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File 2010 taxes online turbotax 2. File 2010 taxes online turbotax   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. File 2010 taxes online turbotax Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. File 2010 taxes online turbotax Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. File 2010 taxes online turbotax Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. File 2010 taxes online turbotax The annual accounting period for your income tax return is called a tax year. File 2010 taxes online turbotax You can use one of the following tax years. File 2010 taxes online turbotax A calendar tax year. File 2010 taxes online turbotax A fiscal tax year. File 2010 taxes online turbotax Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. File 2010 taxes online turbotax A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. File 2010 taxes online turbotax Calendar tax year. File 2010 taxes online turbotax   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. File 2010 taxes online turbotax   You must adopt the calendar tax year if any of the following apply. File 2010 taxes online turbotax You do not keep books. File 2010 taxes online turbotax You have no annual accounting period. File 2010 taxes online turbotax Your present tax year does not qualify as a fiscal year. File 2010 taxes online turbotax Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. File 2010 taxes online turbotax   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. File 2010 taxes online turbotax For more information, see Change in tax year, later. File 2010 taxes online turbotax   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. File 2010 taxes online turbotax Fiscal tax year. File 2010 taxes online turbotax   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. File 2010 taxes online turbotax A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. File 2010 taxes online turbotax   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. File 2010 taxes online turbotax   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. File 2010 taxes online turbotax Change in tax year. File 2010 taxes online turbotax   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. File 2010 taxes online turbotax See the Instructions for Form 1128 for exceptions. File 2010 taxes online turbotax If you qualify for an automatic approval request, a user fee is not required. File 2010 taxes online turbotax If you do not qualify for automatic approval, a ruling must be requested. File 2010 taxes online turbotax See the instructions for Form 1128 for information about user fees if you are requesting a ruling. File 2010 taxes online turbotax Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. File 2010 taxes online turbotax Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. File 2010 taxes online turbotax You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. File 2010 taxes online turbotax After that, if you want to change your accounting method, you must generally get IRS approval. File 2010 taxes online turbotax See Change in Accounting Method, later. File 2010 taxes online turbotax Kinds of methods. File 2010 taxes online turbotax   Generally, you can use any of the following accounting methods. File 2010 taxes online turbotax Cash method. File 2010 taxes online turbotax An accrual method. File 2010 taxes online turbotax Special methods of accounting for certain items of income and expenses. File 2010 taxes online turbotax Combination method using elements of two or more of the above. File 2010 taxes online turbotax You must use the same accounting method to figure your taxable income and to keep your books. File 2010 taxes online turbotax Also, you must use an accounting method that clearly shows your income. File 2010 taxes online turbotax Business and personal items. File 2010 taxes online turbotax   You can account for business and personal items under different accounting methods. File 2010 taxes online turbotax For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. File 2010 taxes online turbotax Two or more businesses. File 2010 taxes online turbotax   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. File 2010 taxes online turbotax They are separate and distinct only if you maintain complete and separate books and records for each business. File 2010 taxes online turbotax Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. File 2010 taxes online turbotax However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. File 2010 taxes online turbotax For more information, see Inventories, later. File 2010 taxes online turbotax Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. File 2010 taxes online turbotax If you receive property or services, you must include their fair market value in income. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax On December 30, 2012, Mrs. File 2010 taxes online turbotax Sycamore sent you a check for interior decorating services you provided to her. File 2010 taxes online turbotax You received the check on January 2, 2013. File 2010 taxes online turbotax You must include the amount of the check in income for 2013. File 2010 taxes online turbotax Constructive receipt. File 2010 taxes online turbotax   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. File 2010 taxes online turbotax You do not need to have possession of it. File 2010 taxes online turbotax If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax Interest is credited to your bank account in December 2013. File 2010 taxes online turbotax You do not withdraw it or enter it into your passbook until 2014. File 2010 taxes online turbotax You must include it in your gross income for 2013. File 2010 taxes online turbotax Delaying receipt of income. File 2010 taxes online turbotax   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. File 2010 taxes online turbotax You must report the income in the year the property is received or made available to you without restriction. