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Free File 2011 Taxes

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Free File 2011 Taxes

Free file 2011 taxes 6. Free file 2011 taxes   Insurance Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Deductible PremiumsSelf-Employed Health Insurance Deduction Nondeductible Premiums Capitalized Premiums When To Deduct Premiums What's New Retiree drug subsidy. Free file 2011 taxes  Beginning in 2013, sponsors of certain qualified retiree prescription drug plans must account for the subsidy received by reducing the amount of qualified retiree prescription drug plans expense by the subsidy received (taking into account the taxpayer's accounting method). Free file 2011 taxes For more information, see the retiree drug subsidy frequently asked questions on IRS. Free file 2011 taxes gov. Free file 2011 taxes Introduction You generally can deduct the ordinary and necessary cost of insurance as a business expense if it is for your trade, business, or profession. Free file 2011 taxes However, you may have to capitalize certain insurance costs under the uniform capitalization rules. Free file 2011 taxes For more information, see Capitalized Premiums , later. Free file 2011 taxes Topics - This chapter discusses: Deductible premiums Nondeductible premiums Capitalized premiums When to deduct premiums Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 538 Accounting Periods and Methods 547 Casualties, Disasters, and Thefts Form (and Instructions) 1040 U. Free file 2011 taxes S. Free file 2011 taxes Individual Income Tax Return See chapter 12 for information about getting publications and forms. Free file 2011 taxes Deductible Premiums You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business. Free file 2011 taxes Insurance that covers fire, storm, theft, accident, or similar losses. Free file 2011 taxes Credit insurance that covers losses from business bad debts. Free file 2011 taxes Group hospitalization and medical insurance for employees, including long-term care insurance. Free file 2011 taxes If a partnership pays accident and health insurance premiums for its partners, it generally can deduct them as guaranteed payments to partners. Free file 2011 taxes If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages subject to federal income tax withholding. Free file 2011 taxes See Publication 15-B. Free file 2011 taxes Liability insurance. Free file 2011 taxes Malpractice insurance that covers your personal liability for professional negligence resulting in injury or damage to patients or clients. Free file 2011 taxes Workers' compensation insurance set by state law that covers any claims for bodily injuries or job-related diseases suffered by employees in your business, regardless of fault. Free file 2011 taxes If a partnership pays workers' compensation premiums for its partners, it generally can deduct them as guaranteed payments to partners. Free file 2011 taxes If an S corporation pays workers' compensation premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the shareholder's wages. Free file 2011 taxes Contributions to a state unemployment insurance fund are deductible as taxes if they are considered taxes under state law. Free file 2011 taxes Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness. Free file 2011 taxes Car and other vehicle insurance that covers vehicles used in your business for liability, damages, and other losses. Free file 2011 taxes If you operate a vehicle partly for personal use, deduct only the part of the insurance premium that applies to the business use of the vehicle. Free file 2011 taxes If you use the standard mileage rate to figure your car expenses, you cannot deduct any car insurance premiums. Free file 2011 taxes Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract. Free file 2011 taxes Business interruption insurance that pays for lost profits if your business is shut down due to a fire or other cause. Free file 2011 taxes Self-Employed Health Insurance Deduction You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Free file 2011 taxes The insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Free file 2011 taxes A child includes your son, daughter, stepchild, adopted child, or foster child. Free file 2011 taxes A foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Free file 2011 taxes One of the following statements must be true. Free file 2011 taxes You were self-employed and had a net profit for the year reported on Schedule C (Form 1040), Profit or Loss From Business; Schedule C-EZ (Form 1040), Net Profit From Business; or Schedule F (Form 1040), Profit or Loss From Farming. Free file 2011 taxes You were a partner with net earnings from self-employment for the year reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free file 2011 taxes , box 14, code A. Free file 2011 taxes You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. Free file 2011 taxes You received wages in 2013 from an S corporation in which you were a more-than-2% shareholder. Free file 2011 taxes Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2, Wage and Tax Statement. Free file 2011 taxes The insurance plan must be established, or considered to be established as discussed in the following bullets, under your business. Free file 2011 taxes For self-employed individuals filing a Schedule C, C-EZ, or F, a policy can be either in the name of the business or in the name of the individual. Free file 2011 taxes For partners, a policy can be either in the name of the partnership or in the name of the partner. Free file 2011 taxes You can either pay the premiums yourself or your partnership can pay them and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Free file 2011 taxes However, if the policy is in your name and you pay the premiums yourself, the partnership must reimburse you and report the premium amounts on Schedule K-1 (Form 1065) as guaranteed payments to be included in your gross income. Free file 2011 taxes Otherwise, the insurance plan will not be considered to be established under your business. Free file 2011 taxes For more-than-2% shareholders, a policy can be either in the name of the S corporation or in the name of the shareholder. Free file 2011 taxes You can either pay the premiums yourself or your S corporation can pay them and report the premium amounts on Form W-2 as wages to be included in your gross income. Free file 2011 taxes However, if the policy is in your name and you pay the premiums yourself, the S corporation must reimburse you and report the premium amounts on Form W-2 as wages to be included in your gross income. Free file 2011 taxes Otherwise, the insurance plan will not be considered to be established under your business. Free file 2011 taxes Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction. Free file 2011 taxes If you previously filed returns without using Medicare premiums to figure the deduction, you can file timely amended returns to refigure the deduction. Free file 2011 taxes For more information, see Form 1040X, Amended U. Free file 2011 taxes S. Free file 2011 taxes Individual