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Vita Tax Locations 2012

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Vita Tax Locations 2012

Vita tax locations 2012 9. Vita tax locations 2012   Tax Treaty Benefits Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Treaty Income Some Typical Tax Treaty BenefitsPersonal Services Teachers, Professors, and Researchers Employees of Foreign Governments Students, Apprentices, and Trainees Capital Gains Resident Aliens Reporting Treaty Benefits Claimed Introduction A nonresident alien (and certain resident aliens) from a country with which the United States has an income tax treaty may qualify for certain benefits. Vita tax locations 2012 Most treaties require that the nonresident alien be a resident of the treaty country to qualify. Vita tax locations 2012 However, some treaties require that the nonresident alien be a national or a citizen of the treaty country. Vita tax locations 2012 See Table 9-1 for a list of tax treaty countries. Vita tax locations 2012 You can generally arrange to have withholding tax reduced or eliminated on wages and other income that are eligible for tax treaty benefits. Vita tax locations 2012 See Income Entitled to Tax Treaty Benefits in chapter 8. Vita tax locations 2012 Topics - This chapter discusses: Typical tax treaty benefits, How to obtain copies of tax treaties, and How to claim tax treaty benefits on your tax return. Vita tax locations 2012 Useful Items - You may want to see: Publication 901 U. Vita tax locations 2012 S. Vita tax locations 2012 Tax Treaties Form (and Instructions) 1040NR U. Vita tax locations 2012 S. Vita tax locations 2012 Nonresident Alien Income Tax Return 1040NR-EZ U. Vita tax locations 2012 S. Vita tax locations 2012 Income Tax Return for Certain Nonresident Aliens With No Dependents 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) See chapter 12 for information about getting these publications and forms. Vita tax locations 2012 Treaty Income A nonresident alien's treaty income is the gross income on which the tax is limited by a tax treaty. Vita tax locations 2012 Treaty income includes, for example, dividends from sources in the United States that are subject to tax at a tax treaty rate not to exceed 15%. Vita tax locations 2012 Nontreaty income is the gross income of a nonresident alien on which the tax is not limited by a tax treaty. Vita tax locations 2012 Figure the tax on treaty income on each separate item of income at the reduced rate that applies to that item under the treaty. Vita tax locations 2012 To determine tax on nontreaty income, figure the tax at either the flat 30% rate or the graduated rate, depending upon whether or not the income is effectively connected with your trade or business in the United States. Vita tax locations 2012 Your tax liability is the sum of the tax on treaty income plus the tax on nontreaty income, but cannot be more than the tax liability figured as if the tax treaty had not come into effect. Vita tax locations 2012 Example. Vita tax locations 2012 Arthur Banks is a nonresident alien who is single and a resident of a foreign country that has a tax treaty with the United States. Vita tax locations 2012 He received gross income of $25,850 during the tax year from sources within the United States, consisting of the following items: Dividends on which the tax is limited to a 15% rate by the tax treaty $1,400 Compensation for personal services on which the tax is not limited by the tax treaty 24,450 Total gross income $25,850 Arthur was engaged in business in the United States during the tax year. Vita tax locations 2012 His dividends are not effectively connected with that business. Vita tax locations 2012 He has no deductions other than his own personal exemption. Vita tax locations 2012 His tax liability, figured as though the tax treaty had not come into effect, is $3,060 determined as follows: Total compensation $24,450 Less: Personal exemption 3,900 Taxable income $20,550 Tax determined by graduated rate (Tax Table column for single taxpayers) $2,640 Plus: Tax on gross dividends ($1,400 × 30%) 420 Tax determined as though treaty had not come into effect $3,060 Arthur's tax liability, figured by taking into account the reduced rate on dividend income as provided by the tax treaty, is $2,850 determined as follows: Tax determined by graduated rate (same as figured above) $2,640 Plus: Tax on gross dividends ($1,400 × 15%) 210 Tax on compensation and dividends $2,850 His tax liability, therefore, is limited to $2,850, the tax liability figured using the tax treaty rate on the dividends. Vita tax locations 2012 Some Typical Tax Treaty Benefits The following paragraphs briefly explain the exemptions that are available under tax treaties for personal services income, remittances, scholarships, fellowships, and capital gain income. Vita tax locations 2012 The conditions for claiming the exemptions vary under each tax treaty. Vita tax locations 2012 For more information about the conditions under a particular tax treaty, see Publication 901. Vita tax locations 2012 Or, you may download the complete text of most U. Vita tax locations 2012 S. Vita tax locations 2012 tax treaties at IRS. Vita tax locations 2012 gov. Vita tax locations 2012 Technical explanations for many of those treaties are also available at that site. Vita tax locations 2012 Tax treaty benefits also cover income such as dividends, interest, rentals, royalties, pensions, and annuities. Vita tax locations 2012 These types of income may be exempt from U. Vita tax locations 2012 S. Vita tax locations 2012 tax or may be subject to a reduced rate of tax. Vita tax locations 2012 For more information, see Publication 901 or the applicable tax treaty. Vita tax locations 2012 Personal Services Nonresident aliens from treaty countries who are in the United States for a short stay and also meet certain other requirements may be exempt from tax on their compensation received for personal services performed in the United States. Vita tax locations 2012 Many tax treaties require that the nonresident alien claiming this exemption be present in the United States for a total of not more than 183 days during the tax year. Vita tax locations 2012 Other tax treaties specify different periods of maximum presence in the United States, such as 180 days or 90 days. Vita tax locations 2012 Spending part of a day in the United States counts as a day of presence. Vita tax locations 2012 Tax treaties may also require that: The compensation cannot be more than a specific amount (frequently $3,000), and The individual have a foreign employer; that is, an individual, corporation, or entity of a foreign country. Vita tax locations 2012 Note. Vita tax locations 2012 Under most treaties, income received as an employee (generally designated as dependent personal services) and income received as a self-employed person (generally designated as independent personal services or business income) are treated differently. Vita tax locations 2012 Teachers, Professors, and Researchers Under many income tax treaties, nonresident alien teachers or professors who temporarily visit the United States for the primary purpose of teaching at a university or other accredited educational institution are not subject to U. Vita tax locations 2012 