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File Prior Years Tax Returns

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File Prior Years Tax Returns

File prior years tax returns 1. File prior years tax returns   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. File prior years tax returns Business associate. File prior years tax returns Bona fide business purpose. File prior years tax returns Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. File prior years tax returns This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. File prior years tax returns It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. File prior years tax returns Travel expenses defined. File prior years tax returns   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. File prior years tax returns   An ordinary expense is one that is common and accepted in your trade or business. File prior years tax returns A necessary expense is one that is helpful and appropriate for your business. File prior years tax returns An expense does not have to be required to be considered necessary. File prior years tax returns   You will find examples of deductible travel expenses in Table 1-1 , later. File prior years tax returns Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. File prior years tax returns This rest requirement is not satisfied by merely napping in your car. File prior years tax returns You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. File prior years tax returns Example 1. File prior years tax returns You are a railroad conductor. File prior years tax returns You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. File prior years tax returns During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. File prior years tax returns You are considered to be away from home. File prior years tax returns Example 2. File prior years tax returns You are a truck driver. File prior years tax returns You leave your terminal and return to it later the same day. File prior years tax returns You get an hour off at your turnaround point to eat. File prior years tax returns Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. File prior years tax returns Members of the Armed Forces. File prior years tax returns   If you are a member of the U. File prior years tax returns S. File prior years tax returns Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. File prior years tax returns You cannot deduct your expenses for meals and lodging. File prior years tax returns You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. File prior years tax returns If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. File prior years tax returns   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. File prior years tax returns Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. File prior years tax returns Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. File prior years tax returns It includes the entire city or general area in which your business or work is located. File prior years tax returns If you have more than one regular place of business, your tax home is your main place of business. File prior years tax returns See Main place of business or work , later. File prior years tax returns If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. File prior years tax returns See No main place of business or work , later. File prior years tax returns If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. File prior years tax returns As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. File prior years tax returns Main place of business or work. File prior years tax returns   If you have more than one place of work, consider the following when determining which one is your main place of business or work. File prior years tax returns The total time you ordinarily spend in each place. File prior years tax returns The level of your business activity in each place. File prior years tax returns Whether your income from each place is significant or insignificant. File prior years tax returns Example. File prior years tax returns You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. File prior years tax returns You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. File prior years tax returns Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. File prior years tax returns No main place of business or work. File prior years tax returns   You may have a tax home even if you do not have a regular or main place of work. File prior years tax returns Your tax home may be the home where you regularly live. File prior years tax returns Factors used to determine tax home. File prior years tax returns   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. File prior years tax returns You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. File prior years tax returns You have living expenses at your main home that you duplicate because your business requires you to be away from that home. File prior years tax returns You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. File prior years tax returns   If you satisfy all three factors, your tax home is the home where you regularly live. File prior years tax returns If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. File prior years tax returns If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. File prior years tax returns Example 1. File prior years tax returns You are single and live in Boston in an apartment you rent. File prior years tax returns You have worked for your employer in Boston for a number of years. File prior years tax returns Your employer enrolls you in a 12-month executive training program. File prior years tax returns You do not expect to return to work in Boston after you complete your training. File prior years tax returns During your training, you do not do any work in Boston. File prior years tax returns Instead, you receive classroom and on-the-job training throughout the United States. File prior years tax returns You keep your apartment in Boston and return to it frequently. File prior years tax returns You use your apartment to conduct your personal business. File prior years tax returns You also keep up your community contacts in Boston. File prior years tax returns When you complete your training, you are transferred to Los Angeles. File prior years tax returns You do not satisfy factor (1) because you did not work in Boston. File prior years tax returns You satisfy factor (2) because you had duplicate living expenses. File prior years tax returns You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. File prior years tax returns Therefore, you have a tax home in Boston. File prior years tax returns Example 2. File prior years tax returns You are an outside salesperson with a sales territory covering several states. File prior years tax returns Your employer's main office is in Newark, but you do not conduct any business there. File prior years tax returns Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. File prior years tax returns You have a room in your married sister's house in Dayton. File prior years tax returns You stay there for one or two weekends a year, but you do no work in the area. File prior years tax returns You do not pay your sister for the use of the room. File prior years tax returns You do not satisfy any of the three factors listed earlier. File prior years tax returns You are an itinerant and have no tax home. File prior years tax returns Tax Home Different From Family Home If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. File prior years tax returns You also cannot deduct the cost of meals and lodging while at your tax home. File prior years tax returns See Example 1 , later. File prior years tax returns If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. File prior years tax returns See Example 2 , later. File prior years tax returns Example 1. File prior years tax returns You are a truck driver and you and your family live in Tucson. File prior years tax returns You are employed by a trucking firm that has its terminal in Phoenix. File prior years tax returns At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. File prior years tax returns You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. File prior years tax returns This is because Phoenix is your tax home. File prior years tax returns Example 2. File prior years tax returns Your family home is in Pittsburgh, where you work 12 weeks a year. File prior years tax returns The rest of the year you work for the same employer in Baltimore. File prior years tax returns In Baltimore, you eat in restaurants and sleep in a rooming house. File prior years tax returns Your salary is the same whether you are in Pittsburgh or Baltimore. File prior years tax returns Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. File prior years tax returns You cannot deduct any expenses you have for meals and lodging there. File prior years tax returns However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. File prior years tax returns You can deduct the cost of your round trip between Baltimore and Pittsburgh. File prior years tax returns You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. File prior years tax returns Temporary Assignment or Job You may regularly work at your tax home and also work at another location. File prior years tax returns It may not be practical to return to your tax home from this other location