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Amended Tax Returns

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Amended Tax Returns

Amended tax returns Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Amended tax returns Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Amended tax returns The care must be for one or more qualifying persons who are identified on Form 2441. Amended tax returns (See Qualifying Person Test. Amended tax returns ) You (and your spouse if filing jointly) must have earned income during the year. Amended tax returns (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Amended tax returns ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Amended tax returns (See Work-Related Expense Test, later. Amended tax returns ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Amended tax returns If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Amended tax returns You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Amended tax returns See Payments to Relatives or Dependents under Work-Related Expense Test, later. Amended tax returns Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Amended tax returns If you are married, you must file a joint return, unless an exception applies to you. Amended tax returns See Joint Return Test, later. Amended tax returns You must identify the care provider on your tax return. Amended tax returns (See Provider Identification Test, later. Amended tax returns ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Amended tax returns (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Amended tax returns See Reduced Dollar Limit under How To Figure the Credit, later. Amended tax returns ) These tests are presented in Figure A and are also explained in detail in this publication. Amended tax returns Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Amended tax returns A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Amended tax returns Dependent defined. Amended tax returns   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Amended tax returns To be your dependent, a person must be your qualifying child (or your qualifying relative). Amended tax returns Qualifying child. Amended tax returns   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Amended tax returns More information. Amended tax returns   For more information about who is a dependent or a qualifying child, see Publication 501. Amended tax returns Physically or mentally not able to care for oneself. Amended tax returns   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Amended tax returns Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Amended tax returns Person qualifying for part of year. Amended tax returns   You determine a person's qualifying status each day. Amended tax returns For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Amended tax returns Also see Yearly limit under Dollar Limit, later. Amended tax returns Birth or death of otherwise qualifying person. Amended tax returns   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Amended tax returns Taxpayer identification number. Amended tax returns   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Amended tax returns If the correct information is not shown, the credit may be reduced or disallowed. Amended tax returns Individual taxpayer identification number (ITIN) for aliens. Amended tax returns   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Amended tax returns The ITIN is entered wherever an SSN is requested on a tax return. Amended tax returns If the alien does not have an ITIN, he or she must apply for one. Amended tax returns See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Amended tax returns   An ITIN is for tax use only. Amended tax returns It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Amended tax returns S. Amended tax returns law. Amended tax returns Adoption taxpayer identification number (ATIN). Amended tax returns   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Amended tax returns File Form W-7A, Application for Taxpayer Identification Number for Pending U. Amended tax returns S. Amended tax returns Adoptions. Amended tax returns Child of divorced or separated parents or parents living apart. Amended tax returns   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Amended tax returns   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Amended tax returns If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Amended tax returns For details and an exception for a parent who works at night, see Publication 501. Amended tax returns   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Amended tax returns Please click here for the text description of the image. Amended tax returns Figure a. Amended tax returns Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Amended tax returns Earned income. Amended tax returns   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Amended tax returns A net loss from self-employment reduces earned income. Amended tax returns Earned income also includes strike benefits and any disability pay you report as wages. Amended tax returns   Generally, only taxable compensation is included. Amended tax returns However, you can elect to include nontaxable combat pay in earned income. Amended tax returns If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Amended tax returns (In other words, if one of you makes the election, the other one can also make it but does not have to. Amended tax returns ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Amended tax returns You should figure your credit both ways and make the election if it gives you a greater tax benefit. Amended tax returns    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Amended tax returns Members of certain religious faiths opposed to social security. Amended tax returns   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Amended tax returns These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Amended tax returns   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Amended tax returns For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Amended tax returns Form 4361. Amended tax returns   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Amended tax returns This includes wages, salaries, tips, and other taxable employee compensation. Amended tax returns   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Amended tax returns Examples include fees for performing marriages and honoraria for delivering speeches. Amended tax returns   Any amount you received for work that is not related to your ministerial duties is earned income. Amended tax returns Form 4029. Amended tax returns   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Amended tax returns   However, amounts you received as a self-employed individual do not count as earned income. Amended tax returns What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Amended tax returns S. Amended tax returns trade or business, or Any amount received for work while an inmate in a penal institution. Amended tax returns Rule for student-spouse or spouse not able to care for self. Amended tax returns   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Amended tax returns (Your spouse also must live with you for more than half the year. Amended tax returns )   If you are filing a joint return, this rule also applies to you. Amended tax returns You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Amended tax returns   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Amended tax returns   This rule applies to only one spouse for any one month. Amended tax returns If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Amended tax returns Full-time student. Amended tax returns    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Amended tax returns You must have been a full-time student for some part of each of 5 calendar months during the year. Amended tax returns (The months need not be consecutive. Amended tax returns ) School. Amended tax returns   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Amended tax returns A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Amended tax returns Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Amended tax returns Expenses are considered work-related only if both of the following are true. Amended tax returns They allow you (and your spouse if filing jointly) to work or look for work. Amended tax returns They are for a qualifying person's care. Amended tax returns Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Amended tax returns If you are married, generally both you and your spouse must work or look for work. Amended tax returns One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Amended tax returns Your work can be for others or in your own business or partnership. Amended tax returns It can be either full time or part time. Amended tax returns Work also includes actively looking for work. Amended tax returns However, if you do not find a job and have no earned income for the year, you cannot take this credit. Amended tax returns See Earned Income Test, earlier. Amended tax returns An expense is not considered work-related merely because you had it while you were working. Amended tax returns The purpose of the expense must be to allow you to work. Amended tax returns Whether your expenses allow you to work or look for work depends on the facts. Amended tax returns Example 1. Amended tax returns The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Amended tax returns Example 2. Amended tax returns You work during the day. Amended tax returns Your spouse works at night and sleeps during the day. Amended tax returns You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Amended tax returns Your expenses are considered work-related. Amended tax returns Volunteer work. Amended tax returns   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Amended tax returns Work for part of year. Amended tax returns   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Amended tax returns For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Amended tax returns However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Amended tax returns Temporary absence from work. Amended tax returns   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Amended tax returns Instead, you can figure your credit including the expenses you paid for the period of absence. Amended tax returns   An absence of 2 weeks or less is a short, temporary absence. Amended tax returns An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Amended tax returns Example. Amended tax returns You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Amended tax returns You become ill and miss 4 months of work but receive sick pay. Amended tax returns You continue to pay the nanny to care for the children while you are ill. Amended tax returns Your absence is not a short, temporary absence, and your expenses are not considered work-related. Amended tax returns Part-time work. Amended tax returns   If you work part-time, you generally must figure your expenses for each day. Amended tax returns However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Amended tax returns Any day when you work at least 1 hour is a day of work. Amended tax returns Example 1. Amended tax returns You work 3 days a week. Amended tax returns While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Amended tax returns You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Amended tax returns Your child attends the center 5 days a week. Amended tax returns Your work-related expenses are limited to $150 a week. Amended tax returns Example 2. Amended tax returns The facts are the same as in Example 1 except the center does not offer a 3-day option. Amended tax returns The entire $250 weekly fee may be a work-related expense. Amended tax returns Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Amended