, Bob became a resident alien and remained a resident for the rest of the year. Turbo tax 2005 Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. Turbo tax 2005 Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. Turbo tax 2005 Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years. Turbo tax 2005 If you do not choose to treat your nonresident alien spouse as a U. Turbo tax 2005 S. Turbo tax 2005 resident, you may be able to use head of household filing status. Turbo tax 2005 To use this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other than your nonresident alien spouse. Turbo tax 2005 For more information, see Publication 501. Turbo tax 2005 Social Security Number (SSN) If you choose to treat your nonresident alien spouse as a U. Turbo tax 2005 S. Turbo tax 2005 resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN). Turbo tax 2005 To get an SSN for a nonresident alien spouse, apply at an office of the U. Turbo tax 2005 S. Turbo tax 2005 Social Security Administration (SSA) or U. Turbo tax 2005 S. Turbo tax 2005 consulate. Turbo tax 2005 You must complete Form SS-5, Application for a Social Security Card, available at www. Turbo tax 2005 socialsecurity. Turbo tax 2005 gov or by calling 1-800-772-1213. Turbo tax 2005 You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. Turbo tax 2005 If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. Turbo tax 2005 How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. Turbo tax 2005 It should contain the following: A declaration that one spouse was a nonresident alien and the other spouse a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien on the last day of your tax year and that you choose to be treated as U. Turbo tax 2005 S. Turbo tax 2005 residents for the entire tax year, and The name, address, and social security number (or individual taxpayer identification number) of each spouse. Turbo tax 2005 (If one spouse died, include the name and address of the person making the choice for the deceased spouse. Turbo tax 2005 ) You generally make this choice when you file your joint return. Turbo tax 2005 However, you also can make the choice by filing a joint amended return on Form 1040X. Turbo tax 2005 Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return. Turbo tax 2005 If you make the choice with an amended return, you and your spouse also must amend any returns that you may have filed after the year for which you made the choice. Turbo tax 2005 You generally must file the amended joint return within 3 years from the date you filed your original U. Turbo tax 2005 S. Turbo tax 2005 income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Turbo tax 2005 Table 1–1. Turbo tax 2005 Ending the Choice To Treat Nonresident Alien Spouse as a Resident Revocation   Either spouse can revoke the choice for any tax year. Turbo tax 2005   • The revocation must be made by the due date for filing the tax return for that tax year. Turbo tax 2005   • The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. Turbo tax 2005 The statement revoking the choice must include the following:     • The name, address, and social security number (or taxpayer identification number) of each spouse. Turbo tax 2005     • The name and address of any person who is revoking the choice for a deceased spouse. Turbo tax 2005     • A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. Turbo tax 2005   • If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed. Turbo tax 2005 Death   The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died. Turbo tax 2005   • If the surviving spouse is a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. Turbo tax 2005   • If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. Turbo tax 2005 Divorce or  Legal separation   A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs. Turbo tax 2005 Inadequate records   The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. Turbo tax 2005 Suspending the Choice The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident alien at any time during the later tax year. Turbo tax 2005 Example. Turbo tax 2005 Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. Turbo tax 2005 They chose to treat Judy as a resident alien and filed a joint 2010 income tax return. Turbo tax 2005 On January 10, 2012, Dick became a nonresident alien. Turbo tax 2005 Judy had remained a nonresident alien. Turbo tax 2005 Because Dick was a resident alien during part of 2012, Dick and Judy can file joint or separate returns for that year. Turbo tax 2005 Neither Dick nor Judy was a resident alien at any time during 2013 and their choice is suspended for that year. Turbo tax 2005 For 2013, both are treated as nonresident aliens. Turbo tax 2005 If Dick becomes a resident alien again in 2014, their choice is no longer suspended and both are treated as resident aliens. Turbo tax 2005 Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1. Turbo tax 2005 If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year. Turbo tax 2005 Estimated Tax The requirements for determining who must pay estimated tax are the same for a U. Turbo tax 2005 S. Turbo tax 2005 citizen or resident abroad as for a taxpayer in the United States. Turbo tax 2005 For current instructions on making estimated tax payments, see Form 1040-ES. Turbo tax 2005 If you had a tax liability for 2013, you may have to pay estimated tax for 2014. Turbo tax 2005 Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 after subtracting your