at the end of each work day. File prior years tax returns Temporary assignment vs. File prior years tax returns indefinite assignment. File prior years tax returns   If your assignment or job away from your main place of work is temporary, your tax home does not change. File prior years tax returns You are considered to be away from home for the whole period you are away from your main place of work. File prior years tax returns You can deduct your travel expenses if they otherwise qualify for deduction. File prior years tax returns Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. File prior years tax returns    However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. File prior years tax returns An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. File prior years tax returns   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. File prior years tax returns You may be able to deduct the cost of relocating to your new tax home as a moving expense. File prior years tax returns See Publication 521 for more information. File prior years tax returns Exception for federal crime investigations or prosecutions. File prior years tax returns   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. File prior years tax returns This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility. File prior years tax returns   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. File prior years tax returns Determining temporary or indefinite. File prior years tax returns   You must determine whether your assignment is temporary or indefinite when you start work. File prior years tax returns If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. File prior years tax returns An assignment or job that is initially temporary may become indefinite due to changed circumstances. File prior years tax returns A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. File prior years tax returns   The following examples illustrate whether an assignment or job is temporary or indefinite. File prior years tax returns Example 1. File prior years tax returns You are a construction worker. File prior years tax returns You live and regularly work in Los Angeles. File prior years tax returns You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. File prior years tax returns Your tax home is Los Angeles. File prior years tax returns Because of a shortage of work, you took a job on a construction project in Fresno. File prior years tax returns Your job was scheduled to end in 8 months. File prior years tax returns The job actually lasted 10 months. File prior years tax returns You realistically expected the job in Fresno to last 8 months. File prior years tax returns The job actually did last less than 1 year. File prior years tax returns The job is temporary and your tax home is still in Los Angeles. File prior years tax returns Example 2. File prior years tax returns The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. File prior years tax returns The job actually was completed in 10 months. File prior years tax returns Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. File prior years tax returns You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. File prior years tax returns Example 3. File prior years tax returns The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. File prior years tax returns After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). File prior years tax returns Initially, you realistically expected the job in Fresno to last for only 9 months. File prior years tax returns However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. File prior years tax returns You can only deduct your travel expenses for the first 8 months. File prior years tax returns You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. File prior years tax returns Going home on days off. File prior years tax returns   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. File prior years tax returns You cannot deduct the cost of your meals and lodging there. File prior years tax returns However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. File prior years tax returns You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. File prior years tax returns   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. File prior years tax returns In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. File prior years tax returns Probationary work period. File prior years tax returns   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. File prior years tax returns You cannot deduct any of your expenses for meals and lodging during the probationary period. File prior years tax returns What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. File prior years tax returns You can deduct ordinary and necessary expenses you have when you travel away from home on business. File prior years tax returns The type of expense you can deduct depends on the facts and your circumstances. File prior years tax returns Table 1-1 summarizes travel expenses you may be able to deduct. File prior years tax returns You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. File prior years tax returns When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. File prior years tax returns You can use a log, diary, notebook, or any other written record to keep track of your expenses. File prior years tax returns The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). File prior years tax returns Separating costs. File prior years tax returns   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. File prior years tax returns You must have a reasonable basis for making this allocation. File prior years tax returns For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. File prior years tax returns Travel expenses for another individual. File prior years tax returns    If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. File prior years tax returns Employee. File prior years tax returns   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. File prior years tax returns Business associate. File prior years tax returns   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. File prior years tax returns A business associate is someone with whom you could reasonably expect to actively conduct business. File prior years tax returns A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. File prior years tax returns Bona fide business purpose. File prior years tax returns   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. File prior years tax returns Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. File prior years tax returns Table 1-1. File prior years tax returns Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. File prior years tax returns IF you have expenses for. File prior years tax returns . File prior years tax returns . File prior years tax returns THEN you can deduct the cost of. File prior years tax returns . File prior years tax returns . File prior years tax returns transportation travel by airplane, train, bus, or car between your home and your business destination. File prior years tax returns If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. File prior years tax returns If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. File prior years tax returns taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. File prior years tax returns baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. File prior years tax returns car operating and maintaining your car when traveling away from home on business. File prior years tax returns You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. File prior years tax returns If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. File prior years tax returns lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. File prior years tax returns Meals include amounts spent for food, beverages, taxes, and related tips. File prior years tax returns See Meals for additional rules and limits. File prior years tax returns cleaning dry cleaning and laundry. File prior years tax returns telephone business calls while on your business trip. File prior years tax returns This includes business communication by fax machine or other communication devices. File prior years tax returns tips tips you pay for any expenses in this chart. File prior years tax returns other other similar ordinary and necessary expenses related to your business travel. File prior years tax returns These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. File prior years tax returns Example. File prior years tax returns Jerry drives to Chicago on business and takes his wife, Linda, with him. File prior years tax returns Linda is not Jerry's employee. File prior years tax returns Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. File prior years tax returns The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. File prior years tax returns Her expenses are not deductible. File prior years tax returns Jerry pays $199 a day for a double room. File prior years tax returns A single room costs $149 a day. File prior years tax returns He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. File prior years tax returns If he uses public transportation, he can deduct only his fare. File prior years tax returns Meals You can deduct the cost of meals in either of the following situations. File prior years tax returns It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. File prior years tax