tax returns You do not have to choose the least expensive way of providing the care. Amended tax returns The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Amended tax returns Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Amended tax returns Expenses for household services qualify if part of the services is for the care of qualifying persons. Amended tax returns See Household Services, later. Amended tax returns Expenses not for care. Amended tax returns   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Amended tax returns However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Amended tax returns Otherwise, see the discussion of Expenses partly work-related, later. Amended tax returns   Child support payments are not for care and do not qualify for the credit. Amended tax returns Education. Amended tax returns   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Amended tax returns   Expenses to attend kindergarten or a higher grade are not expenses for care. Amended tax returns Do not use these expenses to figure your credit. Amended tax returns   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Amended tax returns   Summer school and tutoring programs are not for care. Amended tax returns Example 1. Amended tax returns You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Amended tax returns The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Amended tax returns You can count the total cost when you figure the credit. Amended tax returns Example 2. Amended tax returns You place your 10-year-old child in a boarding school so you can work full time. Amended tax returns Only the part of the boarding school expense that is for the care of your child is a work-related expense. Amended tax returns You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Amended tax returns You cannot count any part of the amount you pay the school for your child's education. Amended tax returns Care outside your home. Amended tax returns   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Amended tax returns Dependent care center. Amended tax returns   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Amended tax returns   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Amended tax returns Camp. Amended tax returns   The cost of sending your child to an overnight camp is not considered a work-related expense. Amended tax returns    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Amended tax returns Transportation. Amended tax returns   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Amended tax returns This includes transportation by bus, subway, taxi, or private car. Amended tax returns However, transportation not provided by a care provider is not for the care of a qualifying person. Amended tax returns Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Amended tax returns Fees and deposits. Amended tax returns   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Amended tax returns However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Amended tax returns Example 1. Amended tax returns You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Amended tax returns The fee you paid is a work-related expense. Amended tax returns Example 2. Amended tax returns You placed a deposit with a preschool to reserve a place for your 3-year-old child. Amended tax returns You later sent your child to a different preschool and forfeited the deposit. Amended tax returns The forfeited deposit is not for care and so is not a work-related expense. Amended tax returns Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Amended tax returns Definition. Amended tax returns   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Amended tax returns They include the services of a housekeeper, maid, or cook. Amended tax returns However, they do not include the services of a chauffeur, bartender, or gardener. Amended tax returns Housekeeper. Amended tax returns   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Amended tax returns Expenses partly work-related. Amended tax returns   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Amended tax returns To figure your credit, count only the part that is work-related. Amended tax returns However, you do not have to divide the expense if only a small part is for other purposes. Amended tax returns Example. Amended tax returns You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Amended tax returns The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Amended tax returns You do not have to divide the expenses. Amended tax returns You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Amended tax returns Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Amended tax returns However, the dollar limit (discussed later) is based on one qualifying person, not two. Amended tax returns Meals and lodging provided for housekeeper. Amended tax returns   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Amended tax returns If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Amended tax returns Example. Amended tax returns To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Amended tax returns You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Amended tax returns However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Amended tax returns Taxes paid on wages. Amended tax returns   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Amended tax returns For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Amended tax returns Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Amended tax returns However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Amended tax returns Joint Return Test Generally, married couples must file a joint return to take the credit. Amended tax returns However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Amended tax returns Legally separated. Amended tax returns   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Amended tax returns You may be eligible to take the credit on your return using head of household filing status. Amended tax returns Married and living apart. Amended tax returns   You are not considered married and are eligible to take the credit if all the following apply. Amended tax returns You file a return apart from your spouse. Amended tax returns Your home is the home of a qualifying person for more than half the year. Amended tax returns You pay more than half the cost of keeping up your home for the year. Amended tax returns Your spouse does not live in your home for the last 6 months of the year. Amended tax returns Costs of keeping up a home. Amended tax returns   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Amended tax returns   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Amended tax returns   They also do not include the purchase, permanent improvement, or replacement of property. Amended tax returns For example, you cannot include the cost of replacing a water heater. Amended tax returns However, you can include the cost of repairing a water heater. Amended tax returns Death of spouse. Amended tax returns   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Amended tax returns If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Amended tax returns Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Amended tax returns Use Form 2441, Part I, to show the information. Amended tax returns If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Amended tax returns Information needed. Amended tax returns   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Amended tax returns    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Amended tax returns If the care provider is an organization, then it is the employer identification number (EIN). Amended tax returns   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Amended tax returns In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Amended tax returns   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Amended tax returns Getting the information. Amended tax returns    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Amended tax returns If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Amended tax returns    You should keep this information with your tax records. Amended tax returns Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Amended tax returns Due diligence. Amended tax returns   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Amended tax returns However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Amended tax returns   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Amended tax returns Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Amended tax returns Provider refusal. Amended tax returns    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Amended tax returns Enter “See Attached Statement” in the columns calling for the information you do not have. Amended tax returns Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Amended tax returns Be sure to write your name and social security number on this statement. Amended tax returns The statement will show that you used due diligence in trying to furnish the necessary information. Amended tax returns U. Amended tax returns S. Amended tax returns citizens and resident aliens living abroad. Amended tax returns   If you are living abroad, your care provider may not have, and may not be required to get, a U. Amended tax returns S. Amended tax returns taxpayer identification number (for example, an SSN or an EIN). Amended tax returns If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Amended tax returns How To Figure the Credit Your credit is a percentage of your work-related expenses. Amended tax returns Your expenses are subject to the earned income limit and the dollar limit. Amended tax returns The percentage is based on your adjusted gross income. Amended tax returns Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Amended tax returns Expenses prepaid in an earlier year. Amended tax returns   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Amended tax returns Claim the expenses for the later year as if they were actually paid in that later year. Amended tax returns Expenses not paid until the following year. Amended tax returns   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Amended tax returns You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Amended tax returns See Payments for prior year's expenses under Amount of Credit, later. Amended tax returns If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Amended tax returns You may be able to claim a credit for them on your 2014 return. Amended tax returns Expenses reimbursed. Amended tax returns   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Amended tax returns Example. Amended tax returns You paid work-related expenses of $3,000. Amended tax returns You are reimbursed $2,000 by a state social services agency. Amended tax returns You can use only $1,000 to figure your credit. Amended tax returns Medical expenses. Amended tax returns   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Amended tax returns You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Amended tax returns   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Amended tax returns However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Amended tax returns For information on medical expenses, see Publication 502, Medical and Dental Expenses. Amended tax returns    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Amended tax returns Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Amended tax returns See Reduced Dollar Limit, later. Amended tax returns But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Amended tax returns Dependent care benefits. Amended tax returns    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Amended tax returns Your salary may have been reduced to pay for these benefits. Amended tax returns If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Amended