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. File 2010 taxes online turbotax She was told in December that her payment was available. File 2010 taxes online turbotax At her request, she was not paid until January 2014. File 2010 taxes online turbotax She must include this payment in her 2013 income because it was constructively received in 2013. File 2010 taxes online turbotax Checks. File 2010 taxes online turbotax   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax Dr. File 2010 taxes online turbotax Redd received a check for $500 on December 31, 2013, from a patient. File 2010 taxes online turbotax She could not deposit the check in her business account until January 2, 2014. File 2010 taxes online turbotax She must include this fee in her income for 2013. File 2010 taxes online turbotax Debts paid by another person or canceled. File 2010 taxes online turbotax   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. File 2010 taxes online turbotax If you receive income in this way, you constructively receive the income when the debt is canceled or paid. File 2010 taxes online turbotax For more information, see Canceled Debt under Kinds of Income in chapter 5. File 2010 taxes online turbotax Repayment of income. File 2010 taxes online turbotax   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. File 2010 taxes online turbotax If the amount you repay is over $3,000, a special rule applies. File 2010 taxes online turbotax For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. File 2010 taxes online turbotax Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. File 2010 taxes online turbotax This includes business expenses for which you contest liability. File 2010 taxes online turbotax However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. File 2010 taxes online turbotax Expenses paid in advance. File 2010 taxes online turbotax   You can deduct an expense you pay in advance only in the year to which it applies. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. File 2010 taxes online turbotax You can deduct $500 in 2013 and $500 in 2014. File 2010 taxes online turbotax Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. File 2010 taxes online turbotax The purpose of an accrual method of accounting is to match income and expenses in the correct year. File 2010 taxes online turbotax Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You are a calendar year accrual method taxpayer. File 2010 taxes online turbotax You sold a computer on December 28, 2013. File 2010 taxes online turbotax You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. File 2010 taxes online turbotax You must include the amount received for the computer in your 2013 income. File 2010 taxes online turbotax Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. File 2010 taxes online turbotax Estimated income. File 2010 taxes online turbotax   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. File 2010 taxes online turbotax Change in payment schedule for services. File 2010 taxes online turbotax   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. File 2010 taxes online turbotax Advance payments for services. File 2010 taxes online turbotax   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. File 2010 taxes online turbotax However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. File 2010 taxes online turbotax However, you cannot postpone including any payment beyond that tax year. File 2010 taxes online turbotax   For more information, see Advance Payment for Services under Accrual Method in Publication 538. File 2010 taxes online turbotax That publication also explains special rules for reporting the following types of income. File 2010 taxes online turbotax Advance payments for service agreements. File 2010 taxes online turbotax Prepaid rent. File 2010 taxes online turbotax Advance payments for sales. File 2010 taxes online turbotax   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. File 2010 taxes online turbotax If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. File 2010 taxes online turbotax An agreement includes a gift certificate that can be redeemed for goods. File 2010 taxes online turbotax Treat amounts that are due and payable as amounts you received. File 2010 taxes online turbotax   You generally include an advance payment in income for the tax year in which you receive it. File 2010 taxes online turbotax However, you can use an alternative method. File 2010 taxes online turbotax For information about the alternative method, see Publication 538. File 2010 taxes online turbotax Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. File 2010 taxes online turbotax The all-events test has been met. File 2010 taxes online turbotax The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. File 2010 taxes online turbotax Economic performance has occurred. File 2010 taxes online turbotax Economic performance. File 2010 taxes online turbotax   You generally cannot deduct or capitalize a business expense until economic performance occurs. File 2010 taxes online turbotax If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. File 2010 taxes online turbotax If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. File 2010 taxes online turbotax An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. File 2010 taxes online turbotax For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You are a calendar year taxpayer and use an accrual method of accounting. File 2010 taxes online turbotax You buy office supplies in December 2013. File 2010 taxes online turbotax You receive the supplies and the bill in December, but you pay the bill in January 2014. File 2010 taxes online turbotax You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. File 2010 taxes online turbotax Your office supplies may qualify as a recurring expense. File 2010 taxes online turbotax In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). File 2010 taxes online turbotax Keeping inventories. File 2010 taxes online turbotax   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. File 2010 taxes online turbotax If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. File 2010 taxes online turbotax For more information, see Inventories , later. File 2010 taxes online turbotax Special rule for related persons. File 2010 taxes online turbotax   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. File 2010 taxes online turbotax Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. File 2010 taxes online turbotax If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. File 2010 taxes online turbotax   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. File 2010 taxes online turbotax For a list of other related persons, see section 267 of the Internal Revenue Code. File 2010 taxes online turbotax Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. File 2010 taxes online turbotax However, the following restrictions apply. File 2010 taxes online turbotax If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. File 2010 taxes online turbotax (See, however, Inventories, later. File 2010 taxes online turbotax ) You can use the cash method for all other items of income and expenses. File 2010 taxes online turbotax If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. File 2010 taxes online turbotax If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. File 2010 