returns The meal is business-related entertainment. File prior years tax returns Business-related entertainment is discussed in chapter 2 . File prior years tax returns The following discussion deals only with meals that are not business-related entertainment. File prior years tax returns Lavish or extravagant. File prior years tax returns   You cannot deduct expenses for meals that are lavish or extravagant. File prior years tax returns An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. File prior years tax returns Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. File prior years tax returns 50% limit on meals. File prior years tax returns   You can figure your meals expense using either of the following methods. File prior years tax returns Actual cost. File prior years tax returns The standard meal allowance. File prior years tax returns Both of these methods are explained below. File prior years tax returns But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. File prior years tax returns   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. File prior years tax returns If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. File prior years tax returns Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. File prior years tax returns Actual Cost You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. File prior years tax returns If you use this method, you must keep records of your actual cost. File prior years tax returns Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. File prior years tax returns It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. File prior years tax returns The set amount varies depending on where and when you travel. File prior years tax returns In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . File prior years tax returns If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. File prior years tax returns See the recordkeeping rules for travel in chapter 5 . File prior years tax returns Incidental expenses. File prior years tax returns   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. File prior years tax returns   Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. File prior years tax returns Incidental-expenses-only method. File prior years tax returns   You can use an optional method (instead of actual cost) for deducting incidental expenses only. File prior years tax returns The amount of the deduction is $5 a day. File prior years tax returns You can use this method only if you did not pay or incur any meal expenses. File prior years tax returns You cannot use this method on any day that you use the standard meal allowance. File prior years tax returns This method is subject to the proration rules for partial days. File prior years tax returns See Travel for days you depart and return , later in this chapter. File prior years tax returns Note. File prior years tax returns The incidental-expenses-only method is not subject to the 50% limit discussed below. File prior years tax returns Federal employees should refer to the Federal Travel Regulations at www. File prior years tax returns gsa. File prior years tax returns gov. File prior years tax returns Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. File prior years tax returns 50% limit may apply. File prior years tax returns   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. File prior years tax returns If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. File prior years tax returns The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. File prior years tax returns There is no optional standard lodging amount similar to the standard meal allowance. File prior years tax returns Your allowable lodging expense deduction is your actual cost. File prior years tax returns Who can use the standard meal allowance. File prior years tax returns   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. File prior years tax returns Use of the standard meal allowance for other travel. File prior years tax returns   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. File prior years tax returns You can also use it to figure your meal expenses when you travel for qualifying educational purposes. File prior years tax returns You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. File prior years tax returns Amount of standard meal allowance. File prior years tax returns   The standard meal allowance is the federal M&IE rate. File prior years tax returns For travel in 2013, the rate for most small localities in the United States is $46 a day. File prior years tax returns    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. File prior years tax returns    You can find this information (organized by state) on the Internet at www. File prior years tax returns gsa. File prior years tax returns gov/perdiem. File prior years tax returns Enter a zip code or select a city and state for the per diem rates for the current fiscal year. File prior years tax returns Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. File prior years tax returns ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. File prior years tax returns You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. File prior years tax returns   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. File prior years tax returns If you work in the transportation industry, however, see Special rate for transportation workers , later. File prior years tax returns Standard meal allowance for areas outside the continental United States. File prior years tax returns   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. File prior years tax returns The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. File prior years tax returns S. File prior years tax returns Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. File prior years tax returns The Department of State establishes per diem rates for all other foreign areas. File prior years tax returns    You can access per diem rates for non-foreign areas outside the continental United States at: www. File prior years tax returns defensetravel. File prior years tax returns dod. File prior years tax returns mil/site/perdiemCalc. File prior years tax returns cfm. File prior years tax returns You can access all other foreign per diem rates at: www. File prior years tax returns state. File prior years tax returns gov/travel/. File prior years tax returns Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. File prior years tax returns Special rate for transportation workers. File prior years tax returns   You can use a special standard meal allowance if you work in the transportation industry. File prior years tax returns You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. File prior years tax returns If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). File prior years tax returns   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. File prior years tax returns If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. File prior years tax returns Travel for days you depart and return. File prior years tax returns   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). File prior years tax returns You can do so by one of two methods. File prior years tax returns Method 1: You can claim 3/4 of the standard meal allowance. File prior years tax returns Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. File prior years tax returns Example. File prior years tax returns Jen is employed in New Orleans as a convention planner. File prior years tax returns In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. File prior years tax returns She left her home in New Orleans at 10 a. File prior years tax returns m. File prior years tax returns on Wednesday and arrived in Washington, DC, at 5:30 p. File prior years tax returns m. File prior years tax returns After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. File prior years tax returns m. File prior years tax returns Jen's employer gave her a flat amount to cover her expenses and included it with her wages. File prior years tax returns Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. File prior years tax returns Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. File prior years tax returns For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. File prior years tax returns Travel in the United States The following discussion applies to travel in the United States. File prior years tax returns For this purpose, the United States includes the 50 states and the District of Columbia. File prior years tax returns The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. File prior years tax returns See Part of Trip Outside the United States , later. File prior years tax returns Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. File prior years tax returns If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. File prior years tax returns These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. File prior years tax returns Example. File prior years tax returns You work in Atlanta and take a business trip to New Orleans in May. File prior years tax returns Your business travel totals 850 miles round trip. File prior years tax returns On your way, you stop in Mobile to visit your parents. File prior years tax returns You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. File prior years tax returns If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. File prior years tax returns