tax returns See Statement for employee, later. Amended tax returns Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Amended tax returns   Enter the amount of these benefits on Form 2441, Part III, line 12. Amended tax returns Exclusion or deduction. Amended tax returns   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Amended tax returns Your employer can tell you whether your benefit plan qualifies. Amended tax returns To claim the exclusion, you must complete Part III of Form 2441. Amended tax returns You cannot use Form 1040EZ. Amended tax returns   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Amended tax returns Therefore, you would not get an exclusion from wages. Amended tax returns Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Amended tax returns To claim the deduction, you must use Form 2441. Amended tax returns   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Amended tax returns   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Amended tax returns    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Amended tax returns Statement for employee. Amended tax returns   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Amended tax returns Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Amended tax returns Effect of exclusion on credit. Amended tax returns   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Amended tax returns Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Amended tax returns Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Amended tax returns For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Amended tax returns Example. Amended tax returns You remarried on December 3. Amended tax returns Your earned income for the year was $18,000. Amended tax returns Your new spouse's earned income for the year was $2,000. Amended tax returns You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Amended tax returns The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Amended tax returns Separated spouse. Amended tax returns   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Amended tax returns Use only your income in figuring the earned income limit. Amended tax returns Surviving spouse. Amended tax returns   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Amended tax returns Community property laws. Amended tax returns   Disregard community property laws when you figure earned income for this credit. Amended tax returns Self-employment earnings. Amended tax returns   If you are self-employed, include your net earnings in earned income. Amended tax returns For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Amended tax returns Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Amended tax returns Clergy or church employee. Amended tax returns   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Amended tax returns Statutory employee. Amended tax returns   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Amended tax returns Net loss. Amended tax returns   You must reduce your earned income by any net loss from self-employment. Amended tax returns Optional method if earnings are low or a net loss. Amended tax returns   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Amended tax returns Get Publication 334, Tax Guide for Small Business, for details. Amended tax returns If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Amended tax returns In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Amended tax returns You or your spouse is a student or not able to care for self. Amended tax returns   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Amended tax returns His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Amended tax returns Spouse works. Amended tax returns   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Amended tax returns Spouse qualifies for part of month. Amended tax returns   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Amended tax returns You are a student or not able to care for self. Amended tax returns   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Amended tax returns For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Amended tax returns If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Amended tax returns Both spouses qualify. Amended tax returns   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Amended tax returns Example. Amended tax returns Jim works and keeps up a home for himself and his wife Sharon. Amended tax returns Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Amended tax returns During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Amended tax returns These expenses also qualify as medical expenses. Amended tax returns Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Amended tax returns Jim and Sharon's earned income limit is the smallest of the following amounts. Amended tax returns   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Amended tax returns However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Amended tax returns Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Amended tax returns This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Amended tax returns If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Amended tax returns This limit does not need to be divided equally among them. Amended tax returns For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Amended tax returns Yearly limit. Amended tax returns   The dollar limit is a yearly limit. Amended tax returns The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Amended tax returns Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Amended tax returns Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Amended tax returns Example 1. Amended tax returns You pay $500 a month for after-school care for your son. Amended tax returns He turned 13 on May 1 and is no longer a qualifying person. Amended tax returns You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Amended tax returns Example 2. Amended tax returns In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Amended tax returns You paid $300 per month for the childcare. Amended tax returns You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Amended tax returns Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Amended tax returns Your reduced dollar limit is figured on Form 2441, Part III. Amended tax returns See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Amended tax returns Example 1. Amended tax returns George is a widower with one child and earns $24,000 a year. Amended tax returns He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Amended tax returns His employer pays an additional $1,000 under a qualified dependent care benefit plan. Amended tax returns This $1,000 is excluded from George's income. Amended tax returns Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Amended tax returns This is because his dollar limit is reduced as shown next. Amended tax returns   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Amended tax returns Randall is married and both he and his wife are employed. Amended tax returns Each has earned income in excess of $6,000. Amended tax returns They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Amended tax returns Randall's work-related expenses are $6,000 for the year. Amended tax returns Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Amended tax returns Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Amended tax returns Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Amended tax returns This is because his dollar limit is reduced as shown next. Amended tax returns   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Amended tax returns This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Amended tax returns The following table shows the percentage to use based on adjusted gross income. Amended tax returns   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Amended tax returns You should show the expenses for each person on Form 2441, line 2, column (c). Amended tax returns However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Amended tax returns You should list -0- for the one person and the actual amount for the second person. Amended tax returns The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Amended tax returns Example. Amended tax returns Roger and Megan Paris have two qualifying children. Amended tax returns They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Amended tax returns They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Amended tax returns Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Amended tax returns Line 30 tells them to complete line 2 without including any dependent care benefits. Amended tax returns They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Amended tax returns Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Amended tax returns 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Amended tax returns However, their son James has special needs and they paid $18,500 for his care. Amended tax returns Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Amended tax returns Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Amended tax returns Payments for prior year's expenses. Amended tax returns   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Amended tax returns Attach a statement to your form showing how you figured the additional amount from 2012. Amended tax returns Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Amended tax returns Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Amended tax returns Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Amended tax returns See Worksheet A. Amended tax returns Example. Amended tax returns In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Amended tax returns Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Amended tax returns Their adjusted gross income for 2012 was $30,000. Amended tax returns Sam's earned income of $14,000 was less than Kate's earned income. Amended tax returns A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Amended tax returns It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Amended tax returns The filled-in Worksheet A they used to figure this credit is shown later. Amended tax returns Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Amended tax returns They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Amended tax returns Worksheet A. Amended tax returns Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Amended tax returns 1. Amended tax returns   Enter your 2012 qualified expenses paid in 2012 1. Amended tax returns     2. Amended tax returns   Enter your 2012 qualified expenses paid in 2013 2. Amended tax returns     3. Amended tax returns   Add the amounts on lines 1 and 2 3. Amended tax returns     4. Amended tax returns   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Amended tax returns     5. Amended tax returns   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Amended tax returns     6. Amended tax returns   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Amended tax returns     7. Amended tax returns   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Amended tax returns     8. Amended tax returns   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Amended tax returns     9. Amended tax returns   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Amended tax returns     10. Amended tax returns   Subtract the amount on line 9 from the amount on line 8 and enter the result. Amended tax returns If zero or less, stop here. Amended tax returns You cannot increase your 2013 credit by any previous year's expenses 10. Amended tax returns     11. Amended tax returns   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Amended tax returns     12. Amended tax returns   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Amended tax returns             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Amended