Income Tax Return. Free file 2011 taxes Amounts paid for health insurance coverage from retirement plan distributions that were nontaxable because you are a retired public safety officer cannot be used to figure the deduction. Free file 2011 taxes Take the deduction on Form 1040, line 29. Free file 2011 taxes Qualified long-term care insurance. Free file 2011 taxes   You can include premiums paid on a qualified long-term care insurance contract when figuring your deduction. Free file 2011 taxes But, for each person covered, you can include only the smaller of the following amounts. Free file 2011 taxes The amount paid for that person. Free file 2011 taxes The amount shown below. Free file 2011 taxes Use the person's age at the end of the tax year. Free file 2011 taxes Age 40 or younger–$360 Age 41 to 50–$680 Age 51 to 60–$1,360 Age 61 to 70–$3,640 Age 71 or older–$4,550 Qualified long-term care insurance contract. Free file 2011 taxes   A qualified long-term care insurance contract is an insurance contract that only provides coverage of qualified long-term care services. Free file 2011 taxes The contract must meet all the following requirements. Free file 2011 taxes It must be guaranteed renewable. Free file 2011 taxes It must provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits. Free file 2011 taxes It must not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed. Free file 2011 taxes It generally must not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. Free file 2011 taxes Qualified long-term care services. Free file 2011 taxes   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and Maintenance or personal care services. Free file 2011 taxes The services must be required by a chronically ill individual and prescribed by a licensed health care practitioner. Free file 2011 taxes Worksheet 6-A. Free file 2011 taxes Self-Employed Health Insurance Deduction Worksheet Note. Free file 2011 taxes Use a separate worksheet for each trade or business under which an insurance plan is established. Free file 2011 taxes 1. Free file 2011 taxes Enter the total amount paid in 2013 for health insurance coverage established under your business for 2013 for you, your spouse, and your dependents. Free file 2011 taxes Your insurance can also cover your child who was under age 27 at the end of 2013, even if the child was not your dependent. Free file 2011 taxes But do not include the following. Free file 2011 taxes   Amounts for any month you were eligible to participate in a health plan subsidized by your or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Free file 2011 taxes Any amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer. Free file 2011 taxes Any amounts you included on Form 8885, line 4. Free file 2011 taxes Any qualified health insurance premiums you paid to “U. Free file 2011 taxes S. Free file 2011 taxes Treasury-HCTC. Free file 2011 taxes ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Free file 2011 taxes Any payments for qualified long-term care insurance (see line 2) 1. Free file 2011 taxes   2. Free file 2011 taxes For coverage under a qualified long-term care insurance contract, enter for each person covered the smaller of the following amounts. Free file 2011 taxes       a) Total payments made for that person during the year. Free file 2011 taxes       b) The amount shown below. Free file 2011 taxes Use the person's age at the end of the tax year. Free file 2011 taxes         $360— if that person is age 40 or younger          $680— if age 41 to 50         $1,360— if age 51 to 60         $3,640— if age 61 to 70         $4,550— if age 71 or older         Do not include payments for any month you were eligible to participate in a long-term care insurance plan subsidized by your or your spouse’s employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2013. Free file 2011 taxes If more than one person is covered, figure separately the amount to enter for each person. Free file 2011 taxes Then enter the total of those amounts 2. Free file 2011 taxes   3. Free file 2011 taxes Add lines 1 and 2 3. Free file 2011 taxes   4. Free file 2011 taxes Enter your net profit* and any other earned income** from the trade or business under which the insurance plan is established. Free file 2011 taxes Do not include Conservation Reserve Program payments exempt from self-employment tax. Free file 2011 taxes If the business is an S corporation, skip to line 11 4. Free file 2011 taxes   5. Free file 2011 taxes Enter the total of all net profits* from: Schedule C (Form 1040), line 31; Schedule C-EZ (Form 1040), line 3; Schedule F (Form 1040), line 34; or Schedule K-1 (Form 1065), box 14, code A; plus any other income allocable to the profitable businesses. Free file 2011 taxes Do not include Conservation Reserve Program payments exempt from self-employment tax. Free file 2011 taxes See the Instructions for Schedule SE (Form 1040). Free file 2011 taxes Do not include any net losses shown on these schedules. Free file 2011 taxes 5. Free file 2011 taxes   6. Free file 2011 taxes Divide line 4 by line 5 6. Free file 2011 taxes   7. Free file 2011 taxes Multiply Form 1040, line 27, by the percentage on line 6 7. Free file 2011 taxes   8. Free file 2011 taxes Subtract line 7 from line 4 8. Free file 2011 taxes   9. Free file 2011 taxes Enter the amount, if any, from Form 1040, line 28, attributable to the same trade or business in which the insurance plan is established 9. Free file 2011 taxes   10. Free file 2011 taxes Subtract line 9 from line 8 10. Free file 2011 taxes   11. Free file 2011 taxes Enter your Medicare wages (Form W-2, box 5) from an S corporation in which you are a more-than-2% shareholder and in which the insurance plan is established 11. Free file 2011 taxes   12. Free file 2011 taxes Enter any amount from Form 2555, line 45, attributable to the amount entered on line 4 or 11 above, or any amount from Form 2555-EZ, line 18, attributable to the amount entered on line 11 above 12. Free file 2011 taxes   13. Free file 2011 taxes Subtract line 12 from line 10 or 11, whichever applies 13. Free file 2011 taxes   14. Free file 2011 taxes Enter the smaller of line 3 or line 13 here and on Form 1040, line 29. Free file 2011 taxes Do not include this amount when figuring any medical expense deduction on Schedule A (Form 1040). Free file 2011 taxes 14. Free file 2011 taxes   * If you used either optional method to figure your net earnings from self-employment from any business, do not enter your net profit from the business. Free file 2011 taxes Instead, enter the amount attributable to that business from Schedule SE (Form 1040), Section B, line 4b. Free file 2011 taxes * *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. Free file 2011 taxes However, it does not include capital gain income. Free file 2011 taxes Chronically ill individual. Free file 2011 taxes   A chronically ill individual is a person who has been certified as one of the following. Free file 2011 taxes An individual who has been unable, due to loss of functional capacity for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual. Free