S. Vita tax locations 2012 income tax on compensation received for teaching for the first 2 or 3 years after their arrival in the United States. Vita tax locations 2012 Many treaties also provide an exemption for engaging in research. Vita tax locations 2012 Generally, the teacher or professor must be in the United States primarily to teach, lecture, instruct, or engage in research. Vita tax locations 2012 A substantial part of that person's time must be devoted to those duties. Vita tax locations 2012 The normal duties of a teacher or professor include not only formal classroom work involving regularly scheduled lectures, demonstrations, or other student-participation activities, but also the less formal method of presenting ideas in seminars or other informal groups and in joint efforts in the laboratory. Vita tax locations 2012 If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Vita tax locations 2012 See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens later under Resident Aliens. Vita tax locations 2012 Employees of Foreign Governments All treaties have provisions for the exemption of income earned by certain employees of foreign governments. Vita tax locations 2012 However, a difference exists among treaties as to who qualifies for this benefit. Vita tax locations 2012 Under many treaties, aliens admitted to the United States for permanent residence do not qualify. Vita tax locations 2012 Under most treaties, aliens who are not nationals or subjects of the foreign country do not qualify. Vita tax locations 2012 Employees of foreign governments should read the pertinent treaty carefully to determine whether they qualify for benefits. Vita tax locations 2012 Chapter 10 of this publication also has information for employees of foreign governments. Vita tax locations 2012 Students, Apprentices, and Trainees Under some income tax treaties, students, apprentices, and trainees are exempt from tax on remittances received from abroad for study and maintenance. Vita tax locations 2012 Also, under some treaties, scholarship and fellowship grants, and a limited amount of compensation received by students, apprentices, and trainees may be exempt from tax. Vita tax locations 2012 If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Vita tax locations 2012 See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens , later, under Resident Aliens. Vita tax locations 2012 Capital Gains Most treaties provide for the exemption of gains from the sale or exchange of personal property. Vita tax locations 2012 Generally, gains from the sale or exchange of real property located in the United States are taxable. Vita tax locations 2012 Resident Aliens Resident aliens may qualify for tax treaty benefits in the situations discussed below. Vita tax locations 2012 U. Vita tax locations 2012 S. Vita tax locations 2012 Residency Under Tax Treaty “Tie-Breaker” Rule In certain circumstances, individuals who are treated as residents of the United States under an income tax treaty (after application of the so-called “tie-breaker” rule) will be entitled to treaty benefits. Vita tax locations 2012 (The “tie-breaker” rule is explained in chapter 1 under Effect of Tax Treaties. Vita tax locations 2012 ) If this applies to you, you generally will not need to file a Form 8833 for the income for which treaty benefits are claimed. Vita tax locations 2012 This is because the income will typically be of a category for which disclosure on a Form 8833 is waived. Vita tax locations 2012 See Reporting Treaty Benefits Claimed . Vita tax locations 2012 In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Vita tax locations 2012 S. Vita tax locations 2012 tax under the treaty. Vita tax locations 2012 However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Vita tax locations 2012 Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Vita tax locations 2012 Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Vita tax locations 2012 On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Vita tax locations 2012 Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Vita tax locations 2012 Attach a statement to Form 1040 showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Vita tax locations 2012 Include this tax on Form 1040, line 61. Vita tax locations 2012 On the dotted line next to line 61, write “Tax from attached statement” and the amount of the tax. Vita tax locations 2012 Example. Vita tax locations 2012 Jacques Dubois, who is a resident of the United States under Article 4 of the U. Vita tax locations 2012 S. Vita tax locations 2012 -France income tax treaty, receives French social security benefits. Vita tax locations 2012 Under Article 18(1) of the treaty, French social security benefits are not taxable by the United States. Vita tax locations 2012 Mr. Vita tax locations 2012 Dubois is not required to file a Form 8833 for his French social security benefits or report the benefits on Form 1040. Vita tax locations 2012 Special Rule for Canadian and German Social Security Benefits Under income tax treaties with Canada and Germany, if a U. Vita tax locations 2012 S. Vita tax locations 2012 resident receives social security benefits from Canada or Germany, those benefits are treated for U. Vita tax locations 2012 S. Vita tax locations 2012 income tax purposes as if they were received under the social security legislation of the United States. Vita tax locations 2012 If you receive social security benefits from Canada or Germany, include them on line 1 of your Social Security Benefits Worksheet for purposes of determining the taxable amount to be reported on Form 1040, line 20b or Form 1040A, line 14b. Vita tax locations 2012 You are not required to file a Form 8833 for those benefits. Vita tax locations 2012 Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens Generally, you must be a nonresident alien student, apprentice, trainee, teacher, professor, or researcher in order to claim a tax treaty exemption for remittances from abroad for study and maintenance in the United States, for scholarship, fellowship, and research grants, and for wages or other personal service compensation. Vita tax locations 2012 Once you become a resident alien, you generally can no longer claim a tax treaty exemption for this income. Vita tax locations 2012 However, if you entered the United States as a nonresident alien, but you are now a resident alien for U. Vita tax locations 2012 S. Vita tax locations 2012 tax purposes, the treaty exemption will continue to apply if the tax treaty's saving clause (explained later) provides an exception for it and you otherwise meet the requirements for the treaty exemption (including any time limit, explained later). Vita tax locations 2012 This is true even if you are a nonresident alien electing to file a joint return as explained in chapter 1. Vita tax locations 2012 Some exceptions to the saving clause apply to all resident aliens (for example, under the U. Vita tax locations 2012 S. Vita tax locations 2012 -People's Republic of China treaty); others apply only to resident aliens who are not lawful permanent residents of the United States (green card holders). Vita tax locations 2012 If you qualify under an exception to the treaty's saving clause, you can avoid income tax withholding by giving the payor a Form W-9 with