tax returns 35                 15,000 — 17,000     . Amended tax returns 34                 17,000 — 19,000     . Amended tax returns 33                 19,000 — 21,000     . Amended tax returns 32                 21,000 — 23,000     . Amended tax returns 31                 23,000 — 25,000     . Amended tax returns 30                 25,000 — 27,000     . Amended tax returns 29                 27,000 — 29,000     . Amended tax returns 28                 29,000 — 31,000     . Amended tax returns 27                 31,000 — 33,000     . Amended tax returns 26                 33,000 — 35,000     . Amended tax returns 25                 35,000 — 37,000     . Amended tax returns 24                 37,000 — 39,000     . Amended tax returns 23                 39,000 — 41,000     . Amended tax returns 22                 41,000 — 43,000     . Amended tax returns 21                 43,000 — No limit     . Amended tax returns 20           13. Amended tax returns   Multiply line 10 by line 12. Amended tax returns Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Amended tax returns Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Amended tax returns       Worksheet A. Amended tax returns Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Amended tax returns 1. Amended tax returns   Enter your 2012 qualified expenses paid in 2012 1. Amended tax returns   $2,000 2. Amended tax returns   Enter your 2012 qualified expenses paid in 2013 2. Amended tax returns   600 3. Amended tax returns   Add the amounts on lines 1 and 2 3. Amended tax returns   2,600 4. Amended tax returns   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Amended tax returns   3,000 5. Amended tax returns   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Amended tax returns   0 6. Amended tax returns   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Amended tax returns   3,000 7. Amended tax returns   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Amended tax returns   14,000 8. Amended tax returns   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Amended tax returns   2,600 9. Amended tax returns   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Amended tax returns   2,000 10. Amended tax returns   Subtract the amount on line 9 from the amount on line 8 and enter the result. Amended tax returns If zero or less, stop here. Amended tax returns You cannot increase your 2013 credit by any previous year's expenses 10. Amended tax returns   600 11. Amended tax returns   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Amended tax returns   30,000 12. Amended tax returns   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Amended tax returns   . Amended tax returns 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Amended tax returns 35                 15,000 — 17,000     . Amended tax returns 34                 17,000 — 19,000     . Amended tax returns 33                 19,000 — 21,000     . Amended tax returns 32                 21,000 — 23,000     . Amended tax returns 31                 23,000 — 25,000     . Amended tax returns 30                 25,000 — 27,000     . Amended tax returns 29                 27,000 — 29,000     . Amended tax returns 28                 29,000 — 31,000     . Amended tax returns 27                 31,000 — 33,000     . Amended tax returns 26                 33,000 — 35,000     . Amended tax returns 25                 35,000 — 37,000     . Amended tax returns 24                 37,000 — 39,000     . Amended tax returns 23                 39,000 — 41,000     . Amended tax returns 22                 41,000 — 43,000     . Amended tax returns 21                 43,000 — No limit     . Amended tax returns 20           13. Amended tax returns   Multiply line 10 by line 12. Amended tax returns Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Amended tax returns Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Amended tax returns   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Amended tax returns You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Amended tax returns Form 1040, Form 1040A, or Form 1040NR. Amended tax returns    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Amended tax returns Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Amended tax returns Limit on credit. Amended tax returns    The amount of credit you can claim is limited to your tax. Amended tax returns For more information, see the Instructions for Form 2441. Amended tax returns Tax credit not refundable. Amended tax returns   You cannot get a refund for any part of the credit that is more than this limit. Amended tax returns Recordkeeping. Amended tax returns You should keep records of your work-related expenses. Amended tax returns Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Amended tax returns Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Amended tax returns Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Amended tax returns If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Amended tax returns If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Amended tax returns Self-employed persons who are in business for themselves are not household employees. Amended tax returns Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Amended tax returns If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Amended tax returns This control could include providing rules of conduct and appearance and requiring regular reports. Amended tax returns In this case, you do not have to pay employment taxes. Amended tax returns But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Amended tax returns If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Amended tax returns Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Amended tax returns Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Amended tax returns Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Amended tax returns For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Amended tax returns State employment tax. Amended tax returns   You may also have to pay state unemployment tax. Amended tax returns Contact your state unemployment tax office for information. Amended tax returns You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Amended tax returns For a list of state unemployment tax agencies, visit the U. Amended tax returns S. Amended tax returns Department of Labor's website. Amended tax returns To find that website, use the link in Publication 926 or search online. Amended tax returns How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Amended tax returns Free help with your tax return. Amended tax returns   You can get free help preparing your return nationwide from IRS-certified volunteers. Amended tax returns The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Amended tax returns The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Amended tax returns Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Amended tax returns In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Amended tax returns To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Amended tax returns gov, download the IRS2Go app, or call 1-800-906-9887. Amended tax returns   As part of the TCE program, AARP offers the Tax-Aide counseling program. Amended tax returns To find the nearest AARP Tax-Aide site, visit AARP's website at www. Amended tax returns aarp. Amended tax returns org/money/taxaide or call 1-888-227-7669. Amended tax returns For more information on these programs, go to IRS. Amended tax returns gov and enter “VITA” in the search box. Amended tax returns Internet. Amended tax returns    IRS. Amended tax returns gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Amended tax returns Download the free IRS2Go app from the iTunes app store or from Google Play. Amended tax returns Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Amended tax returns Check the status of your 2013 refund with the Where's My Refund? application on IRS. Amended tax returns gov or download the IRS2Go app and select the Refund Status option. Amended tax returns The IRS issues more than 9 out of 10 refunds in less than 21 days. Amended tax returns Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Amended tax returns You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Amended tax returns The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Amended tax returns Use the Interactive Tax Assistant (ITA) to research your tax questions. Amended tax returns No need to wait on the phone or stand in line. Amended tax returns The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Amended tax returns When you reach the response screen, you can print the entire interview and the final response for your records. Amended tax returns New subject areas are added on a regular basis. Amended tax returns  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Amended tax returns gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Amended tax returns You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Amended tax returns The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Amended tax returns When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Amended tax returns Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Amended tax returns You can also ask the IRS to mail a return or an account transcript to you. Amended tax returns Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Amended tax returns gov or by calling 1-800-908-9946. Amended tax returns Tax return and tax account transcripts are generally available for the current year and the past three years. Amended tax returns Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Amended tax returns Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Amended tax returns If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Amended tax returns Check the status of your amended return using Where's My Amended Return? Go to IRS. Amended tax returns gov and enter Where's My Amended Return? in the search box. Amended tax returns You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Amended tax returns It can take up to 3 weeks from the date you mailed it to show up in our system. Amended tax returns Make a payment using one of several safe and convenient electronic payment options available on IRS. Amended tax returns gov. Amended tax returns Select the Payment tab on the front page of IRS. Amended tax returns gov for more information. Amended tax returns Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Amended tax returns Figure your income tax withholding with the IRS Withholding Calculator on IRS. Amended tax returns gov. Amended tax returns Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Amended tax returns Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Amended tax returns gov. Amended tax returns Request an Electronic Filing PIN by going to IRS. Amended tax returns gov and entering Electronic Filing PIN in the search box. Amended tax returns Download forms, instructions and publications, including accessible versions for people with disabilities. Amended tax returns Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Amended tax returns gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Amended tax returns An employee can answer questions about your tax account or help you set up a payment plan. Amended tax returns Before you visit, check the Office Locator on IRS. Amended tax returns gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Amended tax returns If you have a special need, such as a disability, you can request an appointment. Amended tax returns Call the local number listed in the Office Locator, or look in the phone book under Unit
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Tax Relief for Victims of Flooding in Alaska

AK-2013-10, June 28, 2013

ANCHORAGE — Victims of flooding that began on May 17, 2013 in parts of Alaska may qualify for tax relief from the Internal Revenue Service.

