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1040ez Tax Form

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1040ez Tax Form

1040ez tax form 3. 1040ez tax form   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. 1040ez tax form Traditional IRA mistakenly moved to SIMPLE IRA. 1040ez tax form When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). 1040ez tax form It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. 1040ez tax form Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). 1040ez tax form This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. 1040ez tax form See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. 1040ez tax form If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. 1040ez tax form See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. 1040ez tax form What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. 1040ez tax form See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. 1040ez tax form A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. 1040ez tax form These contributions are called salary reduction contributions. 1040ez tax form All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. 1040ez tax form The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. 1040ez tax form Contributions are made on behalf of eligible employees. 1040ez tax form (See Eligible Employees below. 1040ez tax form ) Contributions are also subject to various limits. 1040ez tax form (See How Much Can Be Contributed on Your Behalf , later. 1040ez tax form ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. 1040ez tax form See How Are Contributions Made , later. 1040ez tax form You may be able to claim a credit for contributions to your SIMPLE plan. 1040ez tax form For more information, see chapter 4. 1040ez tax form Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. 1040ez tax form Self-employed individual. 1040ez tax form   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. 1040ez tax form Excludable employees. 1040ez tax form   Your employer can exclude the following employees from participating in the SIMPLE plan. 1040ez tax form Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). 1040ez tax form Employees who are nonresident aliens and received no earned income from sources within the United States. 1040ez tax form Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. 1040ez tax form Compensation. 1040ez tax form   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. 1040ez tax form Wages, tips, and other pay from your employer that is subject to income tax withholding. 1040ez tax form Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. 1040ez tax form Self-employed individual compensation. 1040ez tax form   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. 1040ez tax form   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. 1040ez tax form How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. 1040ez tax form They are made on your behalf by your employer. 1040ez tax form Your employer must also make either matching contributions or nonelective contributions. 1040ez tax form Salary reduction contributions. 1040ez tax form   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). 1040ez tax form You can choose to cancel the election at any time during the year. 1040ez tax form   Salary reduction contributions are also referred to as “elective deferrals. 1040ez tax form ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. 1040ez tax form Matching contributions. 1040ez tax form   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. 1040ez tax form See How Much Can Be Contributed on Your Behalf below. 1040ez tax form These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. 1040ez tax form These contributions are referred to as matching contributions. 1040ez tax form   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. 1040ez tax form Nonelective contributions. 1040ez tax form   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. 1040ez tax form These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. 1040ez tax form   One of the requirements your employer must satisfy is notifying the employees that the election was made. 1040ez tax form For other requirements that your employer must satisfy, see chapter 3 of Publication 560. 1040ez tax form How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. 1040ez tax form Salary reduction contributions limit. 1040ez tax form   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. 1040ez tax form The limitation remains at $12,000 for 2014. 1040ez tax form If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. 1040ez tax form You, not your employer, are responsible for monitoring compliance with these limits. 1040ez tax form Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. 1040ez tax form The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. 1040ez tax form $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. 1040ez tax form The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. 1040ez tax form The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. 1040ez tax form Matching employer contributions limit. 1040ez tax form   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. 1040ez tax form These matching contributions cannot be more than 3% of your compensation for the calendar year. 1040ez tax form See Matching contributions less than 3% below. 1040ez tax form Example 1. 1040ez tax form In 2013, Joshua was a participant in his employer's SIMPLE plan. 1040ez tax form His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). 1040ez tax form Instead of taking it all in cash, Joshua elected to have 12. 1040ez tax form 5% of his weekly pay ($100) contributed to his SIMPLE IRA. 1040ez tax form For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. 1040ez tax form Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. 1040ez tax form Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). 1040ez tax form Example 2. 1040ez tax form Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. 