taxes online turbotax If you use a combination method that includes the cash method, treat that combination method as the cash method. File 2010 taxes online turbotax Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. File 2010 taxes online turbotax However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. File 2010 taxes online turbotax These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). File 2010 taxes online turbotax A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. File 2010 taxes online turbotax A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. File 2010 taxes online turbotax Qualifying taxpayer. File 2010 taxes online turbotax   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. File 2010 taxes online turbotax (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. File 2010 taxes online turbotax ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. File 2010 taxes online turbotax Qualifying small business taxpayer. File 2010 taxes online turbotax   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. File 2010 taxes online turbotax (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. File 2010 taxes online turbotax ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. File 2010 taxes online turbotax Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). File 2010 taxes online turbotax Business not owned or not in existence for 3 years. File 2010 taxes online turbotax   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. File 2010 taxes online turbotax If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. File 2010 taxes online turbotax Materials and supplies that are not incidental. File 2010 taxes online turbotax   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. File 2010 taxes online turbotax If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. File 2010 taxes online turbotax Changing accounting method. File 2010 taxes online turbotax   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. File 2010 taxes online turbotax See Change in Accounting Method, later. File 2010 taxes online turbotax More information. File 2010 taxes online turbotax    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. File 2010 taxes online turbotax For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. File 2010 taxes online turbotax Items included in inventory. File 2010 taxes online turbotax   If you are required to account for inventories, include the following items when accounting for your inventory. File 2010 taxes online turbotax Merchandise or stock in trade. File 2010 taxes online turbotax Raw materials. File 2010 taxes online turbotax Work in process. File 2010 taxes online turbotax Finished products. File 2010 taxes online turbotax Supplies that physically become a part of the item intended for sale. File 2010 taxes online turbotax Valuing inventory. File 2010 taxes online turbotax   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). File 2010 taxes online turbotax To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. File 2010 taxes online turbotax   Inventory valuation rules cannot be the same for all kinds of businesses. File 2010 taxes online turbotax The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. File 2010 taxes online turbotax Your inventory practices must be consistent from year to year. File 2010 taxes online turbotax More information. File 2010 taxes online turbotax   For more information about inventories, see Publication 538. File 2010 taxes online turbotax Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. File 2010 taxes online turbotax Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. File 2010 taxes online turbotax You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. File 2010 taxes online turbotax Activities subject to the uniform capitalization rules. File 2010 taxes online turbotax   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. File 2010 taxes online turbotax Produce real or tangible personal property. File 2010 taxes online turbotax For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. File 2010 taxes online turbotax Acquire property for resale. File 2010 taxes online turbotax Exceptions. File 2010 taxes online turbotax   These rules do not apply to the following property. File 2010 taxes online turbotax Personal property you acquire for resale if your average annual gross receipts are $10 million or less. File 2010 taxes online turbotax Property you produce if you meet either of the following conditions. File 2010 taxes online turbotax Your indirect costs of producing the property are $200,000 or less. File 2010 taxes online turbotax You use the cash method of accounting and do not account for inventories. File 2010 taxes online turbotax For more information, see Inventories, earlier. File 2010 taxes online turbotax Special Methods There are special methods of accounting for certain items of income or expense. File 2010 taxes online turbotax These include the following. File 2010 taxes online turbotax Amortization, discussed in chapter 8 of Publication 535, Business Expenses. File 2010 taxes online turbotax Bad debts, discussed in chapter 10 of Publication 535. File 2010 taxes online turbotax Depletion, discussed in chapter 9 of Publication 535. File 2010 taxes online turbotax Depreciation, discussed in Publication 946, How To Depreciate Property. File 2010 taxes online turbotax Installment sales, discussed in Publication 537, Installment Sales. File 2010 taxes online turbotax Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. File 2010 taxes online turbotax A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. File 2010 taxes online turbotax To get approval, you must file Form 3115, Application for Change in Accounting Method. File 2010 taxes online turbotax You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. File 2010 taxes online turbotax You may have to pay a user fee. File 2010 taxes online turbotax For more information, see the form instructions. File 2010 taxes online turbotax Automatic change procedures. File 2010 taxes online turbotax   Certain taxpayers can presume to have IRS approval to change their method of accounting. File 2010 taxes online turbotax The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. File 2010 taxes online turbotax No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. File 2010 taxes online turbotax   Generally, you must use Form 3115 to request an automatic change. File 2010 taxes online turbotax For more information, see the Instructions for Form 3115. File 2010 taxes online turbotax Prev  Up  Next   Home   More Online Publications
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Online EIN: Frequently Asked Questions