The President has declared the Alaskan Gateway Regional Education Attendance Area (REAA), Lower Yukon REAA, Yukon Flats REAA and Yukon Koyukuk REAA a federal disaster area. Individuals who reside or have a business in these areas may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after May 17, and on or before July 16, have been postponed to July 16, 2013. This includes the June 17 deadline for second quarter estimated tax payments.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 17, and on or before June 3, as long as the deposits are made by June 3, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The areas listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until July 16 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 17 and on or before July 16.

The IRS also gives affected taxpayers until July 16 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 17 and on or before July 16.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 17 and on or before June 3 provided the taxpayer makes these deposits by June 3.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Alaska/Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Disaster Assistance and Emergency Relief for Individuals and Businesses

Recent IRS Disaster Relief Announcements

Page Last Reviewed or Updated: 28-Jun-2013

The Amended Tax Returns

Amended tax returns 6. Amended tax returns   How To Report Table of Contents Where To ReportGifts. Amended tax returns Statutory employees. Amended tax returns Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. Amended tax returns Standard mileage rate. Amended tax returns Actual expenses. Amended tax returns Car rentals. Amended tax returns Hours of service limits. Amended tax returns Allocating your reimbursement. Amended tax returns 1. Amended tax returns Limit on meals and entertainment. Amended tax returns 2. Amended tax returns Limit on miscellaneous itemized deductions. Amended tax returns 3. Amended tax returns Limit on total itemized deductions. Amended tax returns Special Rules This chapter explains where and how to report the expenses discussed in this publication. Amended tax returns It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Amended tax returns It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Amended tax returns The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Amended tax returns Where To Report This section provides general information on where to report the expenses discussed in this publication. Amended tax returns Self-employed. Amended tax returns   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. Amended tax returns You do not use Form 2106 or 2106-EZ. Amended tax returns    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Amended tax returns You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Amended tax returns   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. Amended tax returns Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Amended tax returns   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Amended tax returns You can only include 50% of your meals and entertainment in that total. Amended tax returns If you include car expenses, you must also complete Part III of the form. Amended tax returns    If you file Schedule F (Form 1040): Report your car expenses on line 10. Amended tax returns Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Amended tax returns Report all other business expenses discussed in this publication on line 32. Amended tax returns You can only include 50% of your meals and entertainment on that line. Amended tax returns See your form instructions for more information on how to complete your tax return. Amended tax returns Both self-employed and an employee. Amended tax returns   If you are both self-employed and an employee, you must keep separate records for each business activity. Amended tax returns Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. Amended tax returns Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Amended tax returns Employees. Amended tax returns    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Amended tax returns However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Amended tax returns You are an employee deducting expenses attributable to your job. Amended tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Amended tax returns If you claim car expenses, you use the standard mileage rate. Amended tax returns   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Amended tax returns Gifts. Amended tax returns   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Amended tax returns Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Amended tax returns Statutory employees. Amended tax returns    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). Amended tax returns Do not complete Form 2106 or 2106-EZ. Amended tax returns   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Amended tax returns If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. Amended tax returns Reimbursement for personal expenses. Amended tax returns    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. Amended tax returns You cannot deduct personal expenses. Amended tax returns Income-producing property. Amended tax returns   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Amended tax returns   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Amended tax returns See Publication 527, Residential Rental Property, for more information on the rental of real estate. Amended tax returns If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Amended tax returns Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. Amended tax returns The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. Amended tax returns You cannot use the standard mileage rate. Amended tax returns Value reported on Form W-2. Amended tax returns   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Amended tax returns Your employer must separately state the amount if 100% of the annual lease value was included in your income. Amended tax returns If you are unsure of the amount included on your Form W-2, ask your employer. Amended tax returns Full value included in your income. Amended tax returns   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. Amended tax returns On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Amended tax returns    To claim your expenses, complete Form 2106, Part II, Sections A and C. Amended tax returns Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Amended tax returns Complete the rest of the form. Amended tax returns Less than full value included in your income. Amended tax returns   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Amended tax returns Do not enter this value on your Form 2106 because it is not deductible. Amended tax returns   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Amended tax returns Examples of costs that you may have are gas, oil, and repairs. Amended tax returns Complete Form 2106, Part II, Sections A and C. Amended tax returns Enter your actual costs on line 23 of Section C and leave line 25 blank. Amended tax returns Complete the rest of the form. Amended tax returns Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. Amended tax returns If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Amended tax returns This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. Amended tax returns It also covers rules for independent contractors. Amended tax returns No reimbursement. Amended tax returns   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. Amended tax returns In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Amended tax returns Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Amended tax returns Reimbursement, allowance, or advance. Amended tax returns   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Amended tax returns Arrangements include per diem and car allowances. Amended tax returns    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. Amended tax returns (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Amended tax returns ) A car allowance is an amount your employer gives you for the business use of your car. Amended tax returns   Your employer should tell you what method of reimbursement is used and what records you must provide. Amended tax returns Employers. Amended tax returns   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Amended tax returns Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Amended tax returns Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Amended tax returns See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Amended tax returns Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Amended tax returns You must adequately account to your employer for these expenses within a reasonable period of time. Amended tax returns You must return any excess reimbursement or allowance within a reasonable period of time. Amended tax returns “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Amended tax returns An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. Amended tax returns Reasonable period of time. Amended tax returns   The definition of reasonable period of time depends on the facts and circumstances of your situation. Amended tax returns However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Amended tax returns You receive an advance within 30 days of the time you have an expense. Amended tax returns You adequately account for your expenses within 60 days after they were paid or incurred. Amended tax returns You return any excess reimbursement within 120 days after the expense was paid or incurred. Amended tax returns You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Amended tax returns Employee meets accountable plan rules. Amended tax returns   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. Amended tax returns If your expenses equal your reimbursements, you do not complete Form 2106. Amended tax returns You have no deduction since your expenses and reimbursement are equal. Amended tax returns    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. Amended tax returns Accountable plan rules not met. Amended tax returns   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Amended tax returns All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). Amended tax returns Failure to return excess reimbursements. Amended tax returns   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. Amended tax returns See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Amended tax returns Reimbursement of nondeductible expenses. Amended tax returns   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. Amended tax returns The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. Amended tax returns Example. Amended tax returns Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. Amended tax returns