1040ez tax form 94% of his weekly pay contributed to his SIMPLE IRA. 1040ez tax form In this example, Joshua's salary reduction contributions for the year (2. 1040ez tax form 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). 1040ez tax form Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. 1040ez tax form In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. 1040ez tax form Matching contributions less than 3%. 1040ez tax form   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. 1040ez tax form   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. 1040ez tax form If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. 1040ez tax form Nonelective employer contributions limit. 1040ez tax form   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. 1040ez tax form For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. 1040ez tax form   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. 1040ez tax form Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. 1040ez tax form This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. 1040ez tax form Example 3. 1040ez tax form Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. 1040ez tax form Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. 1040ez tax form In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). 1040ez tax form Traditional IRA mistakenly moved to SIMPLE IRA. 1040ez tax form   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. 1040ez tax form For more information, see Recharacterizations in chapter 1. 1040ez tax form Recharacterizing employer contributions. 1040ez tax form   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. 1040ez tax form SEPs are discussed in chapter 2 of Publication 560. 1040ez tax form SIMPLE plans are discussed in this chapter. 1040ez tax form Converting from a SIMPLE IRA. 1040ez tax form   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . 1040ez tax form    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. 1040ez tax form When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. 1040ez tax form These rules are discussed in chapter 1. 1040ez tax form Your employer cannot restrict you from taking distributions from a SIMPLE IRA. 1040ez tax form Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. 1040ez tax form If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. 1040ez tax form See Additional Tax on Early Distributions, later. 1040ez tax form Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. 1040ez tax form Two-year rule. 1040ez tax form   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. 1040ez tax form The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. 1040ez tax form   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). 1040ez tax form Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. 1040ez tax form If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. 1040ez tax form If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. 1040ez tax form Prev  Up  Next   Home   More Online Publications
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The 1040ez Tax Form

1040ez tax form 5. 1040ez tax form   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. 1040ez tax form This chapter discusses the records you need to keep to prove these expenses. 1040ez tax form If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. 1040ez tax form You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. 1040ez tax form These plans are discussed in chapter 6 under Reimbursements . 1040ez tax form How To Prove Expenses Table 5-1 is a summary of records you need to prove each expense discussed in this publication. 1040ez tax form You must be able to prove the elements listed across the top portion of the chart. 1040ez tax form You prove them by having the information and receipts (where needed) for the expenses listed in the first column. 1040ez tax form You cannot deduct amounts that you approximate or estimate. 1040ez tax form You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. 1040ez tax form You must generally prepare a written record for it to be considered adequate. 1040ez tax form This is because written evidence is more reliable than oral evidence alone. 1040ez tax form However, if you prepare a record on a computer, it is considered an adequate record. 1040ez tax form 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. 1040ez tax form You should also keep documentary evidence that, together with your record, will support each element of an expense. 1040ez tax form Documentary evidence. 1040ez tax form   You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses. 1040ez tax form Exception. 1040ez tax form   Documentary evidence is not needed if any of the following conditions apply. 1040ez tax form 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. 1040ez tax form ( Accountable plans and per diem allowances are discussed in chapter 6. 1040ez tax form ) Your expense, other than lodging, is less than $75. 1040ez tax form You have a transportation expense for which a receipt is not readily available. 1040ez tax form Adequate evidence. 1040ez tax form   Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. 1040ez tax form   For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information. 1040ez tax form The name and location of the hotel. 1040ez tax form The dates you stayed there. 1040ez tax form Separate amounts for charges such as lodging, meals, and telephone calls. 1040ez tax form   A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information. 1040ez tax form The name and location of the restaurant. 1040ez tax form The number of people served. 1040ez tax form The date and amount of the expense. 1040ez tax form If a charge is made for items other than food and beverages, the receipt must show that this is the case. 1040ez tax form Canceled check. 1040ez tax form   A canceled check, together with a bill from the payee, ordinarily establishes the cost. 1040ez tax form However, a canceled check by itself does not prove a business expense without other evidence to show that it was for a business purpose. 1040ez tax form Duplicate information. 