If you are unfamiliar with the Online EIN application, you may find this section helpful in answering your questions.

Q. When can I use my Internet EIN to make tax payments or file returns?
A
. This EIN is your permanent number and can be used immediately for most of your business needs, including:

  • Opening a bank account
  • Applying for business licenses
  • Filing a tax return by mail

However, it will take up to two weeks before your EIN becomes part of the IRS's permanent records. You must wait until this occurs before you can:

  • File an electronic return
  • Make an electronic payment
  • Pass an IRS Taxpayer Identification Number (TIN) matching program

Q. Sometimes I don't know all the information required on the application. Why do I have to complete the application online when I can send in paper or fax with missing information?
A. When paper or faxed Forms SS-4 are received by the IRS with information missing, additional time is needed to process that application, delaying the issuance of your Employer Identification Number. Applicants can get their EIN much quicker if all the required information is completed.

Q. The legal name of my business includes the symbol for a dollar sign ($). Does the IRS accept symbols as part of a business name?
A.
No. The only characters IRS systems can accept in a business name are: 1) alpha (A-Z), 2) numeric (0-9), 3) hyphen (-), and 4) ampersand (&). If the legal name of your business includes anything other than those listed above, you will need to decide how best to enter your business name into the online EIN application. Following are some suggestions:

If your legal name contains: Then:
A symbol or character, such as a “plus” symbol (+), “at” symbol (@), or a period (.) 1) Spell out the symbol or 2) drop the symbol and leave a space. Example: If the legal name of your business is Jones.Com, then input it as Jones Dot Com or Jones Com
Backward (\) or forward (/) slash Substitute a hyphen (-)
Apostrophe (') Drop the apostrophe and do not leave a space.

Q. What do I do if my entire address won't fit on your address line on the Internet application?
A
. IRS systems only allow 35 characters on the street address line. If your address does not fit in 35 characters, please make sure you provide the most essential address information (i.e., apartment numbers, suite numbers, etc). We’ll then validate the address you’ve provided with the United States Postal Service’s database and offer you an opportunity to make any changes to the address, if necessary.

Q. Are any entity types excluded from applying for an EIN over the Internet?
A
.  No. All customers whose principal business, office or agency, or legal residence (in the case of an individual) is located in the United States or in one of the U.S. Territories can apply for an EIN online. The principal officer, general partner, grantor, owner, trustor etc. must have a valid Taxpayer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application.

If you were incorporated outside of the United States or the U.S. territories, you cannot apply for an EIN online. Please call us at (267) 941-1099 (this is not a toll free number) between the hours of 6:00 a.m. to 11:00 p.m. Eastern Time.

Q. What if I forget the number I obtained over the Internet?
A.
IRS records will be updated immediately with your EIN. Simply call (800) 829-4933 and select EIN from the list of options. Once connected with an IRS employee, tell the assistor you received an EIN from the Internet but can't remember it. The IRS employee will ask the necessary disclosure and security questions prior to providing the number.

Q. Do all the EINs obtained on the Internet start with 20, 26, 27, 45 or 46?
A.
Yes. The unique prefixes (20, 26, 27, 45 or 46) identify the EIN as a number issued via the Internet. Note: We cannot process your application online if the responsible party is an entity with an EIN previously obtained through the Internet. Please use one of our other methods to apply. See How to Apply for an EIN. We apologize for any inconvenience this may cause you.

Q. Do I need a certain computer or software to obtain an EIN over the Internet?
A
. No. You can go to IRS.gov through any computer that has Internet access. You should have a current Internet browser, which will allow you to view and complete the application process. However, you will need Adobe Reader installed if you would like to receive a confirmation letter online.

Q. Now that I have my EIN, when can I use it to make tax deposits?
A.
Based on the information you submit on your application or if you indicate you will have employees, you will automatically be enrolled in the Electronic Federal Tax Payment System—EFTPS—so you can make all your deposits online or by phone. Within a few days you will receive by mail your EFTPS enrollment confirmation, as well as a Personal Identification Number (PIN) and complete instructions for using EFTPS. You will need to wait until you receive your EFTPS information in the mail before you can make a payment electronically. Once you receive your EFTPS Confirmation Package, you can begin making EFTPS payments.