the statement required by the Form W-9 instructions. Vita tax locations 2012 Saving clause. Vita tax locations 2012   Most tax treaties have a saving clause. Vita tax locations 2012 A saving clause preserves or “saves” the right of each country to tax its own residents as if no tax treaty were in effect. Vita tax locations 2012 Thus, once you become a resident alien of the United States, you generally lose any tax treaty benefits that relate to your income. Vita tax locations 2012 However, many tax treaties have exceptions to the saving clause, which may allow you to continue to claim certain treaty benefits when you become a resident alien. Vita tax locations 2012 Read the treaty to find out if it has a saving clause and an exception to it. Vita tax locations 2012 Time limit for claiming treaty exemptions. Vita tax locations 2012   Many treaties limit the number of years you can claim a treaty exemption. Vita tax locations 2012 For students, apprentices, and trainees, the limit is usually 4–5 years; for teachers, professors, and researchers, the limit is usually 2–3 years. Vita tax locations 2012 Once you reach this limit, you can no longer claim the treaty exemption. Vita tax locations 2012 See the treaty or Publication 901 for the time limits that apply. Vita tax locations 2012 How to report income on your tax return. Vita tax locations 2012   In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Vita tax locations 2012 S. Vita tax locations 2012 tax under the treaty. Vita tax locations 2012 However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages, salaries, scholarships, or fellowships). Vita tax locations 2012 Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Vita tax locations 2012 Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Vita tax locations 2012 On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Vita tax locations 2012 Example. Vita tax locations 2012 Mr. Vita tax locations 2012 Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2009. Vita tax locations 2012 He remained a nonresident alien through 2013 and was able to exclude his scholarship from U. Vita tax locations 2012 S. Vita tax locations 2012 tax in those years under Article 20 of the U. Vita tax locations 2012 S. Vita tax locations 2012 -People's Republic of China income tax treaty. Vita tax locations 2012 On January 1, 2014, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Vita tax locations 2012 Even though Mr. Vita tax locations 2012 Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U. Vita tax locations 2012 S. Vita tax locations 2012 -People's Republic of China treaty dated April 30, 1984. Vita tax locations 2012 Mr. Vita tax locations 2012 Yu should submit Form W-9 and the required statement to the payor. Vita tax locations 2012 Reporting Treaty Benefits Claimed If you claim treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits your tax is, or might be, reduced, you must attach a fully completed Form 8833 to your tax return. Vita tax locations 2012 See below, for the situations where you are not required to file Form 8833. Vita tax locations 2012 You must file a U. Vita tax locations 2012 S. Vita tax locations 2012 tax return and Form 8833 if you claim the following treaty benefits. Vita tax locations 2012 You claim a reduction or modification in the taxation of gain or loss from the disposition of a U. Vita tax locations 2012 S. Vita tax locations 2012 real property interest based on a treaty. Vita tax locations 2012 You claim a credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code. Vita tax locations 2012 You receive payments or income items totaling more than $100,000 and you determine your country of residence under a treaty and not under the rules for residency discussed in chapter 1. Vita tax locations 2012 These are the more common situations for which Form 8833 is required. Vita tax locations 2012 Exceptions. Vita tax locations 2012   You do not have to file Form 8833 for any of the following situations. Vita tax locations 2012 You claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate. Vita tax locations 2012 You claim a treaty reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. Vita tax locations 2012 This includes taxable scholarship and fellowship grants. Vita tax locations 2012 You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement. Vita tax locations 2012 You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return. Vita tax locations 2012 The payments or items of income that are otherwise required to be disclosed total no more than $10,000. Vita tax locations 2012 You are claiming treaty benefits for amounts that are: Reported to you on Form 1042-S and Received by you: As a related party from a reporting corporation within the meaning of Internal Revenue Code section 6038A (relating to information returns on Form 5472 filed by U. Vita tax locations 2012 S. Vita tax locations 2012 corporations that are 25-percent owned by a foreign person), or As a beneficial owner that is a direct account holder of a U. Vita tax locations 2012 S. Vita tax locations 2012 financial institution or qualified intermediary, or a direct partner, beneficiary, or owner of a withholding foreign partnership or trust, from that U. Vita tax locations 2012 S. Vita tax locations 2012 financial institution, qualified intermediary, or withholding foreign partnership or trust. Vita tax locations 2012 The exception described in (6) above does not apply to any amounts for which a treaty-based return disclosure is specifically required by the Form 8833 instructions. Vita tax locations 2012 Penalty for failure to provide required information on Form 8833. Vita tax locations 2012   If you are required to report the treaty benefits but do not, you may be subject to a penalty of $1,000 for each failure. Vita tax locations 2012 Additional information. Vita tax locations 2012   For additional information, see section 301. Vita tax locations 2012 6114-1(c) of the Income Tax Regulations. Vita tax locations 2012 Table 9-1. Vita tax locations 2012 Table of Tax Treaties (Updated through December 31, 2013) Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. Vita tax locations 2012 D. Vita tax locations 2012 ) Australia TIAS 10773 Dec. Vita tax locations 2012 1, 1983 1986-2 C. Vita tax locations 2012 B. Vita tax locations 2012 220 1986-2 C. Vita tax locations 2012 B. Vita tax locations 2012 246 Protocol TIAS Jan. Vita tax locations 2012 1, 2004     Austria TIAS Jan. Vita tax locations 2012 1, 1999     Bangladesh TIAS Jan. Vita tax locations 2012 1, 2007     Barbados TIAS 11090 Jan. Vita tax locations 2012 1, 1984 1991-2 C. Vita tax locations 2012 B. Vita tax locations 2012 436 1991-2 C. Vita tax locations 2012 B. Vita tax locations 2012 466 Protocol TIAS Jan. Vita tax locations 2012 1, 1994     Protocol TIAS Jan. Vita tax locations 2012 1, 2005     Belgium TIAS Jan. Vita tax locations 2012 1, 2008     Bulgaria TIAS Jan. Vita tax locations 2012 1, 2009     Canada2 TIAS 11087 Jan. Vita tax locations 2012 1, 1985 1986-2 C. Vita tax locations 2012 B. Vita tax locations 2012 258 1987-2 C. Vita tax locations 2012 B. Vita tax locations 2012 298 Protocol TIAS Jan. Vita tax locations 2012 1, 1996     Protocol TIAS Dec. Vita tax locations 2012 16, 1997     Protocol TIAS Jan. Vita tax locations 2012 1, 2009     China, People's