file 2011 taxes Activities of daily living are eating, toileting, transferring (general mobility), bathing, dressing, and continence. Free file 2011 taxes An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Free file 2011 taxes The certification must have been made by a licensed health care practitioner within the previous 12 months. Free file 2011 taxes Benefits received. Free file 2011 taxes   For information on excluding benefits you receive from a long-term care contract from gross income, see Publication 525. Free file 2011 taxes Other coverage. Free file 2011 taxes   You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsidized health plan at any time during that month, even if you did not actually participate. Free file 2011 taxes In addition, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2013, do not use amounts paid for coverage for that month to figure the deduction. Free file 2011 taxes   These rules are applied separately to plans that provide long-term care insurance and plans that do not provide long-term care insurance. Free file 2011 taxes However, any medical insurance payments not deductible on Form 1040, line 29, can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, if you itemize deductions. Free file 2011 taxes Effect on itemized deductions. Free file 2011 taxes   Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deductions. Free file 2011 taxes Effect on self-employment tax. Free file 2011 taxes   For tax years beginning before or after 2010, you cannot subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax from the business under which the insurance plan is established, or considered to be established as discussed earlier. Free file 2011 taxes For more information, see Schedule SE (Form 1040). Free file 2011 taxes How to figure the deduction. Free file 2011 taxes   Generally, you can use the worksheet in the Form 1040 instructions to figure your deduction. Free file 2011 taxes However, if any of the following apply, you must use Worksheet 6-A in this chapter. Free file 2011 taxes You had more than one source of income subject to self-employment tax. Free file 2011 taxes You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Free file 2011 taxes You are using amounts paid for qualified long-term care insurance to figure the deduction. Free file 2011 taxes If you are claiming the health coverage tax credit, complete Form 8885, Health Coverage Tax Credit, before you figure this deduction. Free file 2011 taxes Health coverage tax credit. Free file 2011 taxes   You may be able to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Free file 2011 taxes Use Form 8885 to figure the amount, if any, of this credit. Free file 2011 taxes   When figuring the amount to enter on line 1 of Worksheet 6-A, do not include the following. Free file 2011 taxes Any amounts you included on Form 8885, line 4. Free file 2011 taxes Any qualified health insurance premiums you paid to “U. Free file 2011 taxes S. Free file 2011 taxes Treasury-HCTC. Free file 2011 taxes ” Any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Free file 2011 taxes More than one health plan and business. Free file 2011 taxes   If you have more than one health plan during the year and each plan is established under a different business, you must use separate worksheets (Worksheet 6-A) to figure each plan's net earnings limit. Free file 2011 taxes Include the premium you paid under each plan on line 1 or line 2 of that separate worksheet and your net profit (or wages) from that business on line 4 (or line 11). Free file 2011 taxes For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets cannot be more than the appropriate limit shown on line 2 for that person. Free file 2011 taxes Nondeductible Premiums You cannot deduct premiums on the following kinds of insurance. Free file 2011 taxes Self-insurance reserve funds. Free file 2011 taxes You cannot deduct amounts credited to a reserve set up for self-insurance. Free file 2011 taxes This applies even if you cannot get business insurance coverage for certain business risks. Free file 2011 taxes However, your actual losses may be deductible. Free file 2011 taxes See Publication 547. Free file 2011 taxes Loss of earnings. Free file 2011 taxes You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. Free file 2011 taxes However, see the discussion on overhead insurance, item (8), under Deductible Premiums , earlier. Free file 2011 taxes Certain life insurance and annuities. Free file 2011 taxes For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. Free file 2011 taxes You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. Free file 2011 taxes A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. Free file 2011 taxes For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. Free file 2011 taxes The disallowance applies without regard to whom the policy covers. Free file 2011 taxes Partners. Free file 2011 taxes If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. Free file 2011 taxes You cannot deduct the insurance premiums. Free file 2011 taxes Insurance to secure a loan. Free file 2011 taxes If you take out a policy on your life or on the life of another person with a financial interest in your business to get or protect a business loan, you cannot deduct the premiums as a business expense. Free file 2011 taxes Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. Free file 2011 taxes In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Free file 2011 taxes Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. Free file 2011 taxes Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Free file 2011 taxes You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Free file 2011 taxes Indirect costs include premiums for insurance on your plant or facility, machinery, equipment, materials, property produced, or property acquired for resale. Free file 2011 taxes Uniform capitalization rules. Free file 2011 taxes   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Free file 2011 taxes Produce real property or tangible personal property. Free file 2011 taxes For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Free file 2011 taxes Acquire property for resale. Free file 2011 taxes However, these rules do not apply to the following property. Free file 2011 taxes Personal property you acquire for resale if your average annual gross receipts are $10 million or less for the 3 prior tax years. Free file 2011 taxes Property you produce if you meet either of the following conditions. Free file 2011 taxes Your indirect costs of producing the property are $200,000 or less. Free file 2011 taxes You use the cash method of accounting and do not account for inventories. Free file 2011 taxes More information. Free file 2011 taxes   For more information on these rules, see Uniform Capitalization Rules in Publication 538 and the regulations under Internal Revenue Code section 263A. Free file 2011 taxes When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Free file 2011 taxes Cash method. Free file 2011 taxes   If you use the cash method of accounting, you generally deduct insurance