withholding and credits and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Turbo tax 2005 (The return must cover all 12 months. Turbo tax 2005 ) If less than two-thirds of your gross income for 2013 and 2014 is from farming or fishing and your adjusted gross income for 2013 is more than $150,000 ($75,000 if you are married and file separately), substitute 110% for 100% in (2). Turbo tax 2005 See Publication 505 for more information. Turbo tax 2005 The first installment of estimated tax is due on April 15, 2014. Turbo tax 2005 Foreign earned income exclusion. Turbo tax 2005   When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. Turbo tax 2005 In addition, you can reduce your income by your estimated foreign housing deduction. Turbo tax 2005 However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. Turbo tax 2005 If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax. Turbo tax 2005   For more information about figuring your estimated tax, see Publication 505. Turbo tax 2005 Other Forms You May Have To File FinCEN Form 114 (replaces Form TD F 90-22. Turbo tax 2005 1). Turbo tax 2005   Beginning October 1, 2013, Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed instead of Form TD F 90-22. Turbo tax 2005 1. Turbo tax 2005 Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). Turbo tax 2005 See the filing instructions at www. Turbo tax 2005 bsaefiling. Turbo tax 2005 fincen. Turbo tax 2005 treas. Turbo tax 2005 gov/main. Turbo tax 2005 html. Turbo tax 2005   You must file Form 114 if you had any financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country. Turbo tax 2005 You do not need to file the report if the assets are with a U. Turbo tax 2005 S. Turbo tax 2005 military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year. Turbo tax 2005   More information about the filing of Form 114 can be found in the instructions for the form. Turbo tax 2005 FinCEN Form 105. Turbo tax 2005   You must file Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. Turbo tax 2005 Certain recipients of currency or monetary instruments also must file Form 105. Turbo tax 2005   More information about the filing of Form 105 can be found in the instructions on the back of the form. Turbo tax 2005 Form 8938. Turbo tax 2005   You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”). Turbo tax 2005 The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Turbo tax 2005 Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Turbo tax 2005 S. Turbo tax 2005 person. Turbo tax 2005   You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Turbo tax 2005   More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Turbo tax 2005 Prev  Up  Next   Home   More Online Publications
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The Turbo Tax 2005

Turbo tax 2005 5. Turbo tax 2005   Recordkeeping Table of Contents How To Prove ExpensesWhat Are Adequate Records? What If I Have Incomplete Records? Separating and Combining Expenses How Long To Keep Records and Receipts Examples of Records If you deduct travel, entertainment, gift, or transportation expenses, you must be able to prove (substantiate) certain elements of expense. Turbo tax 2005 This chapter discusses the records you need to keep to prove these expenses. Turbo tax 2005 If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. Turbo tax 2005 You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. Turbo tax 2005 These plans are discussed in chapter 6 under Reimbursements . Turbo tax 2005 How To Prove Expenses Table 5-1 is a summary of records you need to prove each expense discussed in this publication. Turbo tax 2005 You must be able to prove the elements listed across the top portion of the chart. Turbo tax 2005 You prove them by having the information and receipts (where needed) for the expenses listed in the first column. Turbo tax 2005 You cannot deduct amounts that you approximate or estimate. Turbo tax 2005 You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. Turbo tax 2005 You must generally prepare a written record for it to be considered adequate. Turbo tax 2005 This is because written evidence is more reliable than oral evidence alone. Turbo tax 2005 However, if you prepare a record on a computer, it is considered an adequate record. Turbo tax 2005 What Are Adequate Records? You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. Turbo tax 2005 You should also keep documentary evidence that, together with your record, will support each element of an expense. Turbo tax 2005 Documentary evidence. Turbo tax 2005   You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses. Turbo tax 2005 Exception. Turbo tax 2005   Documentary evidence is not needed if any of the following conditions apply. Turbo tax 2005 You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. Turbo tax 2005 ( Accountable plans and per diem allowances are discussed in chapter 6. Turbo tax 2005 ) Your expense, other than lodging, is less than $75. Turbo tax 2005 You have a transportation expense for which a receipt is not readily available. Turbo tax 2005 Adequate evidence. Turbo tax 2005   Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. Turbo tax 2005   For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information. Turbo tax 2005 The name and location of the hotel. Turbo tax 2005 The dates you stayed there. Turbo tax 2005 Separate amounts for charges such as lodging, meals, and telephone calls. Turbo tax 2005   A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information. Turbo