1040ez tax form   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. 1040ez tax form   You do not have to record amounts your employer pays directly for any ticket or other travel item. 1040ez tax form 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. 1040ez tax form Timely-kept records. 1040ez tax form   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. 1040ez tax form A timely-kept record has more value than a statement prepared later when generally there is a lack of accurate recall. 1040ez tax form   You do not need to write down the elements of every expense on the day of the expense. 1040ez tax form If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely-kept record. 1040ez tax form   If you give your employer, client, or customer an expense account statement, it can also be considered a timely-kept record. 1040ez tax form This is true if you copy it from your account book, diary, log, statement of expense, trip sheets, or similar record. 1040ez tax form Proving business purpose. 1040ez tax form   You must generally provide a written statement of the business purpose of an expense. 1040ez tax form However, the degree of proof varies according to the circumstances in each case. 1040ez tax form If the business purpose of an expense is clear from the surrounding circumstances, then you do not need to give a written explanation. 1040ez tax form Example. 1040ez tax form 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. 1040ez tax form 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. 1040ez tax form You could also establish the date of each trip with a receipt, record of delivery, or other documentary evidence. 1040ez tax form Confidential information. 1040ez tax form   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. 1040ez tax form 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. 1040ez tax form 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. 1040ez tax form 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. 1040ez tax form Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. 1040ez tax form Documentary evidence can be receipts, paid bills, or similar evidence. 1040ez tax form 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. 1040ez tax form For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. 1040ez tax form Invoices of deliveries establish when you used the car for business. 1040ez tax form Table 5-1. 1040ez tax form How To Prove Certain Business Expenses IF you have expenses for . 1040ez tax form . 1040ez tax form THEN you must keep records that show details of the following elements . 1040ez tax form . 1040ez tax form . 1040ez tax form   Amount Time Place or  Description Business Purpose Business Relationship Travel Cost of each separate expense for travel, lodging, and meals. 1040ez tax form Incidental expenses may be totaled in reasonable categories such as taxis, fees and tips, etc. 1040ez tax form Dates you left and returned for each trip and number of days spent on business. 1040ez tax form Destination or area of your travel (name of city, town, or other designation). 1040ez tax form Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. 1040ez tax form    Relationship: N/A Entertainment Cost of each separate expense. 1040ez tax form Incidental expenses such as taxis, telephones, etc. 1040ez tax form , may be totaled on a daily basis. 1040ez tax form Date of entertainment. 1040ez tax form (Also see Business Purpose. 1040ez tax form ) Name and address or location of place of entertainment. 1040ez tax form Type of entertainment if not otherwise apparent. 1040ez tax form (Also see Business Purpose. 1040ez tax form ) Purpose: Business purpose for the expense or the business benefit gained or expected to be gained. 1040ez tax form  For entertainment, the nature of the business discussion or activity. 1040ez tax form 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. 1040ez tax form    Relationship: Occupations or other information (such as names, titles, or other designations) about the recipients that shows their business relationship to you. 1040ez tax form  For entertainment, you must also prove that you or your employee was present if the entertainment was a business meal. 1040ez tax form Gifts Cost of the gift. 1040ez tax form Date of the gift. 1040ez tax form Description of the gift. 1040ez tax form   Transportation Cost of each separate expense. 1040ez tax form 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. 1040ez tax form Date of the expense. 1040ez tax form For car expenses, the date of the use of the car. 1040ez tax form Your business destination. 1040ez tax form Purpose: Business purpose for the expense. 1040ez tax form    Relationship: N/A Sampling. 1040ez tax form   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. 1040ez tax form 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. 1040ez tax form Example. 1040ez tax form You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. 1040ez tax form There is no other business use of the car, but you and your family use the car for personal purposes. 1040ez tax form You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. 1040ez tax form Invoices and bills show that your business use continues at the same rate during the later weeks of each month. 1040ez tax form 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. 1040ez tax form Exceptional circumstances. 1040ez tax form   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. 1040ez tax form This applies if all the following are true. 1040ez tax form 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 . 1040ez tax form You are unable to obtain evidence for an element that completely satisfies the two rules listed earlier under What If I Have Incomplete Records . 1040ez tax form You have presented other evidence for the element that is the best proof possible under the circumstances. 1040ez tax form Destroyed records. 1040ez tax form   If you cannot produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. 1040ez tax form Reasons beyond your control include fire, flood, and other casualties. 1040ez tax form    Table 5-2. 