EFTPS is a service provided free by the U.S. Department of the Treasury that allows individual and business taxpayers to initiate all Federal tax payments using the Internet or phone. You can input your tax payments 24 hours a day, 7 days a week using a secure government website or an automated voice response phone system. Refer to Publication 4275, EFTPS Express Enrollment for New Businesses for additional information about EFTPS.

Page Last Reviewed or Updated: 03-Jan-2014

The File 2010 Taxes Online Turbotax

File 2010 taxes online turbotax 27. File 2010 taxes online turbotax   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. File 2010 taxes online turbotax Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. File 2010 taxes online turbotax  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013, through December 31, 2013, is 56½ cents per mile. File 2010 taxes online turbotax For more information, see Transportation Expenses under What Expenses Can Be Deducted. File 2010 taxes online turbotax Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. File 2010 taxes online turbotax To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . File 2010 taxes online turbotax If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. File 2010 taxes online turbotax Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. File 2010 taxes online turbotax See chapter 28. File 2010 taxes online turbotax If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. File 2010 taxes online turbotax Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). File 2010 taxes online turbotax You may qualify for these other benefits even if you do not meet the requirements listed earlier. File 2010 taxes online turbotax Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. File 2010 taxes online turbotax Generally, you may claim any number of benefits as long as you use different expenses to figure each one. File 2010 taxes online turbotax When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. File 2010 taxes online turbotax Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. File 2010 taxes online turbotax This is education that meets at least one of the following two tests. File 2010 taxes online turbotax The education is required by your employer or the law to keep your present salary, status, or job. File 2010 taxes online turbotax The required education must serve a bona fide business purpose of your employer. File 2010 taxes online turbotax The education maintains or improves skills needed in your present work. File 2010 taxes online turbotax However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. File 2010 taxes online turbotax You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. File 2010 taxes online turbotax Use Figure 27-A, later, as a quick check to see if your education qualifies. File 2010 taxes online turbotax Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. File 2010 taxes online turbotax This additional education is qualifying work-related education if all three of the following requirements are met. File 2010 taxes online turbotax It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. File 2010 taxes online turbotax When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. File 2010 taxes online turbotax See Education To Maintain or Improve Skills , later. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You are a teacher who has satisfied the minimum requirements for teaching. File 2010 taxes online turbotax Your employer requires you to take an additional college course each year to keep your teaching job. File 2010 taxes online turbotax If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. File 2010 taxes online turbotax Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. File 2010 taxes online turbotax This could include refresher courses, courses on current developments, and academic or vocational courses. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You repair televisions, radios, and stereo systems for XYZ Store. File 2010 taxes online turbotax To keep up with the latest changes, you take special courses in radio and stereo service. File 2010 taxes online turbotax These courses maintain and improve skills required in your work. File 2010 taxes online turbotax Maintaining skills vs. File 2010 taxes online turbotax qualifying for new job. File 2010 taxes online turbotax   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. File 2010 taxes online turbotax Education during temporary absence. File 2010 taxes online turbotax   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. File 2010 taxes online turbotax Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You quit your biology research job to become a full-time biology graduate student for one year. File 2010 taxes online turbotax If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. File 2010 taxes online turbotax Education during indefinite absence. File 2010 taxes online turbotax   If you stop work for more than a year, your absence from your job is considered indefinite. File 2010 taxes online turbotax Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. File 2010 taxes online turbotax Therefore, it is not qualifying work-related education. File 2010 taxes online turbotax Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. File 2010 taxes online turbotax The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. File 2010 taxes online turbotax Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. File 2010 taxes online turbotax This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. File 2010 taxes online turbotax You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. File 2010 taxes online turbotax Example 1. File 2010 taxes online turbotax You are a full-time engineering student. File 2010 taxes online turbotax Although you have not received your degree or certification, you work part-time as an engineer for a firm that will employ you as a full-time engineer after you finish college. File 2010 taxes online turbotax Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. File 2010 taxes online turbotax The education is not qualifying work-related education. File 2010 taxes online turbotax Example 2. File 2010 taxes online turbotax You are an accountant and you have met the minimum educational requirements of your employer. File 2010 taxes online turbotax Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. File 2010 taxes online turbotax These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. File 2010 taxes online turbotax Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. File 2010 taxes online turbotax The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. File 2010 taxes online turbotax