You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. File prior years tax returns The deduction for your meals is subject to the 50% limit on meals mentioned earlier. File prior years tax returns Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. File prior years tax returns However, you can deduct any expenses you have while at your destination that are directly related to your business. File prior years tax returns A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. File prior years tax returns The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. File prior years tax returns Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. File prior years tax returns For the part of your trip that is inside the United States, use the rules for travel in the United States. File prior years tax returns Travel outside the United States does not include travel from one point in the United States to another point in the United States. File prior years tax returns The following discussion can help you determine whether your trip was entirely within the United States. File prior years tax returns Public transportation. File prior years tax returns   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. File prior years tax returns Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . File prior years tax returns Example. File prior years tax returns You fly from New York to Puerto Rico with a scheduled stop in Miami. File prior years tax returns You return to New York nonstop. File prior years tax returns The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. File prior years tax returns Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. File prior years tax returns Private car. File prior years tax returns   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. File prior years tax returns Example. File prior years tax returns You travel by car from Denver to Mexico City and return. File prior years tax returns Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. File prior years tax returns The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. File prior years tax returns Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. File prior years tax returns For this purpose, the United States includes the 50 states and the District of Columbia. File prior years tax returns How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. File prior years tax returns Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. File prior years tax returns Travel entirely for business. File prior years tax returns   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. File prior years tax returns Travel considered entirely for business. File prior years tax returns   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. File prior years tax returns Exception 1 - No substantial control. File prior years tax returns   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. File prior years tax returns The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. File prior years tax returns   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. File prior years tax returns    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . File prior years tax returns   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. File prior years tax returns   A self-employed person generally has substantial control over arranging business trips. File prior years tax returns Exception 2 - Outside United States no more than a week. File prior years tax returns   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. File prior years tax returns One week means 7 consecutive days. File prior years tax returns In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. File prior years tax returns Example. File prior years tax returns You traveled to Brussels primarily for business. File prior years tax returns You left Denver on Tuesday and flew to New York. File prior years tax returns On Wednesday, you flew from New York to Brussels, arriving the next morning. File prior years tax returns On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. File prior years tax returns You flew back to New York, arriving Wednesday afternoon. File prior years tax returns On Thursday, you flew back to Denver. File prior years tax returns Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. File prior years tax returns This is because the day you depart does not count as a day outside the United States. File prior years tax returns You can deduct your cost of the round-trip flight between Denver and Brussels. File prior years tax returns You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. File prior years tax returns However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. File prior years tax returns Exception 3 - Less than 25% of time on personal activities. File prior years tax returns   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. File prior years tax returns For this purpose, count both the day your trip began and the day it ended. File prior years tax returns Example. File prior years tax returns You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. File prior years tax returns You then flew back to Seattle. File prior years tax returns You spent 1 day flying in each direction. File prior years tax returns Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. File prior years tax returns The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. File prior years tax returns Exception 4 - Vacation not a major consideration. File prior years tax returns   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. File prior years tax returns Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. File prior years tax returns You can only deduct the business portion of your cost of getting to and from your destination. File prior years tax returns You must allocate the costs between your business and other activities to determine your deductible amount. File prior years tax returns See Travel allocation rules , later. File prior years tax returns You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . File prior years tax returns In those cases, you can deduct the total cost of getting to and from your destination. File prior years tax returns Travel allocation rules. File prior years tax returns   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. File prior years tax returns The days you depart from and return to the United States are both counted as days outside the United States. File prior years tax returns   To figure the deductible amount of your round-trip travel expenses, use the following fraction. File prior years tax returns The numerator (top number) is the total number of business days outside the United States. File prior years tax returns The denominator (bottom number) is the total number of business and nonbusiness days of travel. File prior years tax returns Counting business days. File prior years tax returns   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. File prior years tax returns Transportation day. File prior years tax returns   Count as a business day any day you spend traveling to or from a business destination. File prior years tax returns However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. File prior years tax returns Extra days for side trips or nonbusiness activities cannot be counted as business days. File prior years tax returns Presence required. File prior years tax returns   Count as a business day any day your presence is required at a particular place for a specific business purpose. File prior years tax returns Count it as a business day even if you spend most of the day on nonbusiness activities. File prior years tax returns Day spent on business. File prior years tax returns   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. File prior years tax returns Also, count as a business day any day you are prevented from working because of circumstances beyond your control. File prior years tax returns Certain weekends and holidays. File prior years tax returns   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. File prior years tax returns But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. File prior years tax returns Example 1. File prior years tax returns Your tax home is New York City. File prior years tax returns You travel to Quebec, where you have a business appointment on Friday. File prior years tax returns You have another appointment on the following Monday. File prior years tax returns Because your presence was required on both Friday and Monday, they are business days. File prior years tax returns Because the weekend is between business days, Saturday and Sunday are counted as business days. File prior years tax returns This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. File prior years tax returns Example 2. File prior years tax returns If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. File prior years tax returns Nonbusiness activity on the way to or from your business destination. File prior years tax returns   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. File prior years tax returns   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. File prior years tax returns   You determine the nonbusiness portion of that expense by multiplying it by a fraction. File prior years tax returns The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. File prior years tax returns Example. File prior years tax returns You live in New York. File prior