1040ez tax form 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. 1040ez tax form ) 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. 1040ez tax form Separating expenses. 1040ez tax form   Each separate payment is generally considered a separate expense. 1040ez tax form 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. 1040ez tax form You must record them separately in your records. 1040ez tax form Season or series tickets. 1040ez tax form   If you buy season or series tickets for business use, you must treat each ticket in the series as a separate item. 1040ez tax form 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. 1040ez tax form You must keep records to show whether you use each ticket as a gift or entertainment. 1040ez tax form 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. 1040ez tax form See Entertainment tickets in chapter 2. 1040ez tax form Combining items. 1040ez tax form   You can make one daily entry in your record for reasonable categories of expenses. 1040ez tax form Examples are taxi fares, telephone calls, or other incidental travel costs. 1040ez tax form Meals should be in a separate category. 1040ez tax form You can include tips for meal-related services with the costs of the meals. 1040ez tax form   Expenses of a similar nature occurring during the course of a single event are considered a single expense. 1040ez tax form 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. 1040ez tax form Car expenses. 1040ez tax form   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. 1040ez tax form Minimal personal use, such as a stop for lunch on the way between two business stops, is not an interruption of business use. 1040ez tax form Example. 1040ez tax form 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. 1040ez tax form You can account for these using a single record of miles driven. 1040ez tax form Gift expenses. 1040ez tax form   You do not always have to record the name of each recipient of a gift. 1040ez tax form 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. 1040ez tax form 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. 1040ez tax form Allocating total cost. 1040ez tax form   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. 1040ez tax form To do so, you must establish the number of persons who participated in the event. 1040ez tax form   An allocation would be needed, for example, if you did not have a business relationship with all of your guests. 1040ez tax form See Allocating between business and nonbusiness in chapter 2. 1040ez tax form If your return is examined. 1040ez tax form    If your return is examined, you may have to provide additional information to the IRS. 1040ez tax form 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. 1040ez tax form    THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Table 5-3. 1040ez tax form Weekly Traveling Expense and Entertainment Record From: To: Name: Expenses Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total 1. 1040ez tax form Travel Expenses: Airlines                                 Excess Baggage                                 Bus – Train                                 Cab and Limousine                                 Tips                                 Porter                                 2. 1040ez tax form Meals and Lodging:  Breakfast                                 Lunch                                 Dinner                                 Hotel and Motel  (Detail in Schedule B)                                 3. 1040ez tax form Entertainment  (Detail in Schedule C)                                 4. 1040ez tax form Other Expenses:  Postage                                 Telephone & Telegraph                                 Stationery & Printing                                 Stenographer                                 Sample Room                                 Advertising                                 Assistant(s)                                 Trade Shows                                 5. 1040ez tax form Car Expenses: (List all car expenses - the division between business and personal expenses may be made at the end of the year. 1040ez tax form ) (Detail mileage in Schedule A. 1040ez tax form ) Gas, oil, lube, wash                                 Repairs, parts                                 Tires, supplies                                 Parking fees, tolls                                 6. 1040ez tax form Other (Identify)                                 Total                                 Note: Attach receipted bills for (1) ALL lodging and (2) any other expenses of $75. 1040ez tax form 00 or more. 1040ez tax form 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. 1040ez tax form 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. 1040ez tax form A return filed early is considered filed on the due date. 1040ez tax form For a more complete explanation of how long to keep records, see Publication 583, Starting a Business and Keeping Records. 1040ez tax form You must keep records of the business use of your car for each year of the recovery period. 1040ez tax form See More-than-50%-use test in chapter 4 under Depreciation Deduction. 1040ez tax form Reimbursed for expenses. 1040ez tax form   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. 1040ez tax form However, you may have to prove your expenses if any of the following conditions apply. 1040ez tax form You claim deductions for expenses that are more than reimbursements. 1040ez tax form Your expenses are reimbursed under a nonaccountable plan. 1040ez tax form Your employer does not use adequate accounting procedures to verify expense accounts. 1040ez tax form You are related to your employer as defined under Per Diem and Car Allowances , in chapter 6. 1040ez tax form Reimbursements , adequate accounting , and nonaccountable plans are discussed in chapter 6. 1040ez tax form Examples of Records Table 5-2 and Table 5-3 are examples of worksheets which can be used for tracking business expenses. 1040ez tax form Prev  Up  Next   Home   More Online Publications