premiums in the tax year you actually paid them, even if you incurred them in an earlier year. Free file 2011 taxes However, see Prepayment , later. Free file 2011 taxes Accrual method. Free file 2011 taxes   If you use an accrual method of accounting, you cannot deduct insurance premiums before the tax year in which you incur a liability for them. Free file 2011 taxes In addition, you cannot deduct insurance premiums before the tax year in which you actually pay them (unless the exception for recurring items applies). Free file 2011 taxes For more information about the accrual method of accounting, see chapter 1. Free file 2011 taxes For information about the exception for recurring items, see Publication 538. Free file 2011 taxes Prepayment. Free file 2011 taxes   You cannot deduct expenses in advance, even if you pay them in advance. Free file 2011 taxes This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Free file 2011 taxes   Expenses such as insurance are generally allocable to a period of time. Free file 2011 taxes You can deduct insurance expenses for the year to which they are allocable. Free file 2011 taxes Example. Free file 2011 taxes In 2013, you signed a 3-year insurance contract. Free file 2011 taxes Even though you paid the premiums for 2013, 2014, and 2015 when you signed the contract, you can only deduct the premium for 2013 on your 2013 tax return. Free file 2011 taxes You can deduct in 2014 and 2015 the premium allocable to those years. Free file 2011 taxes Dividends received. Free file 2011 taxes   If you receive dividends from business insurance and you deducted the premiums in prior years, at least part of the dividends generally are income. Free file 2011 taxes For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1 under How Much Can I Deduct. Free file 2011 taxes Prev  Up  Next   Home   More Online Publications
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Free file 2011 taxes 26. Free file 2011 taxes   Car Expenses and Other Employee Business Expenses Table of Contents What's New Introduction Useful Items - You may want to see: Travel ExpensesTraveling Away From Home Tax Home Temporary Assignment or Job What Travel Expenses Are Deductible? Travel in the United States Travel Outside the United States Conventions Entertainment Expenses50% Limit What Entertainment Expenses Are Deductible? What Entertainment Expenses Are Not Deductible? Gift Expenses Transportation ExpensesArmed Forces reservists. Free file 2011 taxes Parking fees. Free file 2011 taxes Advertising display on car. Free file 2011 taxes Car pools. Free file 2011 taxes Hauling tools or instruments. Free file 2011 taxes Union members' trips from a union hall. Free file 2011 taxes Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. Free file 2011 taxes Statutory employees. Free file 2011 taxes Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. Free file 2011 taxes  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Free file 2011 taxes Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. Free file 2011 taxes Depreciation limits on cars, trucks, and vans. Free file 2011 taxes  For 2013, the first-year limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars remains at $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Free file 2011 taxes For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Free file 2011 taxes For more information, see Depreciation limits in Publication 463. Free file 2011 taxes Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. Free file 2011 taxes An ordinary expense is one that is common and accepted in your trade or business. Free file 2011 taxes A necessary expense is one that is helpful and appropriate for your business. Free file 2011 taxes An expense does not have to be required to be considered necessary. Free file 2011 taxes This chapter explains the following. Free file 2011 taxes What expenses are deductible. Free file 2011 taxes How to report your expenses on your return. Free file 2011 taxes What records you need to prove your expenses. Free file 2011 taxes How to treat any expense reimbursements you may receive. Free file 2011 taxes Who does not need to use this chapter. Free file 2011 taxes   If you are an employee, you will not need to read this chapter if all of the following are true. Free file 2011 taxes You fully accounted to your employer for your work-related expenses. Free file 2011 taxes You received full reimbursement for your expenses. Free file 2011 taxes Your employer required you to return any excess reimbursement and you did so. Free file 2011 taxes There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. Free file 2011 taxes If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. Free file 2011 taxes See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. Free file 2011 taxes    If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask your employer for a corrected Form W-2. Free file 2011 taxes Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business Schedule C-EZ (Form 1040) Net Profit From Business Schedule F (Form 1040) Profit or Loss From Farming Form 2106 Employee Business Expenses Form 2106-EZ Unreimbursed Employee Business Expenses Travel Expenses If you temporarily travel away from your tax home, you can use this section to determine if you have deductible travel expenses. Free file 2011 taxes This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. Free file 2011 taxes It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. Free file 2011 taxes Travel expenses defined. Free file 2011 taxes   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. Free file 2011 taxes   You will find examples of deductible travel expenses in Table 26-1 . Free file 2011 taxes 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. Free file 2011 taxes This rest requirement is not satisfied by merely napping in your car. Free file 2011 taxes 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. Free file 2011 taxes Example 1. Free file 2011 taxes You are a railroad conductor. Free file 2011 taxes You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. Free file 2011 taxes 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. Free file 2011 taxes You are considered to be away from home. Free file 2011 taxes Example 2. Free file 2011 taxes You are a truck driver. Free file 2011 taxes You leave your terminal and return to it later the same day. Free file 2011 taxes You get an hour off at your turnaround point to eat. Free file 2011 taxes 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. Free file 2011 taxes Members of the Armed Forces. Free file 2011 taxes   If you are a member of the U. Free file 2011 taxes S. Free file 2011 taxes Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. Free file 2011 taxes You cannot deduct your expenses for meals and lodging. Free file 2011 taxes 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. Free file 2011 taxes 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. Free file 2011 taxes    A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home aboard ship for travel expense purposes. Free file 2011 