If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. File 2010 taxes online turbotax The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. File 2010 taxes online turbotax You generally will be considered a faculty member when one or more of the following occurs. File 2010 taxes online turbotax You have tenure. File 2010 taxes online turbotax Your years of service count toward obtaining tenure. File 2010 taxes online turbotax You have a vote in faculty decisions. File 2010 taxes online turbotax Your school makes contributions for you to a retirement plan other than social security or a similar program. File 2010 taxes online turbotax Example 1. File 2010 taxes online turbotax The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. File 2010 taxes online turbotax In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. File 2010 taxes online turbotax If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. File 2010 taxes online turbotax However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. File 2010 taxes online turbotax Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. File 2010 taxes online turbotax If you have all the required education except the fifth year, you have met the minimum educational requirements. File 2010 taxes online turbotax The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. File 2010 taxes online turbotax Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. File 2010 taxes online turbotax Figure 27-A. File 2010 taxes online turbotax Does Your Work-Related Education Qualify?" Example 2. File 2010 taxes online turbotax Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. File 2010 taxes online turbotax The additional four education courses can be qualifying work-related education. File 2010 taxes online turbotax Although you do not have all the required courses, you have already met the minimum educational requirements. File 2010 taxes online turbotax Example 3. File 2010 taxes online turbotax Assume the same facts as in Example 1 except that you are hired with only 3 years of college. File 2010 taxes online turbotax The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. File 2010 taxes online turbotax They are needed to meet the minimum educational requirements for employment as a teacher. File 2010 taxes online turbotax Example 4. File 2010 taxes online turbotax You have a bachelor's degree and you work as a temporary instructor at a university. File 2010 taxes online turbotax At the same time, you take graduate courses toward an advanced degree. File 2010 taxes online turbotax The rules of the university state that you can become a faculty member only if you get a graduate degree. File 2010 taxes online turbotax Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. File 2010 taxes online turbotax You have not met the minimum educational requirements to qualify you as a faculty member. File 2010 taxes online turbotax The graduate courses are not qualifying work-related education. File 2010 taxes online turbotax Certification in a new state. File 2010 taxes online turbotax   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. File 2010 taxes online turbotax This is true even if you must get additional education to be certified in another state. File 2010 taxes online turbotax Any additional education you need is qualifying work-related education. File 2010 taxes online turbotax You have already met the minimum requirements for teaching. File 2010 taxes online turbotax Teaching in another state is not a new trade or business. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. File 2010 taxes online turbotax You move to State B and are promptly hired as a teacher. File 2010 taxes online turbotax You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. File 2010 taxes online turbotax These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. File 2010 taxes online turbotax Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. File 2010 taxes online turbotax This is true even if you do not plan to enter that trade or business. File 2010 taxes online turbotax If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. File 2010 taxes online turbotax Example 1. File 2010 taxes online turbotax You are an accountant. File 2010 taxes online turbotax Your employer requires you to get a law degree at your own expense. File 2010 taxes online turbotax You register at a law school for the regular curriculum that leads to a law degree. File 2010 taxes online turbotax Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. File 2010 taxes online turbotax Example 2. File 2010 taxes online turbotax You are a general practitioner of medicine. File 2010 taxes online turbotax You take a 2-week course to review developments in several specialized fields of medicine. File 2010 taxes online turbotax The course does not qualify you for a new profession. File 2010 taxes online turbotax It is qualifying work-related education because it maintains or improves skills required in your present profession. File 2010 taxes online turbotax Example 3. File 2010 taxes online turbotax While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. File 2010 taxes online turbotax The program will lead to qualifying you to practice psychoanalysis. File 2010 taxes online turbotax The psychoanalytic training does not qualify you for a new profession. File 2010 taxes online turbotax It is qualifying work-related education because it maintains or improves skills required in your present profession. File 2010 taxes online turbotax Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. File 2010 taxes online turbotax They are part of a program of study that can qualify you for a new profession. File 2010 taxes online turbotax Teaching and Related Duties All teaching and related duties are considered the same general kind of work. File 2010 taxes online turbotax A change in duties in any of the following ways is not considered a change to a new business. File 2010 taxes online turbotax Elementary school teacher to secondary school teacher. File 2010 taxes online turbotax Teacher of one subject, such as biology, to teacher of another subject, such as art. File 2010 taxes online turbotax Classroom teacher to guidance counselor. File 2010 taxes online turbotax Classroom teacher to school administrator. File 2010 taxes online turbotax What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education , you can generally deduct your education expenses as business expenses. File 2010 taxes online turbotax If you are not self-employed, you can deduct business expenses only if you itemize your deductions. File 2010 taxes online turbotax You cannot deduct expenses related to tax-exempt and excluded income. File 2010 taxes online turbotax Deductible expenses. File 