years tax returns On May 4 you flew to Paris to attend a business conference that began on May 5. File prior years tax returns The conference ended at noon on May 14. File prior years tax returns That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. File prior years tax returns The primary purpose for the trip was to attend the conference. File prior years tax returns If you had not stopped in Dublin, you would have arrived home the evening of May 14. File prior years tax returns You do not meet any of the exceptions that would allow you to consider your travel entirely for business. File prior years tax returns May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. File prior years tax returns You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. File prior years tax returns You cannot deduct your expenses while in Dublin. File prior years tax returns You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. File prior years tax returns You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. File prior years tax returns Round-trip airfare from New York to Dublin would have been $1,250. File prior years tax returns You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). File prior years tax returns Your deductible air travel expense is $1,364 ($1,850 − $486). File prior years tax returns Nonbusiness activity at, near, or beyond business destination. File prior years tax returns   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. File prior years tax returns   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. File prior years tax returns   You determine the nonbusiness portion of that expense by multiplying it by a fraction. File prior years tax returns The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. File prior years tax returns   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. File prior years tax returns Example. File prior years tax returns Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. File prior years tax returns You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. File prior years tax returns In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. File prior years tax returns You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. File prior years tax returns (Assume these expenses total $4,939. File prior years tax returns ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. File prior years tax returns Other methods. File prior years tax returns   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. File prior years tax returns Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. File prior years tax returns However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. File prior years tax returns Example. File prior years tax returns The university from which you graduated has a continuing education program for members of its alumni association. File prior years tax returns This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. File prior years tax returns However, none of the conferences are directed toward specific occupations or professions. File prior years tax returns It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. File prior years tax returns Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. File prior years tax returns These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. File prior years tax returns Professional conference directors schedule and conduct the sessions. File prior years tax returns Participants can choose those sessions they wish to attend. File prior years tax returns You can participate in this program since you are a member of the alumni association. File prior years tax returns You and your family take one of the trips. File prior years tax returns You spend about 2 hours at each of the planned sessions. File prior years tax returns The rest of the time you go touring and sightseeing with your family. File prior years tax returns The trip lasts less than 1 week. File prior years tax returns Your travel expenses for the trip are not deductible since the trip was primarily a vacation. File prior years tax returns However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. File prior years tax returns These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. File prior years tax returns Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. File prior years tax returns The limit is twice the highest federal per diem rate allowable at the time of your travel. File prior years tax returns (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. File prior years tax returns ) Daily limit on luxury water travel. File prior years tax returns   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. File prior years tax returns   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. File prior years tax returns 1 – Mar. File prior years tax returns 31 $367 $734   Apr. File prior years tax returns 1 – June 30 312 624   July 1 – Aug. File prior years tax returns 31 310 620   Sept. File prior years tax returns 1 – Sept. File prior years tax returns 30 366 732   Oct. File prior years tax returns 1 – Dec. File prior years tax returns 31 374 748 Example. File prior years tax returns Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. File prior years tax returns Her expense for the 6-day cruise was $5,200. File prior years tax returns Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). File prior years tax returns Meals and entertainment. File prior years tax returns   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. File prior years tax returns For a discussion of the 50% Limit , see chapter 2. File prior years tax returns Example. File prior years tax returns In the previous example, Caroline's luxury water travel had a total cost of $5,200. File prior years tax returns Of that amount, $3,700 was separately stated as meals and entertainment. File prior years tax returns Caroline, who is self-employed, is not reimbursed for any of her travel expenses. File prior years tax returns Caroline figures her deductible travel expenses as follows. File prior years tax returns Meals and entertainment $3,700   50% limit × . File prior years tax returns 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. File prior years tax returns Not separately stated. File prior years tax returns   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. File prior years tax returns Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. File prior years tax returns See Cruise Ships under Conventions. File prior years tax returns Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. File prior years tax returns You cannot deduct the travel expenses for your family. File prior years tax returns If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. File prior years tax returns Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. File prior years tax returns You can deduct your travel expenses only if your attendance is connected to your own trade or business. File prior years tax returns Convention agenda. File prior years tax returns   The convention agenda or program generally shows the purpose of the convention. File prior years tax returns You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. File prior years tax returns The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. File prior years tax returns Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. File prior years tax returns See Reasonableness test , later. File prior years tax returns If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . File prior years tax returns North American area. File prior years tax returns   The North American area includes the following locations. File prior years tax returns American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. File prior years tax returns S. File prior years tax returns Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. File prior years tax returns S. File prior years tax returns islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. File prior years tax returns Reasonableness test. File prior years tax returns   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. File prior years tax returns The purpose of the meeting and the activities taking place at the meeting. File prior years tax returns The purposes and activities of the sponsoring organizations or groups. File prior years tax returns The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. File prior years tax returns Other relevant factors you may present. File prior years tax returns Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. File prior years tax returns All ships that sail are considered cruise ships. File prior years tax returns You can deduct these expenses only if all of the following requirements are met. File prior years tax returns The convention, seminar, or meeting is directly related to your trade or business. File prior years tax returns The cruise ship is a vessel registered in the United States. File prior years tax returns All of the cruise ship's ports of call are in the United States or in possessions of the United States. File prior years tax returns You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. File prior years tax returns You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. File prior years tax returns Prev  Up  Next   Home   More Online Publications
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U.S. Citizenship and Immigration Services oversees immigration to the United States.