taxes Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. Free file 2011 taxes Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. Free file 2011 taxes It includes the entire city or general area in which your business or work is located. Free file 2011 taxes If you have more than one regular place of business, your tax home is your main place of business. Free file 2011 taxes See Main place of business or work , later. Free file 2011 taxes 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. Free file 2011 taxes See No main place of business or work , later. Free file 2011 taxes If you do not have a regular or a 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. Free file 2011 taxes As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. Free file 2011 taxes Main place of business or work. Free file 2011 taxes   If you have more than one place of business or work, consider the following when determining which one is your main place of business or work. Free file 2011 taxes The total time you ordinarily spend in each place. Free file 2011 taxes The level of your business activity in each place. Free file 2011 taxes Whether your income from each place is significant or insignificant. Free file 2011 taxes Example. Free file 2011 taxes You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. Free file 2011 taxes You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Free file 2011 taxes Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. Free file 2011 taxes No main place of business or work. Free file 2011 taxes   You may have a tax home even if you do not have a regular or main place of business or work. Free file 2011 taxes Your tax home may be the home where you regularly live. Free file 2011 taxes Factors used to determine tax home. Free file 2011 taxes   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. Free file 2011 taxes 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. Free file 2011 taxes You have living expenses at your main home that you duplicate because your business requires you to be away from that home. Free file 2011 taxes 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. Free file 2011 taxes   If you satisfy all three factors, your tax home is the home where you regularly live. Free file 2011 taxes If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. Free file 2011 taxes If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. Free file 2011 taxes Example. Free file 2011 taxes You are single and live in Boston in an apartment you rent. Free file 2011 taxes You have worked for your employer in Boston for a number of years. Free file 2011 taxes Your employer enrolls you in a 12-month executive training program. Free file 2011 taxes You do not expect to return to work in Boston after you complete your training. Free file 2011 taxes During your training, you do not do any work in Boston. Free file 2011 taxes Instead, you receive classroom and on-the-job training throughout the United States. Free file 2011 taxes You keep your apartment in Boston and return to it frequently. Free file 2011 taxes You use your apartment to conduct your personal business. Free file 2011 taxes You also keep up your community contacts in Boston. Free file 2011 taxes When you complete your training, you are transferred to Los Angeles. Free file 2011 taxes You do not satisfy factor (1) because you did not work in Boston. Free file 2011 taxes You satisfy factor (2) because you had duplicate living expenses. Free file 2011 taxes 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. Free file 2011 taxes Therefore, you have a tax home in Boston. Free file 2011 taxes Tax home different from family home. Free file 2011 taxes   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. Free file 2011 taxes You also cannot deduct the cost of meals and lodging while at your tax home. Free file 2011 taxes See Example 1 . Free file 2011 taxes   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. Free file 2011 taxes See Example 2 . Free file 2011 taxes Example 1. Free file 2011 taxes You are a truck driver and you and your family live in Tucson. Free file 2011 taxes You are employed by a trucking firm that has its terminal in Phoenix. Free file 2011 taxes At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. Free file 2011 taxes You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. Free file 2011 taxes This is because Phoenix is your tax home. Free file 2011 taxes Example 2. Free file 2011 taxes Your family home is in Pittsburgh, where you work 12 weeks a year. Free file 2011 taxes The rest of the year you work for the same employer in Baltimore. Free file 2011 taxes In Baltimore, you eat in restaurants and sleep in a rooming house. Free file 2011 taxes Your salary is the same whether you are in Pittsburgh or Baltimore. Free file 2011 taxes Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. Free file 2011 taxes You cannot deduct any expenses you have for meals and lodging there. Free file 2011 taxes However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. Free file 2011 taxes You can deduct the cost of your round trip between Baltimore and Pittsburgh. Free file 2011 taxes You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. Free file 2011 taxes Temporary Assignment or Job You may regularly work at your tax home and also work at another location. Free file 2011 taxes It may not be practical to return to your tax home from this other location at the end of each work day. Free file 2011 taxes Temporary assignment vs. Free file 2011 taxes indefinite assignment. Free file 2011 taxes   If your assignment or job away from your main place of work is temporary, your tax home does not change. Free file 2011 taxes You are considered to be away from home for the whole period you are away from your main place of work. Free file 2011 taxes You can deduct your travel expenses if they otherwise qualify for deduction. Free file 2011 taxes 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. Free file 2011 taxes   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. Free file 2011 taxes 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. Free file 2011 taxes   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. Free file 2011 taxes You may be able to deduct the cost of relocating to your new tax home as a moving expense. Free file 2011 taxes See Publication 521 for more information. Free file 2011 taxes Exception for federal crime investigations or prosecutions. Free file 2011 taxes   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. Free file 2011 taxes 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. Free file 2011 taxes   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 or prosecute, or provide support services for the investigation or prosecution of a federal crime. Free file 2011 taxes Determining temporary or indefinite. Free file 2011 taxes   You must determine whether your assignment is temporary or indefinite when you start work. Free file 2011 taxes 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. Free file 2011 taxes An assignment or job that is initially temporary may become