Republic of TIAS 12065 Jan. Vita tax locations 2012 1, 1987 1988-1 C. Vita tax locations 2012 B. Vita tax locations 2012 414 1988-1 C. Vita tax locations 2012 B. Vita tax locations 2012 447 Commonwealth of Independent States3 TIAS 8225 Jan. Vita tax locations 2012 1, 1976 1976-2 C. Vita tax locations 2012 B. Vita tax locations 2012 463 1976-2 C. Vita tax locations 2012 B. Vita tax locations 2012 475 Cyprus TIAS 10965 Jan. Vita tax locations 2012 1, 1986 1989-2 C. Vita tax locations 2012 B. Vita tax locations 2012 280 1989-2 C. Vita tax locations 2012 B. Vita tax locations 2012 314 Czech Republic TIAS Jan. Vita tax locations 2012 1, 1993     Denmark TIAS Jan. Vita tax locations 2012 1, 2001     Protocol TIAS Jan. Vita tax locations 2012 1, 2008     Egypt TIAS 10149 Jan. Vita tax locations 2012 1, 1982 1982-1 C. Vita tax locations 2012 B. Vita tax locations 2012 219 1982-1 C. Vita tax locations 2012 B. Vita tax locations 2012 243 Estonia TIAS Jan. Vita tax locations 2012 1, 2000     Finland TIAS 12101 Jan. Vita tax locations 2012 1, 1991     Protocol TIAS Jan. Vita tax locations 2012 1, 2008     France TIAS Jan. Vita tax locations 2012 1, 1996     Protocol TIAS Jan. Vita tax locations 2012 1, 2007     Protocol TIAS Jan. Vita tax locations 2012 1, 2010     Germany TIAS Jan. Vita tax locations 2012 1, 1990     Protocol TIAS Jan. Vita tax locations 2012 1, 2008     Greece TIAS 2902 Jan. Vita tax locations 2012 1, 1953 1958-2 C. Vita tax locations 2012 B. Vita tax locations 2012 1054 T. Vita tax locations 2012 D. Vita tax locations 2012 6109, 1954-2 C. Vita tax locations 2012 B. Vita tax locations 2012 638 Hungary TIAS 9560 Jan. Vita tax locations 2012 1, 1980 1980-1 C. Vita tax locations 2012 B. Vita tax locations 2012 333 1980-1 C. Vita tax locations 2012 B. Vita tax locations 2012 354 Iceland TIAS Jan. Vita tax locations 2012 1, 2009     India TIAS Jan. Vita tax locations 2012 1, 1991     Indonesia TIAS 11593 Jan. Vita tax locations 2012 1, 1990     Ireland TIAS Jan. Vita tax locations 2012 1, 1998     Israel TIAS Jan. Vita tax locations 2012 1, 1995     Italy TIAS Jan. Vita tax locations 2012 1, 2010     Jamaica TIAS 10207 Jan. Vita tax locations 2012 1, 1982 1982-1 C. Vita tax locations 2012 B. Vita tax locations 2012 257 1982-1 C. Vita tax locations 2012 B. Vita tax locations 2012 291 Japan TIAS Jan. Vita tax locations 2012 1, 2005     Kazakhstan TIAS Jan. Vita tax locations 2012 1, 1996     Korea, South TIAS 9506 Jan. Vita tax locations 2012 1, 1980 1979-2 C. Vita tax locations 2012 B. Vita tax locations 2012 435 1979-2 C. Vita tax locations 2012 B. Vita tax locations 2012 458 Latvia TIAS Jan. Vita tax locations 2012 1, 2000     Lithuania TIAS Jan. Vita tax locations 2012 1, 2000     Luxembourg TIAS Jan. Vita tax locations 2012 1, 2001     Malta TIAS Jan. Vita tax locations 2012 1, 2011     Mexico TIAS Jan. Vita tax locations 2012 1, 1994 1994-2 C. Vita tax locations 2012 B. Vita tax locations 2012 424 1994-2 C. Vita tax locations 2012 B. Vita tax locations 2012 489 Protocol TIAS Oct. Vita tax locations 2012 26, 1995     Protocol TIAS Jan. Vita tax locations 2012 1, 2004     Morocco TIAS 10195 Jan. Vita tax locations 2012 1, 1981 1982-2 C. Vita tax locations 2012 B. Vita tax locations 2012 405 1982-2 C. Vita tax locations 2012 B. Vita tax locations 2012 427 Netherlands TIAS Jan. Vita tax locations 2012 1, 1994     Protocol TIAS Jan. Vita tax locations 2012 1, 2005     New Zealand TIAS 10772 Nov. Vita tax locations 2012 2, 1983 1990-2 C. Vita tax locations 2012 B. Vita tax locations 2012 274 1990-2 C. Vita tax locations 2012 B. Vita tax locations 2012 303 Protocol TIAS Jan. Vita tax locations 2012 1, 2011     Norway TIAS 7474 Jan. Vita tax locations 2012 1, 1971 1973-1 C. Vita tax locations 2012 B. Vita tax locations 2012 669 1973-1 C. Vita tax locations 2012 B. Vita tax locations 2012 693 Protocol TIAS 10205 Jan. Vita tax locations 2012 1, 1982 1982-2 C. Vita tax locations 2012 B. Vita tax locations 2012 440 1982-2 C. Vita tax locations 2012 B. Vita tax locations 2012 454 Pakistan TIAS 4232 Jan. Vita tax locations 2012 1, 1959 1960-2 C. Vita tax locations 2012 B. Vita tax locations 2012 646 T. Vita tax locations 2012 D. Vita tax locations 2012 6431, 1960-1 C. Vita tax locations 2012 B. Vita tax locations 2012 755 Philippines TIAS 10417 Jan. Vita tax locations 2012 1, 1983 1984-2 C. Vita tax locations 2012 B. Vita tax locations 2012 384 1984-2 C. Vita tax locations 2012 B. Vita tax locations 2012 412 Poland TIAS 8486 Jan. Vita tax locations 2012 1, 1974 1977-1 C. Vita tax locations 2012 B. Vita tax locations 2012 416 1977-1 C. Vita tax locations 2012 B. Vita tax locations 2012 427 Portugal TIAS Jan. Vita tax locations 2012 1, 1996     Romania TIAS 8228 Jan. Vita tax locations 2012 1, 1974 1976-2 C. Vita tax locations 2012 B. Vita tax locations 2012 492 1976-2 C. Vita tax locations 2012 B. Vita tax locations 2012 504 Russia TIAS Jan. Vita tax locations 2012 1, 1994     Slovak Republic TIAS Jan. Vita tax locations 2012 1, 1993     Slovenia TIAS Jan. Vita tax locations 2012 1, 2002     South Africa TIAS Jan. Vita tax locations 2012 1, 1998     Spain TIAS Jan. Vita tax locations 2012 1, 1991     Sri Lanka TIAS Jan. Vita tax locations 2012 1, 2004     Sweden TIAS Jan. Vita tax locations 2012 1, 1996     Protocol TIAS Jan. Vita tax locations 2012 1, 2007     Switzerland TIAS Jan. Vita tax locations 2012 1, 1998     Thailand TIAS Jan. Vita tax locations 2012 1, 1998     Trinidad and Tobago TIAS 7047 Jan. Vita tax locations 2012 1, 1970 1971-2 C. Vita tax locations 2012 B. Vita tax locations 2012 479   Tunisia TIAS Jan. Vita tax locations 2012 1, 1990     Turkey TIAS Jan. Vita tax locations 2012 1, 1998     Ukraine TIAS Jan. Vita tax locations 2012 1, 2001     United Kingdom TIAS Jan. Vita tax locations 2012 1, 2004     Venezuela TIAS Jan. Vita tax locations 2012 1, 2000     1(TIAS) Treaties and Other International Act Series 2Information on the treaty can be found in Publication 597, Information on the United States-Canada Income Tax Treaty. Vita tax locations 2012 3The U. Vita tax locations 2012 S. Vita tax locations 2012 -U. Vita tax locations 2012 S. Vita tax locations 2012 S. Vita tax locations 2012 R. Vita tax locations 2012 income tax treaty applies to the countries of Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Vita tax locations 2012 Prev  Up  Next   Home   More Online Publications
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The Vita Tax Locations 2012