tax 2005 The name and location of the restaurant. Turbo tax 2005 The number of people served. Turbo tax 2005 The date and amount of the expense. Turbo tax 2005 If a charge is made for items other than food and beverages, the receipt must show that this is the case. Turbo tax 2005 Canceled check. Turbo tax 2005   A canceled check, together with a bill from the payee, ordinarily establishes the cost. Turbo tax 2005 However, a canceled check by itself does not prove a business expense without other evidence to show that it was for a business purpose. Turbo tax 2005 Duplicate information. Turbo tax 2005   You do not have to record information in your account book or other record that duplicates information shown on a receipt as long as your records and receipts complement each other in an orderly manner. Turbo tax 2005   You do not have to record amounts your employer pays directly for any ticket or other travel item. Turbo tax 2005 However, if you charge these items to your employer, through a credit card or otherwise, you must keep a record of the amounts you spend. Turbo tax 2005 Timely-kept records. Turbo tax 2005   You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence. Turbo tax 2005 A timely-kept record has more value than a statement prepared later when generally there is a lack of accurate recall. Turbo tax 2005   You do not need to write down the elements of every expense on the day of the expense. Turbo tax 2005 If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely-kept record. Turbo tax 2005   If you give your employer, client, or customer an expense account statement, it can also be considered a timely-kept record. Turbo tax 2005 This is true if you copy it from your account book, diary, log, statement of expense, trip sheets, or similar record. Turbo tax 2005 Proving business purpose. Turbo tax 2005   You must generally provide a written statement of the business purpose of an expense. Turbo tax 2005 However, the degree of proof varies according to the circumstances in each case. Turbo tax 2005 If the business purpose of an expense is clear from the surrounding circumstances, then you do not need to give a written explanation. Turbo tax 2005 Example. Turbo tax 2005 If you are a sales representative who calls on customers on an established sales route, you do not have to give a written explanation of the business purpose for traveling that route. Turbo tax 2005 You can satisfy the requirements by recording the length of the delivery route once, the date of each trip at or near the time of the trips, and the total miles you drove the car during the tax year. Turbo tax 2005 You could also establish the date of each trip with a receipt, record of delivery, or other documentary evidence. Turbo tax 2005 Confidential information. Turbo tax 2005   You do not need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. Turbo tax 2005 However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense. Turbo tax 2005 What If I Have Incomplete Records? If you do not have complete records to prove an element of an expense, then you must prove the element with: Your own written or oral statement containing specific information about the element, and Other supporting evidence that is sufficient to establish the element. Turbo tax 2005 If the element is the description of a gift, or the cost, time, place, or date of an expense, the supporting evidence must be either direct evidence or documentary evidence. Turbo tax 2005 Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. Turbo tax 2005 Documentary evidence can be receipts, paid bills, or similar evidence. Turbo tax 2005 If the element is either the business relationship of your guests or the business purpose of the amount spent, the supporting evidence can be circumstantial rather than direct. Turbo tax 2005 For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. Turbo tax 2005 Invoices of deliveries establish when you used the car for business. Turbo tax 2005 Table 5-1. Turbo tax 2005 How To Prove Certain Business Expenses IF you have expenses for . Turbo tax 2005 . Turbo tax 2005 THEN you must keep records that show details of the following elements . Turbo tax 2005 . Turbo tax 2005 . Turbo tax 2005   Amount Time Place or  Description Business Purpose Business Relationship Travel Cost of each separate expense for travel, lodging, and meals. Turbo tax 2005 Incidental expenses may be totaled in reasonable categories such as taxis, fees and tips, etc. Turbo tax 2005 Dates you left and returned for each trip and number of days spent on business. Turbo tax 2005 Destination or area of your travel (name of city, town, or other designation). Turbo tax 2005 Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. Turbo tax 2005    Relationship: N/A Entertainment Cost of each separate expense. Turbo tax 2005 Incidental expenses such as taxis, telephones, etc. Turbo tax 2005 , may be totaled on a daily basis. Turbo tax 2005 Date of entertainment. Turbo tax 2005 (Also see Business Purpose. Turbo tax 2005 ) Name and address or location of place of entertainment. Turbo tax 2005 Type of entertainment if not otherwise apparent. Turbo tax 2005 (Also see Business Purpose. Turbo tax 2005 ) Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. Turbo tax 2005  For entertainment, the nature of the business discussion or activity. Turbo tax 2005 If the entertainment was directly before or after a business discussion: the