The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. Amended tax returns The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Amended tax returns If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. Amended tax returns Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Amended tax returns You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. Amended tax returns (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Amended tax returns ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Amended tax returns See Per Diem and Car Allowances , later. Amended tax returns You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Amended tax returns This includes amounts you charged to your employer by credit card or other method. Amended tax returns You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. Amended tax returns You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. Amended tax returns Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. Amended tax returns A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Amended tax returns Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Amended tax returns The allowance is similar in form to and not more than the federal rate (defined later). Amended tax returns You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. Amended tax returns You are not related to your employer (as defined next). Amended tax returns If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. Amended tax returns If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. Amended tax returns In this case, you must be able to prove your expenses to the IRS. Amended tax returns Related to employer. Amended tax returns   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. Amended tax returns You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. Amended tax returns The federal rate. Amended tax returns   The federal rate can be figured using any one of the following methods. Amended tax returns For per diem amounts: The regular federal per diem rate. Amended tax returns The standard meal allowance. Amended tax returns The high-low rate. Amended tax returns For car expenses: The standard mileage rate. Amended tax returns A fixed and variable rate (FAVR). Amended tax returns    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Amended tax returns Regular federal per diem rate. Amended tax returns   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. Amended tax returns The rates are different for different locations. Amended tax returns Your employer should have these rates available. Amended tax returns You can also find federal per diem rates at www. Amended tax returns gsa. Amended tax returns gov/perdiem. Amended tax returns The standard meal allowance. Amended tax returns   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Amended tax returns The rate for most small localities in the United States is $46 a day. Amended tax returns Most major cities and many other localities qualify for higher rates. Amended tax returns You can find this information on the Internet at www. Amended tax returns gsa. Amended tax returns gov/perdiem. Amended tax returns   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Amended tax returns Provides you with lodging (furnishes it in kind). Amended tax returns Reimburses you, based on your receipts, for the actual cost of your lodging. Amended tax returns Pays the hotel, motel, etc. Amended tax returns , directly for your lodging. Amended tax returns Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. Amended tax returns Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Amended tax returns High-low rate. Amended tax returns   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Amended tax returns It eliminates the need to keep a current list of the per diem rates for each city. Amended tax returns   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. Amended tax returns All other areas have a per diem amount of $163 (including $52 for M&IE). Amended tax returns For more information, see Notice 2012-63, which can be found on the Internet at www. Amended tax returns irs. Amended tax returns gov/irb/2012-42_IRB/ar12. Amended tax returns html. Amended tax returns    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Amended tax returns The rate for all other locations increased to $170 (including $52 for M&IE). Amended tax returns Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Amended tax returns For more information, see Notice 2013-65, which can be found on the Internet at www. Amended tax returns irs. Amended tax returns gov/pub/irs-drop/n-13–65. Amended tax returns pdf and Revenue Procedure 2011-47 at www. Amended tax returns irs. Amended tax returns gov/irb/2011-42_IRB/ar12. Amended tax returns html. Amended tax returns Prorating the standard meal allowance on partial days of travel. Amended tax returns   The standard meal allowance is for a full 24-hour day of travel. Amended tax returns If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. Amended tax returns This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Amended tax returns   You can use either of the following methods to figure the federal M&IE for that day. Amended tax returns Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Amended tax returns For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Amended tax returns Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Amended tax returns For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. Amended tax returns m. Amended tax returns of one day to 5 p. Amended tax returns m. Amended tax returns of the next day as being no more than the federal rate. Amended tax returns This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. Amended tax returns The standard mileage rate. Amended tax returns   This is a set rate per mile that you can use to compute your deductible car expenses. Amended tax returns For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Amended tax returns Fixed and variable rate (FAVR). Amended tax returns   This is an allowance your employer may use to reimburse your car expenses. Amended tax returns Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. Amended tax returns ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Amended tax returns ). Amended tax returns If your employer chooses to use this method, your employer will request the necessary records from you. Amended tax returns Reporting your expenses with a per diem or car allowance. Amended tax returns   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Amended tax returns The federal rate. Amended tax returns Whether the allowance or your actual expenses were more than the federal rate. Amended tax returns The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Amended tax returns Allowance less than or equal to the federal rate. Amended tax returns   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. Amended tax returns You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. Amended tax returns   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). Amended tax returns If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. Amended tax returns If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Amended tax returns Example 1. Amended tax returns In April, Jeremy takes a 2-day business trip to Denver. Amended tax returns The federal rate for Denver is $215 per day. Amended tax returns As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Amended tax returns His employer reimburses him $215 a day ($430 total) for living expenses. Amended tax returns Jeremy's living expenses in Denver are not more than $215 a day. Amended tax returns Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. Amended tax returns Example 2. Amended tax returns In June, Matt takes a 2-day business trip to Boston. Amended tax returns Matt's employer uses the high-low method to reimburse employees. Amended tax returns Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. Amended tax returns Matt's actual expenses totaled $700. Amended tax returns Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Amended tax returns Matt completes Form 2106 (showing all of his expenses and reimbursements). Amended tax returns He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Amended tax returns Example 3. Amended tax returns Nicole drives 10,000 miles in 2013 for business. Amended tax returns Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Amended tax returns Her employer pays her a mileage allowance of 40 cents a mile. Amended tax returns Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. Amended tax returns Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Amended tax returns Allowance more than the federal rate. Amended tax returns   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. Amended tax returns This amount is not taxable. Amended tax returns However, the excess allowance will be included in box 1 of your Form W-2. Amended tax returns You must report this part of your allowance as if it were wage income. Amended tax returns   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. Amended tax returns   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Amended tax returns You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. Amended tax returns You should be able to prove these amounts to the IRS. Amended tax returns Example 1. Amended tax returns Laura lives and works in Austin. Amended tax returns In July her employer sent her to Albuquerque for 4 days on business. Amended tax returns Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Amended tax returns Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Amended tax returns Table 6-1. Amended tax returns Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. Amended tax returns No amount. Amended tax returns No amount. Amended tax returns Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Amended tax returns The excess amount as wages in box 1. Amended tax returns No amount. Amended tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Amended tax returns No amount. Amended tax returns All expenses and reimbursements only if excess expenses are claimed. Amended tax returns Otherwise, form is not filed. Amended tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Amended tax returns The excess amount as wages in box 1. Amended tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Amended tax returns No amount. Amended tax returns Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Amended tax returns The excess amount as wages in box 1. Amended tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Amended tax returns All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Amended tax returns Otherwise, form is not filed. Amended tax returns A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Amended tax returns The entire amount as wages in box 1. Amended tax returns All expenses. Amended tax returns No