Vita tax locations 2012 12. Vita tax locations 2012   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. Vita tax locations 2012 Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. Vita tax locations 2012  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. Vita tax locations 2012 5 cents per mile. Vita tax locations 2012 For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. Vita tax locations 2012 Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Vita tax locations 2012 To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. Vita tax locations 2012 What is the tax benefit of taking a business deduction for work-related education. Vita tax locations 2012   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Vita tax locations 2012 Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. Vita tax locations 2012 An itemized deduction reduces the amount of your income subject to tax. Vita tax locations 2012   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Vita tax locations 2012 This reduces the amount of your income subject to both income tax and self-employment tax. Vita tax locations 2012   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. Vita tax locations 2012 You may qualify for these other benefits even if you do not meet the requirements listed above. Vita tax locations 2012   Also, your work-related education expenses may qualify you to claim more than one tax benefit. Vita tax locations 2012 Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Vita tax locations 2012 Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Vita tax locations 2012 This is education that meets at least one of the following two tests. Vita tax locations 2012 The education is required by your employer or the law to keep your present salary, status, or job. Vita tax locations 2012 The required education must serve a bona fide business purpose of your employer. Vita tax locations 2012 The education maintains or improves skills needed in your present work. Vita tax locations 2012 However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. Vita tax locations 2012 You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Vita tax locations 2012 Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. Vita tax locations 2012 Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. Vita tax locations 2012 This additional education is qualifying work-related education if all three of the following requirements are met. Vita tax locations 2012 It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. Vita tax locations 2012 When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Vita tax locations 2012 See Education To Maintain or Improve Skills , later. Vita tax locations 2012 Example. Vita tax locations 2012 You are a teacher who has satisfied the minimum requirements for teaching. Vita tax locations 2012 Your employer requires you to take an additional college course each year to keep your teaching job. Vita tax locations 2012 If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. Vita tax locations 2012 This image is too large to be displayed in the current screen. Vita tax locations 2012 Please click the link to view the image. Vita tax locations 2012 Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. Vita tax locations 2012 This could include refresher courses, courses on current developments, and academic or vocational courses. Vita tax locations 2012 Example. Vita tax locations 2012 You repair televisions, radios, and stereo systems for XYZ Store. Vita tax locations 2012 To keep up with the latest changes, you take special courses in radio and stereo service. Vita tax locations 2012 These courses maintain and improve skills required in your work. Vita tax locations 2012 Maintaining skills vs. Vita tax locations 2012 qualifying for new job. Vita tax locations 2012   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. Vita tax locations 2012 Education during temporary absence. Vita tax locations 2012   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. Vita tax locations 2012 Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Vita tax locations 2012 Example. Vita tax locations 2012 You quit your biology research job to become a full-time biology graduate student for 1 year. Vita tax locations 2012 If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. Vita tax locations 2012 Education during indefinite absence. Vita tax locations 2012   If you stop work for more than a year, your absence from your job is considered indefinite. Vita tax locations 2012 Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. Vita tax locations 2012 Therefore, it is not qualifying work-related education. Vita tax locations 2012 Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Vita tax locations 2012 The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Vita tax locations 2012 Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. Vita tax locations 2012 This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. Vita tax locations 2012 You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Vita tax locations 2012 Example 1. Vita tax locations 2012 You are a full-time engineering student. Vita tax locations 2012 Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. Vita tax locations 2012 Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. Vita tax locations 2012 The education is not qualifying work-related education. Vita tax locations 2012 Example 2. Vita tax locations 2012 You are an accountant and you have met the minimum educational requirements of your employer. Vita tax locations 2012 Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Vita tax locations 2012 These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. Vita tax locations 2012 Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Vita tax locations 2012 The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Vita tax locations 2012 If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Vita tax locations 2012 The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. Vita tax locations 2012 You generally will be considered a faculty member when one or more of the following occurs. Vita tax locations 2012 You have tenure. Vita tax locations 2012 Your years of service count toward obtaining tenure. Vita tax locations 2012 You have a vote in faculty decisions. Vita tax locations 2012 Your school makes contributions for you to a retirement plan other than social security or a similar program. Vita tax locations 2012 Example 1. Vita tax locations 2012 The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Vita tax locations 2012 In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Vita tax locations 2012 If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. Vita tax locations 2012 However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Vita tax locations 2012 Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. Vita tax locations 2012 If you have all the required education except the fifth year, you have met the minimum educational requirements. Vita tax locations 2012 The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. Vita tax locations 2012 Example 2. Vita tax locations 2012 Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Vita tax locations 2012 The additional four education courses can be qualifying work-related education. Vita tax locations 2012 Although you do not have all the required courses, you have already met the minimum educational requirements. Vita tax locations 2012 Example 3. Vita tax locations 2012 Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Vita tax locations 2012 The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Vita tax locations 2012 They are needed to meet the minimum educational requirements for employment as a teacher. Vita tax locations 2012 Example 4. Vita tax locations 2012 You have a bachelor's degree and you work as a temporary instructor at a university. Vita tax locations 2012 At the same time, you take graduate courses toward an advanced degree. Vita tax locations 2012 The rules of the university state that you can become a faculty member only if you get a graduate degree. Vita tax locations 2012 Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Vita tax locations 2012 You have not met the minimum educational requirements to qualify you as a faculty member. Vita tax locations 2012 The graduate courses are not qualifying work-related education. Vita tax locations 2012 Certification in a new state. Vita tax locations 2012   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. Vita tax locations 2012 This is true even if you must get additional education to be certified in another state. Vita tax locations 2012 Any additional education you need is qualifying work-related education. Vita tax locations 2012 You have already met the minimum requirements for teaching. Vita tax locations 2012 Teaching in another state is not a new trade or business. Vita tax locations 2012 Example. Vita tax locations 2012 You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Vita tax locations 2012 You move to State B and are promptly hired as a teacher. Vita tax locations 2012 You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Vita tax locations 2012 These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. Vita tax locations 2012 Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. Vita tax locations 2012 This is true even if you do not plan to enter that trade or business. Vita tax locations 2012 If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Vita tax locations 2012 Example 1. Vita tax locations 2012 You are an accountant. Vita tax locations 2012 Your employer requires you to get a law degree at your own expense. Vita tax locations 2012 You register at a law school for the regular curriculum that leads to a law degree. Vita tax locations 2012 Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. Vita tax locations 2012 Example 2. Vita tax locations 2012 You are a general practitioner of medicine. Vita tax locations 2012 You take a 2-week course to review developments in several specialized fields of medicine. Vita tax locations 2012 The course does not qualify you for a new profession. Vita tax locations 2012 It is qualifying work- related education because it maintains or improves skills required in your present profession. Vita tax locations 2012 Example 3. Vita tax locations 2012 While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Vita tax locations 2012 The program will lead to qualifying you to practice psychoanalysis. Vita tax locations 2012 The psychoanalytic training does not qualify you for a new profession. Vita tax locations 2012 It is qualifying work-related education because it maintains or improves skills required in your present profession. Vita tax locations 2012 Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. Vita tax locations 2012 They are part of a program of study that can qualify you for a new profession. Vita tax locations 2012 Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Vita tax locations 2012 A change in duties in any of the following ways is not considered a change to a new business. Vita tax locations 2012 Elementary school teacher to secondary school teacher. Vita tax locations 2012 Teacher of one subject, such as biology, to teacher of another subject, such as art. Vita tax locations 2012 Classroom teacher to guidance counselor. Vita tax locations 2012 Classroom teacher to school administrator. Vita tax locations 2012 What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. Vita tax locations 2012 If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Vita tax locations 2012 You cannot deduct expenses related to tax-exempt and excluded income. Vita tax locations 2012 Deductible expenses. Vita tax locations 2012   The following education expenses can be deducted. Vita tax locations 2012 Tuition, books, supplies, lab fees, and similar items. Vita tax locations 2012 Certain transportation and travel costs. Vita tax locations 2012 Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Vita tax locations 2012 Nondeductible expenses. Vita tax locations 2012   You cannot deduct personal or capital expenses. Vita tax locations 2012 For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Vita tax locations 2012 This amount is a personal expense. Vita tax locations 2012 Unclaimed reimbursement. Vita tax locations 2012   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. Vita tax locations 2012 Example. Vita tax locations 2012 Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Vita tax locations 2012 You do not file a voucher and you do not get reimbursed. Vita tax locations 2012 Because you did not file a voucher, you cannot deduct the expenses on your tax return. Vita tax locations 2012 Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Vita tax locations 2012 If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. Vita tax locations 2012 Temporary basis. Vita tax locations 2012   You go to school on a temporary basis if either of the following situations applies to you. Vita tax locations 2012 Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Vita tax locations 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Vita tax locations 2012 Your attendance is temporary up to the date you determine it will last more than 1 year. Vita tax locations 2012 If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. Vita tax locations 2012 Attendance not on a temporary basis. Vita tax locations 2012   You do not go to school on a temporary basis if either of the following situations apply to you. Vita tax locations 2012 Your attendance at school is realistically expected to last more than 1 year. Vita tax locations 2012 It does not matter how long you actually attend. Vita tax locations 2012 Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. Vita tax locations 2012 Your attendance is not temporary after the date you determine it will last more than 1 year. Vita tax locations 2012 Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. Vita tax locations 2012 This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Vita tax locations 2012 Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Vita tax locations 2012 Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Vita tax locations 2012 Example 1. Vita tax locations 2012 You regularly work in a nearby town, and go directly from work to home. Vita tax locations 2012 You also attend school every work night for 3 months to take a course that improves your job skills. Vita tax locations 2012 Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Vita tax locations 2012 This is true regardless of the distance traveled. Vita tax locations 2012 Example 2. Vita tax locations 2012 Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Vita tax locations 2012 You can deduct your transportation expenses from your regular work site to school and then home. Vita tax locations 2012 Example 3. Vita tax locations 2012 Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Vita tax locations 2012 Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Vita tax locations 2012 Example 4. Vita tax locations 2012 Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Vita tax locations 2012 Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Vita tax locations 2012 If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Vita tax locations 2012 If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. Vita tax locations 2012 Using your car. Vita tax locations 2012    