The File Prior Years Tax Returns

File prior years tax returns 8. File prior years tax returns   Qualified Tuition Program (QTP) Table of Contents Introduction What Is a Qualified Tuition ProgramDesignated beneficiary. File prior years tax returns Half-time student. File prior years tax returns How Much Can You Contribute Are Distributions TaxableFiguring the Taxable Portion of a Distribution Additional Tax on Taxable Distributions Rollovers and Other TransfersRollovers Changing the Designated Beneficiary Introduction Qualified tuition programs (QTPs) are also called “529 plans. File prior years tax returns ” States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at a postsecondary institution. File prior years tax returns Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. File prior years tax returns If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. File prior years tax returns You cannot deduct either payments or contributions to a QTP. File prior years tax returns For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it. File prior years tax returns What is the tax benefit of a QTP. File prior years tax returns   No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses. File prior years tax returns See Are Distributions Taxable , later, for more information. File prior years tax returns    Even if a QTP is used to finance a student's education, the student or the student's parents still may be eligible to claim the American opportunity credit or the lifetime learning credit. File prior years tax returns See Coordination With American Opportunity and Lifetime Learning Credits, later. File prior years tax returns What Is a Qualified Tuition Program A qualified tuition program is a program set up to allow you to either prepay, or contribute to an account established for paying, a student's qualified education expenses at an eligible educational institution. File prior years tax returns QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. File prior years tax returns The program must meet certain requirements. File prior years tax returns Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP. File prior years tax returns Qualified education expenses. File prior years tax returns   These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). File prior years tax returns As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time. File prior years tax returns See Half-time student , later. File prior years tax returns The following expenses must be required for enrollment or attendance of a Designated beneficiary (defined later) at an eligible educational institution. File prior years tax returns Tuition and fees. File prior years tax returns Books, supplies, and equipment. File prior years tax returns Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution. File prior years tax returns Expenses for room and board must be incurred by students who are enrolled at least half-time. File prior years tax returns The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. File prior years tax returns The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. File prior years tax returns The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. File prior years tax returns You will need to contact the eligible educational institution for qualified room and board costs. File prior years tax returns    For tax years after 2010, the purchase of computer technology or equipment is only a qualified education expense if the computer technology or equipment is required for enrollment or attendance at an eligible institution. File prior years tax returns Designated beneficiary. File prior years tax returns   The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. File prior years tax returns The designated beneficiary can be changed after participation in the QTP begins. File prior years tax returns If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship. File prior years tax returns Half-time student. File prior years tax returns   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic workload for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. File prior years tax returns Eligible educational institution. File prior years tax returns   For purposes of a QTP, this is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. File prior years tax returns S. File prior years tax returns Department of Education. File prior years tax returns It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. File prior years tax returns The educational institution should be able to tell you if it is an eligible educational institution. File prior years tax returns   Certain educational institutions located outside the United States also participate in the U. File prior years tax returns S. File prior years tax returns Department of Education's Federal Student Aid (FSA) programs. File prior years tax returns   How Much Can You Contribute Contributions to a QTP on behalf of any beneficiary cannot be more than the amount necessary to provide for the qualified education expenses of the beneficiary. File prior years tax returns There are no income restrictions on the individual contributors. File prior years tax returns You can contribute to both a QTP and a Coverdell ESA in the same year for the same designated beneficiary. File prior years tax returns   Are Distributions Taxable The part of a distribution representing the amount paid or contributed to a QTP does not have to be included in income. File prior years tax returns This is a return of the investment in the plan. File prior years tax returns The designated beneficiary generally does not have to include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified education expenses (defined under Figuring the Taxable Portion of a Distribution , later). File prior years tax returns Earnings and return of investment. File prior years tax returns    You will receive a Form 1099-Q, from each of the programs from which you received a QTP distribution in 2013. File prior years tax returns The amount of your gross distribution (box 1) shown on each form will be divided between your earnings (box 2) and your basis, or return of investment (box 3). File prior years tax returns Form 1099-Q should be sent to you by January 31, 2014. File prior years tax returns Figuring the Taxable Portion of a Distribution To determine if total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all QTP distributions for the tax year to the adjusted qualified education expenses. File prior years tax returns Adjusted qualified education expenses. File prior years tax returns   This amount is the total qualified education expenses reduced by any tax-free educational assistance. File prior years tax returns Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. File prior years tax returns