reimbursement plan: The entire amount as wages in box 1. Amended tax returns All expenses. Amended tax returns * You may be able to use Form 2106-EZ. Amended tax returns See Completing Forms 2106 and 2106-EZ . Amended tax returns Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Amended tax returns Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Amended tax returns This amount is not included in Laura's income. Amended tax returns Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). Amended tax returns Example 2. Amended tax returns Joe also lives in Austin and works for the same employer as Laura. Amended tax returns In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Amended tax returns The employer reimbursed Joe $75 a day for his meals and incidental expenses. Amended tax returns The federal rate for San Diego is $71 a day. Amended tax returns Joe can prove that his actual meal expenses totaled $380. Amended tax returns His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. Amended tax returns However, he does account for the time, place, and business purpose of the trip. Amended tax returns This is Joe's only business trip this year. Amended tax returns Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Amended tax returns The employer includes the $16 as income on Joe's Form W-2 in box 1. Amended tax returns The employer also enters $284 in box 12 of Joe's Form W-2. Amended tax returns Joe completes Form 2106 to figure his deductible expenses. Amended tax returns He enters the total of his actual expenses for the year ($380) on Form 2106. Amended tax returns He also enters the reimbursements that were not included in his income ($284). Amended tax returns His total deductible expense, before the 50% limit, is $96. Amended tax returns After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Amended tax returns Example 3. Amended tax returns Debbie drives 10,000 miles in 2013 for business. Amended tax returns Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Amended tax returns Her total reimbursement is $6,000. Amended tax returns Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. Amended tax returns That amount is not taxable. Amended tax returns Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Amended tax returns This is the reimbursement that is more than the standard mileage rate. Amended tax returns If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Amended tax returns If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). Amended tax returns She would then claim the excess expenses as an itemized deduction. Amended tax returns Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Amended tax returns Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Amended tax returns For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. Amended tax returns “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Amended tax returns Travel advance. Amended tax returns   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Amended tax returns Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. Amended tax returns   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). Amended tax returns Unproved amounts. Amended tax returns   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. Amended tax returns If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Amended tax returns Per diem allowance more than federal rate. Amended tax returns   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. Amended tax returns However, the difference will be reported as wages on your Form W-2. Amended tax returns This excess amount is considered paid under a nonaccountable plan (discussed later). Amended tax returns Example. Amended tax returns Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. Amended tax returns The federal per diem for meals and incidental expenses for Phoenix is $71. Amended tax returns Your trip lasts only 3 days. Amended tax returns Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Amended tax returns For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). Amended tax returns However, the $27 will be reported on your Form W-2 as wages. Amended tax returns Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. Amended tax returns In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. Amended tax returns See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Amended tax returns An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Amended tax returns This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Amended tax returns If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Amended tax returns Reporting your expenses under a nonaccountable plan. Amended tax returns   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. Amended tax returns Your employer will report the total in box 1 of your Form W-2. Amended tax returns    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Amended tax returns Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Amended tax returns Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Amended tax returns Example 1. Amended tax returns Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Amended tax returns Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. Amended tax returns Kim is being reimbursed under a nonaccountable plan. Amended tax returns Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Amended tax returns If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Amended tax returns Example 2. Amended tax returns Kevin is paid $2,000 a month by his employer. Amended tax returns On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. Amended tax returns Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Amended tax returns No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Amended tax returns Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Amended tax returns The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. Amended tax returns You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Amended tax returns Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. Amended tax returns If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Amended tax returns You must keep adequate records of these expenses whether or not you account to your client for these expenses. Amended tax returns If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. Amended tax returns See 50% Limit in chapter 2. Amended tax returns Adequate accounting. Amended tax returns   As a self-employed person, you adequately account by reporting your actual expenses. Amended tax returns You should follow the recordkeeping rules in chapter 5 . Amended tax returns How to report. Amended tax returns   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Amended tax returns Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. Amended tax returns However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. Amended tax returns Contractor adequately accounts. Amended tax returns   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Amended tax returns Use your records as proof for a deduction on your tax return. Amended tax returns If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Amended tax returns If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Amended tax returns Contractor does not adequately account. Amended tax returns    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. Amended tax returns You are not subject to the 50% limit on entertainment in this case. Amended tax returns You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Amended tax returns However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. Amended tax returns How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. Amended tax returns The Two Substantiation Methods High-low method. Amended tax returns   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Amended tax returns Notice 2012–63, available at www. Amended tax returns irs. Amended tax returns gov/irb/2012–42_IRB/ar12. Amended tax returns html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Amended tax returns For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. Amended tax returns   Notice 2013–65, available at www. Amended tax returns irs. Amended tax returns gov/pub/irs-drop/n-13–65. Amended tax returns pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Amended tax returns For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Amended tax returns Regular federal per diem rate method. Amended tax returns   Regular federal per diem rates are published by the General Services Administration (GSA). Amended tax returns Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Amended tax returns The rates listed for FY2013 at www. Amended tax returns gsa. Amended tax returns gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Amended tax returns The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Amended tax returns For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Amended tax returns Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. Amended tax returns During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Amended tax returns High-low method. Amended tax returns   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. Amended tax returns However, you must continue using the high-low method for the rest of the calendar year (through December 31). Amended tax returns If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Amended tax returns   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. Amended tax returns You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Amended tax returns irs. Amended tax returns gov/irb. Amended tax returns Federal per diem rate method. Amended tax returns   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Amended tax returns Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). Amended tax returns However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. Amended tax returns   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Amended tax returns Go to www. Amended tax returns gsa. Amended tax returns gov/perdiem. Amended tax returns Per diem rates for localities listed for FY2014 may change at any time. Amended tax returns To be sure you have the most current rate, check www. Amended tax returns gsa. Amended tax returns gov/perdiem. Amended tax returns Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Amended tax returns Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Amended tax returns The instructions for the forms have more information on completing them. Amended tax returns If you are self-employed, do not file Form 2106 or 2106-EZ. Amended tax returns Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Amended tax returns See the instructions for the form that you must file. Amended tax returns Form 2106-EZ. Amended tax returns   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Amended tax returns You can use this form if you meet all