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. Vita tax locations 2012 The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. Vita tax locations 2012 5 cents per mile. Vita tax locations 2012 Whichever method you use, you can also deduct parking fees and tolls. Vita tax locations 2012 See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. Vita tax locations 2012 Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. Vita tax locations 2012 Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Vita tax locations 2012 For more information, see chapter 1 of Publication 463. Vita tax locations 2012 You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. Vita tax locations 2012 Mainly personal travel. Vita tax locations 2012   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Vita tax locations 2012 You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Vita tax locations 2012   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Vita tax locations 2012 An important factor is the comparison of time spent on personal activities with time spent on educational activities. Vita tax locations 2012 If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. Vita tax locations 2012 Example 1. Vita tax locations 2012 John works in Newark, New Jersey. Vita tax locations 2012 He traveled to Chicago to take a deductible 1-week course at the request of his employer. Vita tax locations 2012 His main reason for going to Chicago was to take the course. Vita tax locations 2012 While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Vita tax locations 2012 Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Vita tax locations 2012 He cannot deduct his transportation expenses of going to Pleasantville. Vita tax locations 2012 He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Vita tax locations 2012 Example 2. Vita tax locations 2012 Sue works in Boston. Vita tax locations 2012 She went to a university in Michigan to take a course for work. Vita tax locations 2012 The course is qualifying work-related education. Vita tax locations 2012 She took one course, which is one-fourth of a full course load of study. Vita tax locations 2012 She spent the rest of the time on personal activities. Vita tax locations 2012 Her reasons for taking the course in Michigan were all personal. Vita tax locations 2012 Sue's trip is mainly personal because three-fourths of her time is considered personal time. Vita tax locations 2012 She cannot deduct the cost of her round-trip train ticket to Michigan. Vita tax locations 2012 She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Vita tax locations 2012 Example 3. Vita tax locations 2012 Dave works in Nashville and recently traveled to California to take a 2-week seminar. Vita tax locations 2012 The seminar is qualifying work-related education. Vita tax locations 2012 While there, he spent an extra 8 weeks on personal activities. Vita tax locations 2012 The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Vita tax locations 2012 Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Vita tax locations 2012 He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Vita tax locations 2012 Cruises and conventions. Vita tax locations 2012   Certain cruises and conventions offer seminars or courses as part of their itinerary. Vita tax locations 2012 Even if the seminars or courses are work related, your deduction for travel may be limited. Vita tax locations 2012 This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Vita tax locations 2012   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. Vita tax locations 2012 50% limit on meals. Vita tax locations 2012   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Vita tax locations 2012 If you were reimbursed for the meals, see How To Treat Reimbursements , later. Vita tax locations 2012   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Vita tax locations 2012 Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. Vita tax locations 2012 Example. Vita tax locations 2012 You are a French language teacher. Vita tax locations 2012 While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Vita tax locations 2012 You chose your itinerary and most of your activities to improve your French language skills. Vita tax locations 2012 You cannot deduct your travel expenses as education expenses. Vita tax locations 2012 This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. Vita tax locations 2012 No Double Benefit Allowed You cannot do either of the following. Vita tax locations 2012 Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. Vita tax locations 2012 Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Vita tax locations 2012 See Adjustments to Qualifying Work-Related Education Expenses, next. Vita tax locations 2012 Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. Vita tax locations 2012 You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Vita tax locations 2012 Tax-free educational assistance. Vita tax locations 2012   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Vita tax locations 2012 Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Vita tax locations 2012 Amounts that do not reduce qualifying work-related education expenses. Vita tax locations 2012   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Vita tax locations 2012 Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. Vita tax locations 2012 How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Vita tax locations 2012 There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Vita tax locations 2012 You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Vita tax locations 2012 Note. Vita tax locations 2012 The following rules about reimbursement arrangements also apply to expense allowances received from your employer. Vita tax locations 2012 Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Vita tax locations 2012 Your expenses must have a business connection. Vita tax locations 2012 This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. Vita tax locations 2012 You must adequately account to your employer for your expenses within a reasonable period of time. Vita tax locations 2012 You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. Vita tax locations 2012 If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. Vita tax locations 2012 If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. Vita tax locations 2012 Accountable plan rules not met. Vita tax locations 2012   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. Vita tax locations 2012 Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). Vita tax locations 2012 Expenses equal reimbursement. Vita tax locations 2012   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. Vita tax locations 2012 Because your expenses and reimbursements are equal, you do not have a deduction. Vita tax locations 2012 Excess expenses. Vita tax locations 2012   If your expenses are more than your reimbursement, you can deduct your excess expenses. Vita tax locations 2012 This is discussed later, under Deducting Business Expenses . Vita tax locations 2012 Allocating your reimbursements for meals. Vita tax locations 2012   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. Vita tax locations 2012 If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. Vita tax locations 2012 