date, place, nature, and duration of the business discussion, and the identities of the persons who took part in both the business discussion and the entertainment activity. Turbo tax 2005    Relationship: Occupations or other information (such as names, titles, or other designations) about the recipients that shows their business relationship to you. Turbo tax 2005  For entertainment, you must also prove that you or your employee was present if the entertainment was a business meal. Turbo tax 2005 Gifts Cost of the gift. Turbo tax 2005 Date of the gift. Turbo tax 2005 Description of the gift. Turbo tax 2005   Transportation Cost of each separate expense. Turbo tax 2005 For car expenses, the cost of the car and any improvements, the date you started using it for business, the mileage for each business use, and the total miles for the year. Turbo tax 2005 Date of the expense. Turbo tax 2005 For car expenses, the date of the use of the car. Turbo tax 2005 Your business destination. Turbo tax 2005 Purpose: Business purpose for the expense. Turbo tax 2005    Relationship: N/A Sampling. Turbo tax 2005   You can keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. Turbo tax 2005 You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year. Turbo tax 2005 Example. Turbo tax 2005 You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. Turbo tax 2005 There is no other business use of the car, but you and your family use the car for personal purposes. Turbo tax 2005 You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. Turbo tax 2005 Invoices and bills show that your business use continues at the same rate during the later weeks of each month. Turbo tax 2005 Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year. Turbo tax 2005 Exceptional circumstances. Turbo tax 2005   You can satisfy the substantiation requirements with other evidence if, because of the nature of the situation in which an expense is made, you cannot get a receipt. Turbo tax 2005 This applies if all the following are true. Turbo tax 2005 You were unable to obtain evidence for an element of the expense or use that completely satisfies the requirements explained earlier under What Are Adequate Records . Turbo tax 2005 You are unable to obtain evidence for an element that completely satisfies the two rules listed earlier under What If I Have Incomplete Records . Turbo tax 2005 You have presented other evidence for the element that is the best proof possible under the circumstances. Turbo tax 2005 Destroyed records. Turbo tax 2005   If you cannot produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. Turbo tax 2005 Reasons beyond your control include fire, flood, and other casualties. Turbo tax 2005    Table 5-2. Turbo tax 2005 Daily Business Mileage and Expense Log Name:       Odometer Readings Expenses Date Destination  (City, Town, or Area) Business Purpose Start Stop Miles  this trip Type  (Gas, oil, tolls, etc. Turbo tax 2005 ) Amount                                                                                                                   Weekly  Total             Total Year-to-Date             Separating and Combining Expenses This section explains when expenses must be kept separate and when expenses can be combined. Turbo tax 2005 Separating expenses. Turbo tax 2005   Each separate payment is generally considered a separate expense. Turbo tax 2005 For example, if you entertain a customer or client at dinner and then go to the theater, the dinner expense and the cost of the theater tickets are two separate expenses. Turbo tax 2005 You must record them separately in your records. Turbo tax 2005 Season or series tickets. Turbo tax 2005   If you buy season or series tickets for business use, you must treat each ticket in the series as a separate item. Turbo tax 2005 To determine the cost of individual tickets, divide the total cost (but not more than face value) by the number of games or performances in the series. Turbo tax 2005 You must keep records to show whether you use each ticket as a gift or entertainment. Turbo tax 2005 Also, you must be able to prove the cost of nonluxury box seat tickets if you rent a skybox or other private luxury box for more than one event. Turbo tax 2005 See Entertainment tickets in chapter 2. Turbo tax 2005 Combining items. Turbo tax 2005   You can make one daily entry in your record for reasonable categories of expenses. Turbo tax 2005 Examples are taxi fares, telephone calls, or other incidental travel costs. Turbo tax 2005 Meals should be in a separate category. Turbo tax 2005 You can include tips for meal-related services with the costs of the meals. Turbo tax 2005   Expenses of a similar nature occurring during the course of a single event are considered a single expense. Turbo tax 2005 For example, if during entertainment at a cocktail lounge, you pay separately for each serving of refreshments, the total expense for the refreshments is treated as a single expense. Turbo tax 2005 Car expenses. Turbo tax 2005   You can account for several uses of your car that can be considered part of a single use, such as a round trip or uninterrupted business use, with a single record. Turbo tax 2005 Minimal personal use, such as a stop for lunch on the way between two business stops, is not an interruption of business use. Turbo tax 2005 Example. Turbo tax 2005 You make deliveries at several different locations on a route that begins and ends at your employer's business premises and that includes a stop