the following conditions. Amended tax returns You are an employee deducting ordinary and necessary expenses attributable to your job. Amended tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Amended tax returns If you are claiming car expenses, you are using the standard mileage rate. Amended tax returns Car expenses. Amended tax returns   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Amended tax returns These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Amended tax returns Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Amended tax returns Information on use of cars. Amended tax returns   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. Amended tax returns The information relates to the following items. Amended tax returns Date placed in service. Amended tax returns Mileage (total, business, commuting, and other personal mileage). Amended tax returns Percentage of business use. Amended tax returns After-work use. Amended tax returns Use of other vehicles. Amended tax returns Whether you have evidence to support the deduction. Amended tax returns Whether or not the evidence is written. Amended tax returns Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Amended tax returns Standard mileage rate. Amended tax returns   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. Amended tax returns The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Amended tax returns In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Amended tax returns If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Amended tax returns See Standard Mileage Rate in chapter 4 for information on using this rate. Amended tax returns Actual expenses. Amended tax returns   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Amended tax returns You must complete Form 2106, Part II, Section C. Amended tax returns In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Amended tax returns   If you are still using a car that is fully depreciated, continue to complete Section C. Amended tax returns Since you have no depreciation deduction, enter zero on line 28. Amended tax returns In this case, do not complete Section D. Amended tax returns Car rentals. Amended tax returns   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. Amended tax returns If so, you can show your car expenses and any inclusion amount as follows. Amended tax returns Compute the inclusion amount without taking into account your business use percentage for the tax year. Amended tax returns Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Amended tax returns Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Amended tax returns The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. Amended tax returns Transportation expenses. Amended tax returns   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. Amended tax returns Also include on this line business expenses you have for parking fees and tolls. Amended tax returns Do not include expenses of operating your car or expenses of commuting between your home and work. Amended tax returns Employee business expenses other than meals and entertainment. Amended tax returns   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Amended tax returns Do not include expenses for meals and entertainment on those lines. Amended tax returns Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Amended tax returns    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. Amended tax returns Claim these amounts directly on Schedule A (Form 1040), line 21. Amended tax returns List the type and amount of each expense on the dotted lines and include the total on line 21. Amended tax returns Meal and entertainment expenses. Amended tax returns   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Amended tax returns Include meals while away from your tax home overnight and other business meals and entertainment. Amended tax returns Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Amended tax returns   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. Amended tax returns Enter the result on line 5. Amended tax returns Hours of service limits. Amended tax returns   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. Amended tax returns Reimbursements. Amended tax returns   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. Amended tax returns This includes any amount reported under code L in box 12 of Form W-2. Amended tax returns Allocating your reimbursement. Amended tax returns   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. Amended tax returns This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. Amended tax returns You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Amended tax returns Example. Amended tax returns Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Amended tax returns The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Amended tax returns The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Amended tax returns Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Amended tax returns Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Amended tax returns To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Amended tax returns His completed worksheet follows. Amended tax returns Reimbursement Allocation Worksheet (Keep for your records)   1. Amended tax returns Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. Amended tax returns Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Amended tax returns Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Amended tax returns Divide line 3 by line 2. Amended tax returns Enter the result as a decimal (rounded to at least three places) . Amended tax returns 529   5. Amended tax returns Multiply line 1 by line 4. Amended tax returns Enter the result here and in Column B, line 7 3,703   6. Amended tax returns Subtract line 5 from line 1. Amended tax returns Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. Amended tax returns After you complete the form. Amended tax returns   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. Amended tax returns For most taxpayers, this is line 21 of Schedule A (Form 1040). Amended tax returns However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. Amended tax returns Limits on employee business expenses. Amended tax returns   Your employee business expenses may be subject to either of the limits described next. Amended tax returns They are figured in the following order on the specified form. Amended tax returns 1. Amended tax returns Limit on meals and entertainment. Amended tax returns   Certain meal and entertainment expenses are subject to a 50% limit. Amended tax returns If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Amended tax returns (See 50% Limit in chapter 2. Amended tax returns ) 2. Amended tax returns Limit on miscellaneous itemized deductions. Amended tax returns   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). Amended tax returns Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Amended tax returns This limit is figured on line 26 of Schedule A (Form 1040). Amended tax returns 3. Amended tax returns Limit on total itemized deductions. Amended tax returns   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. Amended tax returns See your form instructions for information on how to figure this limit. Amended tax returns Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. Amended tax returns Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Amended tax returns The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Amended tax returns See Per Diem and Car Allowances , earlier, for more information. Amended tax returns Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Amended tax returns Member of a reserve component. Amended tax returns   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. Amended tax returns How to report. Amended tax returns   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. Amended tax returns Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Amended tax returns Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. Amended tax returns   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Amended tax returns Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Amended tax returns Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). Amended tax returns Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. Amended tax returns They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. Amended tax returns If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Amended tax returns Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. Amended tax returns To qualify, you must meet all of the following requirements. Amended tax returns During the tax year, you perform services in the performing arts as an employee for at least two employers. Amended tax returns You receive at least $200 each from any two of these employers. Amended tax returns Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Amended tax returns Your adjusted gross income is not more than $16,000 before deducting these business expenses. Amended tax returns Special rules for married persons. Amended tax returns   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Amended tax returns If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Amended tax returns However, requirement (4) applies to your and your spouse's combined adjusted gross income. Amended tax returns Where to report. Amended tax returns   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Amended tax returns Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. Amended tax returns   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Amended tax returns Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. Amended tax returns Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. Amended tax returns After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. Amended tax returns Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. Amended tax returns Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. Amended tax returns You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Amended tax returns You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Amended tax returns Example 1. Amended tax returns You are blind. Amended tax returns You must use a reader to do your work. Amended tax returns You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Amended tax returns The reader's services are only for your work. Amended tax returns You can deduct your expenses for the reader as business expenses. Amended tax returns Example 2. Amended tax returns You are deaf. Amended tax returns You must use a sign language interpreter during meetings while you are at work. Amended tax returns The interpreter's services are used only for your work. Amended tax returns You can deduct your expenses for the interpreter as business expenses. Amended tax returns Prev  Up  Next   Home   More Online Publications