Taxable earnings. File prior years tax returns   Use the following steps to figure the taxable part. File prior years tax returns Multiply the total distributed earnings shown in box 2 of Form 1099-Q by a fraction. File prior years tax returns The numerator is the adjusted qualified education expenses paid during the year and the denominator is the total amount distributed during the year. File prior years tax returns Subtract the amount figured in (1) from the total distributed earnings. File prior years tax returns The result is the amount the beneficiary must include in income. File prior years tax returns Report it on Form 1040 or Form 1040NR, line 21. File prior years tax returns Example 1. File prior years tax returns In 2007, Sara Clarke's parents opened a savings account for her with a QTP maintained by their state government. File prior years tax returns Over the years they contributed $18,000 to the account. File prior years tax returns The total balance in the account was $27,000 on the date the distribution was made. File prior years tax returns In the summer of 2013, Sara enrolled in college and had $8,300 of qualified education expenses for the rest of the year. File prior years tax returns She paid her college expenses from the following sources. File prior years tax returns   Gift from parents $1,600     Partial tuition scholarship (tax-free) 3,100     QTP distribution 5,300           Before Sara can determine the taxable part of her QTP distribution, she must reduce her total qualified education expenses by any tax-free educational assistance. File prior years tax returns   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Equals: Adjusted qualified  education expenses (AQEE) $5,200   Since the remaining expenses ($5,200) are less than the QTP distribution, part of the earnings will be taxable. File prior years tax returns Sara's Form 1099-Q shows that $950 of the QTP distribution is earnings. File prior years tax returns Sara figures the taxable part of the distributed earnings as follows. File prior years tax returns   1. File prior years tax returns $950 (earnings) × $5,200 AQEE  $5,300 distribution           =$932 (tax-free earnings)     2. File prior years tax returns $950 (earnings)−$932 (tax-free earnings)     =$18 (taxable earnings)  Sara must include $18 in income (Form 1040, line 21) as distributed QTP earnings not used for adjusted qualified education expenses. File prior years tax returns Coordination With American Opportunity and Lifetime Learning Credits An American opportunity or lifetime learning credit (education credit) can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. File prior years tax returns This means that after the beneficiary reduces qualified education expenses by tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit. File prior years tax returns Example 2. File prior years tax returns Assume the same facts as in Example 1 , except that Sara's parents claimed an American opportunity credit of $2,500 (based on $4,000 expenses). File prior years tax returns   Total qualified education expenses $8,300     Minus: Tax-free educational assistance −3,100     Minus: Expenses taken into account  in figuring American opportunity credit −4,000     Equals: Adjusted qualified  education expenses (AQEE) $1,200           The taxable part of the distribution is figured as follows. File prior years tax returns   1. File prior years tax returns $950 (earnings) × $1,200 AQEE  $5,300 distribution           =$215 (tax-free earnings)     2. File prior years tax returns $950 (earnings)−$215 (tax-free earnings)     =$735 (taxable earnings)       Sara must include $735 in income (Form 1040, line 21). File prior years tax returns This represents distributed earnings not used for adjusted qualified education expenses. File prior years tax returns Coordination With Coverdell ESA Distributions If a designated beneficiary receives distributions from both a QTP and a Coverdell ESA in the same year, and the total of these distributions is more than the beneficiary's adjusted qualified higher education expenses, the expenses must be allocated between the distributions. File prior years tax returns For purposes of this allocation, disregard any qualified elementary and secondary education expenses. File prior years tax returns Example 3. File prior years tax returns Assume the same facts as in Example 2 , except that instead of receiving a $5,300 distribution from her QTP, Sara received $4,600 from that account and $700 from her Coverdell ESA. File prior years tax returns In this case, Sara must allocate her $1,200 of adjusted qualified higher education expenses (AQHEE) between the two distributions. File prior years tax returns   $1,200 AQHEE × $700 ESA distribution  $5,300 total distribution = $158 AQHEE (ESA)     $1,200 AQHEE × $4,600 QTP distribution  $5,300 total distribution = $1,042 AQHEE (QTP)   Sara then figures the taxable portion of her Coverdell ESA distribution based on qualified higher education expenses of $158, and the taxable portion of her QTP distribution based on the other $1,042. File prior years tax returns Note. File prior years tax returns If you are required to allocate your expenses between Coverdell ESA and QTP distributions, and you have adjusted qualified elementary and secondary education expenses, see the examples in chapter 7, Coverdell Education Savings Account under Coordination With Qualified Tuition Program (QTP) Distributions . File prior years tax returns Coordination With Tuition and Fees Deduction. File prior years tax returns   A tuition and fees deduction can be claimed in the same year the beneficiary takes a tax-free distribution from a QTP, as long as the same expenses are not used for both benefits. File prior years tax returns Losses on QTP Investments If you have a loss on your investment in a QTP account, you may be able to take the loss on your income tax return. File prior years tax returns You can take the loss only when all amounts from that account have been distributed and the total distributions are less than your unrecovered basis. File prior years tax returns Your basis is the total amount of contributions to that QTP account. File prior years tax returns You claim the loss as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23 (Schedule A (Form 1040NR), line 9), subject to the 2%-of-adjusted-gross-income limit. File prior years tax returns If you have distributions from more than one QTP account during a year, you must combine the information (amount of distribution, basis, etc. File prior years tax returns ) from all such accounts in order to determine your taxable earnings for the year. File prior years tax returns By doing this, the loss from one QTP account reduces the distributed earnings (if any) from any other QTP