indefinite due to changed circumstances. Free file 2011 taxes 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. Free file 2011 taxes Going home on days off. Free file 2011 taxes   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. Free file 2011 taxes You cannot deduct the cost of your meals and lodging there. Free file 2011 taxes However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. Free file 2011 taxes You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. Free file 2011 taxes   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. Free file 2011 taxes 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. Free file 2011 taxes Probationary work period. Free file 2011 taxes   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. Free file 2011 taxes You cannot deduct any of your expenses for meals and lodging during the probationary period. Free file 2011 taxes 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. Free file 2011 taxes You can deduct ordinary and necessary expenses you have when you travel away from home on business. Free file 2011 taxes The type of expense you can deduct depends on the facts and your circumstances. Free file 2011 taxes Table 26-1 summarizes travel expenses you may be able to deduct. Free file 2011 taxes You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. Free file 2011 taxes 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. Free file 2011 taxes You can use a log, diary, notebook, or any other written record to keep track of your expenses. Free file 2011 taxes The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. Free file 2011 taxes Separating costs. Free file 2011 taxes   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. Free file 2011 taxes You must have a reasonable basis for making this allocation. Free file 2011 taxes For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. Free file 2011 taxes Travel expenses for another individual. Free file 2011 taxes   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. Free file 2011 taxes Employee. Free file 2011 taxes   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. Free file 2011 taxes Business associate. Free file 2011 taxes   If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. Free file 2011 taxes A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. Free file 2011 taxes A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. Free file 2011 taxes Bona fide business purpose. Free file 2011 taxes   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Free file 2011 taxes Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. Free file 2011 taxes Example. Free file 2011 taxes Jerry drives to Chicago on business and takes his wife, Linda, with him. Free file 2011 taxes Linda is not Jerry's employee. Free file 2011 taxes Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. Free file 2011 taxes The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. Free file 2011 taxes Her expenses are not deductible. Free file 2011 taxes Jerry pays $199 a day for a double room. Free file 2011 taxes A single room costs $149 a day. Free file 2011 taxes He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. Free file 2011 taxes If he uses public transportation, he can deduct only his fare. Free file 2011 taxes Table 26-1. Free file 2011 taxes Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. Free file 2011 taxes IF you have expenses for. Free file 2011 taxes . Free file 2011 taxes . Free file 2011 taxes THEN you can deduct the cost of. Free file 2011 taxes . Free file 2011 taxes . Free file 2011 taxes transportation travel by airplane, train, bus, or car between your home and your business destination. Free file 2011 taxes If you were provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. Free file 2011 taxes If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. Free file 2011 taxes 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. Free file 2011 taxes baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. Free file 2011 taxes car operating and maintaining your car when traveling away from home on business. Free file 2011 taxes You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. Free file 2011 taxes If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. Free file 2011 taxes 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. Free file 2011 taxes Meals include amounts spent for food, beverages, taxes, and related tips. Free file 2011 taxes See Meals and Incidental Expenses for additional rules and limits. Free file 2011 taxes cleaning dry cleaning and laundry. Free file 2011 taxes telephone business calls while on your business trip. Free file 2011 taxes This includes business communication by fax machine or other communication devices. Free file 2011 taxes tips tips you pay for any expenses in this chart. Free file 2011 taxes other other similar ordinary and necessary expenses related to your business travel. Free file 2011 taxes 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. Free file 2011 taxes Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. Free file 2011 taxes It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Free file 2011 taxes The meal is business-related entertainment. Free file 2011 taxes Business-related entertainment is discussed under Entertainment Expenses , later. Free file 2011 taxes The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. Free file 2011 taxes Lavish or extravagant. Free file 2011 taxes   You cannot deduct expenses for meals that are lavish or extravagant. Free file 2011 taxes An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Free file 2011 taxes 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. Free file 2011 taxes 50% limit on meals. Free file 2011 taxes   You can figure your meal expenses using either of the following methods. Free file 2011 taxes Actual cost. Free file 2011 taxes The standard meal allowance. Free file 2011 taxes Both of these methods are explained below. Free file 2011 taxes But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. Free file 2011 taxes   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. Free file 2011 taxes If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Free file 2011 taxes The 50% limit is explained later under Entertainment Expenses . Free file 2011 taxes Accountable and nonaccountable plans are discussed later under Reimbursements . Free file 2011 taxes Actual cost. Free file 2011 taxes   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. Free file 2011 taxes If you use this method, you must keep records of your actual cost. Free file 2011 taxes Standard meal allowance. Free file 2011 taxes   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. Free file 2011 taxes 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. Free file 2011 taxes The set amount varies depending on where and when you travel. Free file 2011 taxes In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . Free file 2011 taxes If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. Free file 2011 taxes See Recordkeeping , later. Free file 2011 taxes Incidental expenses. Free file 