2010 taxes online turbotax   The following education expenses can be deducted. File 2010 taxes online turbotax Tuition, books, supplies, lab fees, and similar items. File 2010 taxes online turbotax Certain transportation and travel costs. File 2010 taxes online turbotax Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. File 2010 taxes online turbotax Nondeductible expenses. File 2010 taxes online turbotax   You cannot deduct personal or capital expenses. File 2010 taxes online turbotax For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. File 2010 taxes online turbotax This amount is a personal expense. File 2010 taxes online turbotax Unclaimed reimbursement. File 2010 taxes online turbotax   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax Your employer agrees to pay your education expenses if you file a voucher showing your expenses. File 2010 taxes online turbotax You do not file a voucher, and you do not get reimbursed. File 2010 taxes online turbotax Because you did not file a voucher, you cannot deduct the expenses on your tax return. File 2010 taxes online turbotax Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. File 2010 taxes online turbotax If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. File 2010 taxes online turbotax Temporary basis. File 2010 taxes online turbotax   You go to school on a temporary basis if either of the following situations applies to you. File 2010 taxes online turbotax Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. File 2010 taxes online turbotax Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. File 2010 taxes online turbotax Your attendance is temporary up to the date you determine it will last more than 1 year. File 2010 taxes online turbotax Note. File 2010 taxes online turbotax If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. File 2010 taxes online turbotax Attendance not on a temporary basis. File 2010 taxes online turbotax   You do not go to school on a temporary basis if either of the following situations apply to you. File 2010 taxes online turbotax Your attendance at school is realistically expected to last more than 1 year. File 2010 taxes online turbotax It does not matter how long you actually attend. File 2010 taxes online turbotax Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. File 2010 taxes online turbotax Your attendance is not temporary after the date you determine it will last more than 1 year. File 2010 taxes online turbotax Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. File 2010 taxes online turbotax This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. File 2010 taxes online turbotax Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. File 2010 taxes online turbotax Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. File 2010 taxes online turbotax Example 1. File 2010 taxes online turbotax You regularly work in a nearby town, and go directly from work to home. File 2010 taxes online turbotax You also attend school every work night for 3 months to take a course that improves your job skills. File 2010 taxes online turbotax Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. File 2010 taxes online turbotax This is true regardless of the distance traveled. File 2010 taxes online turbotax Example 2. File 2010 taxes online turbotax Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. File 2010 taxes online turbotax You can deduct your transportation expenses from your regular work site to school and then home. File 2010 taxes online turbotax Example 3. File 2010 taxes online turbotax Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. File 2010 taxes online turbotax Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. File 2010 taxes online turbotax Example 4. File 2010 taxes online turbotax Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. File 2010 taxes online turbotax Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. File 2010 taxes online turbotax If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. File 2010 taxes online turbotax If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. File 2010 taxes online turbotax Using your car. File 2010 taxes online turbotax   If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. File 2010 taxes online turbotax The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. File 2010 taxes online turbotax Whichever method you use, you can also deduct parking fees and tolls. File 2010 taxes online turbotax See chapter 26 for information on deducting your actual expenses of using a car. File 2010 taxes online turbotax Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. File 2010 taxes online turbotax Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. File 2010 taxes online turbotax For more information, see chapter 26. File 2010 taxes online turbotax You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. File 2010 taxes online turbotax Mainly personal travel. File 2010 taxes online turbotax   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. File 2010 taxes online turbotax You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. File 2010 taxes online turbotax   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. File 2010 taxes online turbotax An important factor is the comparison of time spent on personal activities with time spent on educational activities. File 2010 taxes online turbotax If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. File 2010 taxes online turbotax Example 1. File 2010 taxes online turbotax John works in Newark, New Jersey. File 2010 taxes online turbotax He traveled to Chicago to take a deductible 1-week course at the request of his employer. File 2010 taxes online turbotax His main reason for going to Chicago was to take the course. File 2010 taxes online turbotax While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. File 2010 taxes online turbotax Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. File 2010 taxes online turbotax He cannot deduct his transportation expenses of going to Pleasantville. File 2010 taxes online turbotax He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. File 2010 taxes online turbotax Example 2. File 2010 taxes online turbotax Sue works in Boston. File 2010 taxes online turbotax She went to a university in Michigan to take a course for work. File 2010 taxes online turbotax The course is qualifying work-related education. File 2010 taxes online turbotax She took one course, which is one-fourth of a full course load of study. File 2010 taxes online turbotax She spent the rest of the time on personal activities. File 2010 taxes online turbotax Her reasons for taking the course in Michigan were all personal. File 2010 taxes online turbotax Sue's trip is