Make the allocation as follows. Vita tax locations 2012 Divide your meal expenses by your total expenses. Vita tax locations 2012 Multiply your total reimbursement by the result from (1). Vita tax locations 2012 This is the allocated reimbursement for your meal expenses. Vita tax locations 2012 Subtract the amount figured in (2) from your total reimbursement. Vita tax locations 2012 The difference is the allocated reimbursement for your other expenses of qualifying work-related education. Vita tax locations 2012 Example. Vita tax locations 2012 Your employer paid you an expense allowance of $2,000 under an accountable plan. Vita tax locations 2012 The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. Vita tax locations 2012 There was no indication of how much of the reimbursement was for each type of expense. Vita tax locations 2012 Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). Vita tax locations 2012 Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. Vita tax locations 2012   1. Vita tax locations 2012 $425 meal expenses  $2,500 total expenses = . Vita tax locations 2012 17   2. Vita tax locations 2012 $2,000 (reimbursement)×. Vita tax locations 2012 17     =$340 (allocated reimbursement for meal expenses)   3. Vita tax locations 2012 $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). Vita tax locations 2012 After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). Vita tax locations 2012 Nonaccountable Plans Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay and report the total in box 1 of your Form W-2. Vita tax locations 2012 You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. Vita tax locations 2012 This is discussed later under Deducting Business Expenses . Vita tax locations 2012 An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. Vita tax locations 2012 Reimbursements for nondeductible expenses. Vita tax locations 2012   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. Vita tax locations 2012 You must include them in your income. Vita tax locations 2012 For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. Vita tax locations 2012   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. Vita tax locations 2012 Deducting Business Expenses Self-employed persons and employees report their business expenses differently. Vita tax locations 2012 The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Vita tax locations 2012 Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). Vita tax locations 2012 If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. Vita tax locations 2012 See the instructions for the form you file for information on how to complete it. Vita tax locations 2012 Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. Vita tax locations 2012 If either (1) or (2) applies, you can deduct the total qualifying cost. Vita tax locations 2012 If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Vita tax locations 2012 In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Vita tax locations 2012 (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Vita tax locations 2012 ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Vita tax locations 2012 Form 2106 or 2106-EZ. Vita tax locations 2012   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. Vita tax locations 2012 Form not required. Vita tax locations 2012   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. Vita tax locations 2012   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. Vita tax locations 2012 (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. Vita tax locations 2012 ) Using Form 2106-EZ. Vita tax locations 2012   This form is shorter and easier to use than Form 2106. Vita tax locations 2012 Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. Vita tax locations 2012   If you do not meet both of these requirements, use Form 2106. Vita tax locations 2012 Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. Vita tax locations 2012 Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. Vita tax locations 2012 You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Vita tax locations 2012 You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . Vita tax locations 2012 For more information on qualified performing artists, see chapter 6 of Publication 463. Vita tax locations 2012 Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. Vita tax locations 2012 They are not subject to the 2%-of-adjusted-gross-income limit. Vita tax locations 2012 To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Vita tax locations 2012 For more information on impairment-related work expenses, see chapter 6 of Publication 463. Vita tax locations 2012 Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Vita tax locations 2012 Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Vita tax locations 2012 If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. Vita tax locations 2012 However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. Vita tax locations 2012 Examples of records to keep. Vita tax locations 2012   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. Vita tax locations 2012 You should keep adequate records or have sufficient evidence that will support your expenses. Vita tax locations 2012 Estimates or approximations do not qualify as proof of an expense. Vita tax locations 2012 Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. Vita tax locations 2012 , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. Vita tax locations 2012 Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. Vita tax locations 2012 Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. Vita tax locations 2012 Complete information about any scholarship or fellowship grants, including amounts you received during the year. Vita tax locations 2012 Illustrated Example Victor Jones teaches math at a private high school in North Carolina. Vita tax locations 2012 He was selected to attend a 3-week math seminar at a university in California. Vita tax locations 2012 The seminar will improve his skills in his current job and is qualifying work-related education. Vita tax locations 2012 He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. Vita tax locations 2012 Victor will file Form 1040. Vita tax locations 2012 His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. Vita tax locations 2012 He shows his expenses for the seminar in Part I of the form. Vita tax locations 2012 He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. Vita tax locations 2012 He enters $400 on line 4 for his tuition and books. Vita tax locations 2012 On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. Vita tax locations 2012 He multiplies that amount by 50% and enters the result, $263, on line 5. Vita tax locations 2012 On line 6, Victor totals the amounts from lines 3 through 5. Vita tax locations 2012 He carries the total, $2,313, to Schedule A (Form 1040), line 21. Vita tax locations 2012 Since he does not claim any vehicle expenses, Victor leaves Part II blank. Vita tax locations 2012 His filled-in form is shown on the next page. Vita tax locations 2012 This image is too large to be displayed in the current screen. Vita tax locations 2012 Please click the link to view the image. Vita tax locations 2012 Form 2106-EZ for V. Vita tax locations 2012 Jones Prev  Up  Next   Home   More Online Publications