accounts. File prior years tax returns Example 1. File prior years tax returns In 2013, Taylor received a final distribution of $1,000 from QTP #1. File prior years tax returns His unrecovered basis in that account before the distribution was $3,000. File prior years tax returns If Taylor itemizes his deductions, he can claim the $2,000 loss on Schedule A (Form 1040). File prior years tax returns Example 2. File prior years tax returns Assume the same facts as in Example 1 , except that Taylor also had a distribution of $9,000 from QTP #2, giving him total distributions for 2013 of $10,000. File prior years tax returns His total basis in these distributions was $4,500 ($3,000 for QTP #1 and $1,500 for QTP #2). File prior years tax returns Taylor's adjusted qualified education expenses for 2013 totaled $6,000. File prior years tax returns In order to figure his taxable earnings, Taylor combines the two accounts and determines his taxable earnings as follows. File prior years tax returns   1. File prior years tax returns $10,000 (total distribution)−$4,500 (basis portion of distribution)     = $5,500 (earnings included in distribution)   2. File prior years tax returns $5,500 (earnings) x $6,000 AQEE  $10,000 distribution           =$3,300 (tax-free earnings)     3. File prior years tax returns $5,500 (earnings)−$3,300 (tax-free earnings)     =$2,200 (taxable earnings)                 Taylor must include $2,200 in income on Form 1040, line 21. File prior years tax returns Because Taylor's accounts must be combined, he cannot deduct his $2,000 loss (QTP #1) on Schedule A (Form 1040). File prior years tax returns Instead, the $2,000 loss reduces the total earnings that were distributed, thereby reducing his taxable earnings. File prior years tax returns Additional Tax on Taxable Distributions Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income. File prior years tax returns Exceptions. File prior years tax returns   The 10% additional tax does not apply to distributions: Paid to a beneficiary (or to the estate of the designated beneficiary) on or after the death of the designated beneficiary. File prior years tax returns Made because the designated beneficiary is disabled. File prior years tax returns A person is considered to be disabled if he or she shows proof that he or she cannot do any substantial gainful activity because of his or her physical or mental condition. File prior years tax returns A physician must determine that his or her condition can be expected to result in death or to be of long-continued and indefinite duration. File prior years tax returns Included in income because the designated beneficiary received: A tax-free scholarship or fellowship (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), or Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. File prior years tax returns Made on account of the attendance of the designated beneficiary at a U. File prior years tax returns S. File prior years tax returns military academy (such as the USNA at Annapolis). File prior years tax returns This exception applies only to the extent that the amount of the distribution does not exceed the costs of advanced education (as defined in section 2005(d)(3) of title 10 of the U. File prior years tax returns S. File prior years tax returns Code) attributable to such attendance. File prior years tax returns Included in income only because the qualified education expenses were taken into account in determining the American opportunity or lifetime learning credit (see Coordination With American Opportunity and Lifetime Learning Credits , earlier. File prior years tax returns ) Exception (3) applies only to the extent the distribution is not more than the scholarship, allowance, or payment. File prior years tax returns Figuring the additional tax. File prior years tax returns    Use Part II of Form 5329, to figure any additional tax. File prior years tax returns Report the amount on Form 1040, line 58, or Form 1040NR, line 56. File prior years tax returns Rollovers and Other Transfers Assets can be rolled over or transferred from one QTP to another. File prior years tax returns In addition, the designated beneficiary can be changed without transferring accounts. File prior years tax returns Rollovers Any amount distributed from a QTP is not taxable if it is rolled over to another QTP for the benefit of the same beneficiary or for the benefit of a member of the beneficiary's family (including the beneficiary's spouse). File prior years tax returns An amount is rolled over if it is paid to another QTP within 60 days after the date of the distribution. File prior years tax returns Do not report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040 or 1040NR. File prior years tax returns These are not taxable distributions. File prior years tax returns Members of the beneficiary's family. File prior years tax returns   For these purposes, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. File prior years tax returns Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. File prior years tax returns Brother, sister, stepbrother, or stepsister. File prior years tax returns Father or mother or ancestor of either. File prior years tax returns Stepfather or stepmother. File prior years tax returns Son or daughter of a brother or sister. File prior years tax returns Brother or sister of father or mother. File prior years tax returns Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. File prior years tax returns The spouse of any individual listed above. File prior years tax returns First cousin. File prior years tax returns Example. File prior years tax returns When Aaron graduated from college last year he had $5,000 left in his QTP. File prior years tax returns He wanted to give this money to his younger brother, who was in junior high school. File prior years tax returns In order to avoid paying tax on the distribution of the amount remaining in his account, Aaron contributed the same amount to his brother's QTP within 60 days of the distribution. File prior years tax returns If the rollover is to another QTP for the same beneficiary, only one rollover is allowed within 12 months of a previous transfer to any QTP for that designated beneficiary. File prior years tax returns Changing the Designated Beneficiary There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. File prior years tax returns See Members of the beneficiary's family , earlier. File prior years tax returns Example. File prior years tax returns Assume the same situation as in the last example. File prior years tax returns Instead of closing his QTP and paying the distribution into his brother's QTP, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his brother. File prior years tax returns Prev  Up  Next   Home   More Online Publications