mainly personal because three-fourths of her time is considered personal time. File 2010 taxes online turbotax She cannot deduct the cost of her round-trip train ticket to Michigan. File 2010 taxes online turbotax She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. File 2010 taxes online turbotax Example 3. File 2010 taxes online turbotax Dave works in Nashville and recently traveled to California to take a 2-week seminar. File 2010 taxes online turbotax The seminar is qualifying work-related education. File 2010 taxes online turbotax While there, he spent an extra 8 weeks on personal activities. File 2010 taxes online turbotax The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. File 2010 taxes online turbotax Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. File 2010 taxes online turbotax He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. File 2010 taxes online turbotax Cruises and conventions. File 2010 taxes online turbotax   Certain cruises and conventions offer seminars or courses as part of their itinerary. File 2010 taxes online turbotax Even if the seminars or courses are work-related, your deduction for travel may be limited. File 2010 taxes online turbotax This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. File 2010 taxes online turbotax   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. File 2010 taxes online turbotax 50% limit on meals. File 2010 taxes online turbotax   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. File 2010 taxes online turbotax You cannot have been reimbursed for the meals. File 2010 taxes online turbotax   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. File 2010 taxes online turbotax Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. File 2010 taxes online turbotax Example. File 2010 taxes online turbotax You are a French language teacher. File 2010 taxes online turbotax While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. File 2010 taxes online turbotax You chose your itinerary and most of your activities to improve your French language skills. File 2010 taxes online turbotax You cannot deduct your travel expenses as education expenses. File 2010 taxes online turbotax This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. File 2010 taxes online turbotax No Double Benefit Allowed You cannot do either of the following. File 2010 taxes online turbotax Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). File 2010 taxes online turbotax Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. File 2010 taxes online turbotax See Adjustments to Qualifying Work-Related Education Expenses , next. File 2010 taxes online turbotax Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. File 2010 taxes online turbotax You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. File 2010 taxes online turbotax For more information, see chapter 12 of Publication 970. File 2010 taxes online turbotax Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. File 2010 taxes online turbotax Amounts that do not reduce qualifying work-related education expenses. File 2010 taxes online turbotax   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. File 2010 taxes online turbotax   Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. File 2010 taxes online turbotax Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. File 2010 taxes online turbotax There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. File 2010 taxes online turbotax You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. File 2010 taxes online turbotax For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. File 2010 taxes online turbotax Deducting Business Expenses Self-employed persons and employees report business expenses differently. File 2010 taxes online turbotax The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. File 2010 taxes online turbotax Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). File 2010 taxes online turbotax If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. File 2010 taxes online turbotax See the instructions for the form you file for information on how to complete it. File 2010 taxes online turbotax Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. File 2010 taxes online turbotax If either (1) or (2) applies, you can deduct the total qualifying cost. File 2010 taxes online turbotax If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. File 2010 taxes online turbotax In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21. File 2010 taxes online turbotax (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. File 2010 taxes online turbotax ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. File 2010 taxes online turbotax See chapter 28. File 2010 taxes online turbotax Form 2106 or 2106-EZ. File 2010 taxes online turbotax   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. File 2010 taxes online turbotax Form not required. File 2010 taxes online turbotax   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. File 2010 taxes online turbotax   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. File 2010 taxes online turbotax (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. File 2010 taxes online turbotax ) Using Form 2106-EZ. File 2010 taxes online turbotax   This form is shorter and easier to use than Form 2106. File 2010 taxes online turbotax Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. File 2010 taxes online turbotax   If you do not meet both of these requirements, use Form 2106. File 2010 taxes online turbotax Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. File 2010 taxes online turbotax Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. File 2010 taxes online turbotax You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. File 2010 taxes online turbotax You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . File 2010 taxes online turbotax For more information on qualified performing artists, see chapter 6 of Publication 463. File 2010 taxes online turbotax Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28. File 2010 taxes online turbotax They are not subject to the 2%-of-adjusted-gross-income limit. File 2010 taxes online turbotax To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . File 2010 taxes online turbotax For more information on impairment-related work expenses, see chapter 6 of Publication 463. File 2010 taxes online turbotax Recordkeeping You must keep records as proof of any deduction claimed on your tax return. File 2010 taxes online turbotax Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. File 2010 taxes online turbotax For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. File 2010 taxes online turbotax Prev  Up  Next   Home   More Online Publications