2011 taxes   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Free file 2011 taxes 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. Free file 2011 taxes Incidental expenses only method. Free file 2011 taxes   You can use an optional method (instead of actual cost) for deducting incidental expenses only. Free file 2011 taxes The amount of the deduction is $5 a day. Free file 2011 taxes You can use this method only if you did not pay or incur any meal expenses. Free file 2011 taxes You cannot use this method on any day that you use the standard meal allowance. Free file 2011 taxes    Federal employees should refer to the Federal Travel Regulations at  www. Free file 2011 taxes gsa. Free file 2011 taxes gov. Free file 2011 taxes Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. Free file 2011 taxes 50% limit may apply. Free file 2011 taxes   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. Free file 2011 taxes 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. Free file 2011 taxes The 50% limit is explained later under Entertainment Expenses . Free file 2011 taxes Accountable and nonaccountable plans are discussed later under Reimbursements . Free file 2011 taxes There is no optional standard lodging amount similar to the standard meal allowance. Free file 2011 taxes Your allowable lodging expense deduction is your actual cost. Free file 2011 taxes Who can use the standard meal allowance. Free file 2011 taxes   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. Free file 2011 taxes   Use of the standard meal allowance for other travel. Free file 2011 taxes    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. Free file 2011 taxes You can also use it to figure your meal expenses when you travel for qualifying educational purposes. Free file 2011 taxes You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. Free file 2011 taxes Amount of standard meal allowance. Free file 2011 taxes   The standard meal allowance is the federal M&IE rate. Free file 2011 taxes For travel in 2013, the daily rate for most small localities in the United States is $46. Free file 2011 taxes   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. Free file 2011 taxes You can find this information (organized by state) on the Internet at www. Free file 2011 taxes gsa. Free file 2011 taxes gov. Free file 2011 taxes Click on “Per Diem Rates,” then select “2013” for the period January 1, 2013 – September 30, 2013, and select “2014” for the period October 1, 2013 – December 31, 2013. Free file 2011 taxes However, you can apply the rates in effect before October 1, 2013, for expenses of all travel within the United States for 2013 instead of the updated rates. Free file 2011 taxes You must consistently use either the rates for the first 9 months for all of 2013 or the updated rates for the period of October 1, 2013, through December 31, 2013. Free file 2011 taxes   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. Free file 2011 taxes If you work in the transportation industry, however, see Special rate for transportation workers , later. Free file 2011 taxes Standard meal allowance for areas outside the continental United States. Free file 2011 taxes    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. Free file 2011 taxes The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. Free file 2011 taxes S. Free file 2011 taxes Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. Free file 2011 taxes The Department of State establishes per diem rates for all other foreign areas. Free file 2011 taxes    You can access per diem rates for non-foreign areas outside the continental United States at: www. Free file 2011 taxes defensetravel. Free file 2011 taxes dod. Free file 2011 taxes mil/site/perdiemCalc. Free file 2011 taxes cfm. Free file 2011 taxes You can access all other foreign per diem rates at www. Free file 2011 taxes state. Free file 2011 taxes gov/travel/. Free file 2011 taxes Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. Free file 2011 taxes Special rate for transportation workers. Free file 2011 taxes   You can use a special standard meal allowance if you work in the transportation industry. Free file 2011 taxes 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. Free file 2011 taxes If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). Free file 2011 taxes   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. Free file 2011 taxes 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. Free file 2011 taxes Travel for days you depart and return. Free file 2011 taxes   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). Free file 2011 taxes You can do so by one of two methods. Free file 2011 taxes Method 1: You can claim 3/4 of the standard meal allowance. Free file 2011 taxes Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. Free file 2011 taxes Example. Free file 2011 taxes Jen is employed in New Orleans as a convention planner. Free file 2011 taxes In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. Free file 2011 taxes She left her home in New Orleans at 10 a. Free file 2011 taxes m. Free file 2011 taxes on Wednesday and arrived in Washington, DC, at 5:30 p. Free file 2011 taxes m. Free file 2011 taxes After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. Free file 2011 taxes m. Free file 2011 taxes Jen's employer gave her a flat amount to cover her expenses and included it with her wages. Free file 2011 taxes 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. Free file 2011 taxes Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. Free file 2011 taxes 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. Free file 2011 taxes Travel in the United States The following discussion applies to travel in the United States. Free file 2011 taxes For this purpose, the United States includes only the 50 states and the District of Columbia. Free file 2011 taxes 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. Free file 2011 taxes See Part of Trip Outside the United States , later. Free file 2011 taxes Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. Free file 2011 taxes 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 your business-related travel expenses. Free file 2011 taxes These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. Free file 2011 taxes Example. Free file 2011 taxes You work in Atlanta and take a business trip to New Orleans in May. Free file 2011 taxes On your way home, you stop in Mobile to visit your parents. Free file 2011 taxes You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. Free file 2011 taxes If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. Free file 2011 taxes You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. Free file 2011 taxes The deduction for your meals is subject to the 50% limit on meals mentioned earlier. Free file 2011 taxes 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. Free file 2011 taxes However, you can deduct any expenses you have while at your destination that are directly related to your business. Free file 2011 taxes 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. Free