at the business premises between two deliveries. Turbo tax 2005 You can account for these using a single record of miles driven. Turbo tax 2005 Gift expenses. Turbo tax 2005   You do not always have to record the name of each recipient of a gift. Turbo tax 2005 A general listing will be enough if it is evident that you are not trying to avoid the $25 annual limit on the amount you can deduct for gifts to any one person. Turbo tax 2005 For example, if you buy a large number of tickets to local high school basketball games and give one or two tickets to each of many customers, it is usually enough to record a general description of the recipients. Turbo tax 2005 Allocating total cost. Turbo tax 2005   If you can prove the total cost of travel or entertainment but you cannot prove how much it cost for each person who participated in the event, you may have to allocate the total cost among you and your guests on a pro rata basis. Turbo tax 2005 To do so, you must establish the number of persons who participated in the event. Turbo tax 2005   An allocation would be needed, for example, if you did not have a business relationship with all of your guests. Turbo tax 2005 See Allocating between business and nonbusiness in chapter 2. Turbo tax 2005 If your return is examined. Turbo tax 2005    If your return is examined, you may have to provide additional information to the IRS. Turbo tax 2005 This information could be needed to clarify or to establish the accuracy or reliability of information contained in your records, statements, testimony, or documentary evidence before a deduction is allowed. Turbo tax 2005    THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Table 5-3. Turbo tax 2005 Weekly Traveling Expense and Entertainment Record From: To: Name: Expenses Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total 1. Turbo tax 2005 Travel Expenses: Airlines                                 Excess Baggage                                 Bus – Train                                 Cab and Limousine                                 Tips                                 Porter                                 2. Turbo tax 2005 Meals and Lodging:  Breakfast                                 Lunch                                 Dinner                                 Hotel and Motel  (Detail in Schedule B)                                 3. Turbo tax 2005 Entertainment  (Detail in Schedule C)                                 4. Turbo tax 2005 Other Expenses:  Postage                                 Telephone & Telegraph                                 Stationery & Printing                                 Stenographer                                 Sample Room                                 Advertising                                 Assistant(s)                                 Trade Shows                                 5. Turbo tax 2005 Car Expenses: (List all car expenses - the division between business and personal expenses may be made at the end of the year. Turbo tax 2005 ) (Detail mileage in Schedule A. Turbo tax 2005 ) Gas, oil, lube, wash                                 Repairs, parts                                 Tires, supplies                                 Parking fees, tolls                                 6. Turbo tax 2005 Other (Identify)                                 Total                                 Note: Attach receipted bills for (1) ALL lodging and (2) any other expenses of $75. Turbo tax 2005 00 or more. Turbo tax 2005 Schedule A – Car Mileage: End                 Start                 Total                 Business Mileage                 Schedule B – Lodging Hotel or Motel Name                 City                 Schedule C – Entertainment Date Item Place Amount Business Purpose Business Relationship                                             WEEKLY REIMBURSEMENTS:     Travel and transportation expenses     Other reimbursements     TOTAL   How Long To Keep Records and Receipts You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Turbo tax 2005 Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. Turbo tax 2005 A return filed early is considered filed on the due date. Turbo tax 2005 For a more complete explanation of how long to keep records, see Publication 583, Starting a Business and Keeping Records. Turbo tax 2005 You must keep records of the business use of your car for each year of the recovery period. Turbo tax 2005 See More-than-50%-use test in chapter 4 under Depreciation Deduction. Turbo tax 2005 Reimbursed for expenses. Turbo tax 2005   Employees who give their records and documentation to their employers and are reimbursed for their expenses generally do not have to keep copies of this information. Turbo tax 2005 However, you may have to prove your expenses if any of the following conditions apply. Turbo tax 2005 You claim deductions for expenses that are more than reimbursements. Turbo tax 2005 Your expenses are reimbursed under a nonaccountable plan. Turbo tax 2005 Your employer does not use adequate accounting procedures to verify expense accounts. Turbo tax 2005 You are related to your employer as defined under Per Diem and Car Allowances , in chapter 6. Turbo tax 2005 Reimbursements , adequate accounting , and nonaccountable plans are discussed in chapter 6. Turbo tax 2005 Examples of Records Table 5-2 and Table 5-3 are examples of worksheets which can be used for tracking business expenses. Turbo tax 2005 Prev  Up  Next   Home   More Online Publications