file 2011 taxes 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. Free file 2011 taxes Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later under Travel Outside the United States for that part of the trip. Free file 2011 taxes For the part of your trip that is inside the United States, use the rules for travel in the United States. Free file 2011 taxes Travel outside the United States does not include travel from one point in the United States to another point in the United States. Free file 2011 taxes The following discussion can help you determine whether your trip was entirely within the United States. Free file 2011 taxes Public transportation. Free file 2011 taxes   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. Free file 2011 taxes 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 . Free file 2011 taxes Example. Free file 2011 taxes You fly from New York to Puerto Rico with a scheduled stop in Miami. Free file 2011 taxes You return to New York nonstop. Free file 2011 taxes 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. Free file 2011 taxes Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. Free file 2011 taxes Private car. Free file 2011 taxes   Travel by private car in the United States is travel between points in the United States, even when you are on your way to a destination outside the United States. Free file 2011 taxes Example. Free file 2011 taxes You travel by car from Denver to Mexico City and return. Free file 2011 taxes 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. Free file 2011 taxes The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. Free file 2011 taxes 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. Free file 2011 taxes For this purpose, the United States includes only the 50 states and the District of Columbia. Free file 2011 taxes 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. Free file 2011 taxes See chapter 1 of Publication 463 for information on luxury water travel. Free file 2011 taxes 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. Free file 2011 taxes Travel entirely for business. Free file 2011 taxes   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. Free file 2011 taxes Travel considered entirely for business. Free file 2011 taxes   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. Free file 2011 taxes Exception 1 - No substantial control. Free file 2011 taxes   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. Free file 2011 taxes The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. Free file 2011 taxes   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. Free file 2011 taxes    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . Free file 2011 taxes   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. Free file 2011 taxes    A self-employed person generally has substantial control over arranging business trips. Free file 2011 taxes Exception 2 - Outside United States no more than a week. Free file 2011 taxes   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. Free file 2011 taxes One week means 7 consecutive days. Free file 2011 taxes 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. Free file 2011 taxes Exception 3 - Less than 25% of time on personal activities. Free file 2011 taxes   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. Free file 2011 taxes For this purpose, count both the day your trip began and the day it ended. Free file 2011 taxes Exception 4 - Vacation not a major consideration. Free file 2011 taxes   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. Free file 2011 taxes Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on nonbusiness activities, you generally cannot deduct all of your travel expenses. Free file 2011 taxes You can only deduct the business portion of your cost of getting to and from your destination. Free file 2011 taxes You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. Free file 2011 taxes These travel allocation rules are discussed in chapter 1 of Publication 463. Free file 2011 taxes You do not have to allocate your travel expense deduction if you meet one of the four exceptions listed earlier under Travel considered entirely for business. Free file 2011 taxes In those cases, you can deduct the total cost of getting to and from your destination. Free file 2011 taxes 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. Free file 2011 taxes 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. Free file 2011 taxes Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. Free file 2011 taxes You cannot deduct the travel expenses for your family. Free file 2011 taxes If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. Free file 2011 taxes Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. Free file 2011 taxes You can deduct your travel expenses only if your attendance is connected to your own trade or business. Free file 2011 taxes Convention agenda. Free file 2011 taxes   The convention agenda or program generally shows the purpose of the convention. Free file 2011 taxes 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. Free file 2011 taxes 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. Free file 2011 taxes Conventions held outside the North American area. Free file 2011 taxes    See chapter 1 of Publication 463 for information on conventions held outside the North American area. Free file 2011 taxes Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Free file 2011 taxes You can deduct entertainment expenses only if they are both ordinary and necessary (defined earlier in the Introduction ) and meet one of the following tests. Free file 2011 taxes Directly-related test. Free file 2011 taxes Associated test. Free file 2011 taxes Both of these tests are explained in chapter 2 of Publication 463. Free file 2011 taxes The amount you can deduct for entertainment expenses may be limited. Free file 2011 taxes Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Free file 2011 taxes This limit is discussed next. Free file 2011 taxes 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Free file 2011 taxes (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Free file 2011 taxes See Individuals subject to “hours of service” limits , later. Free file 2011 taxes ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Free file 2011 taxes Figure 26-A summarizes the general rules explained in this section. Free file 2011 taxes The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Free file 2011 taxes Included expenses. Free file 2011 taxes   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Free file 2011 taxes However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Free file 2011 taxes Application of 50% limit. Free file 2011 taxes   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later in this section. Free file 2011 taxes   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Free file 2011 taxes It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. Free file 2011 taxes It also applies to the cost of meals included in deductible educational expenses. Free file 2011 taxes When to apply the 50% limit. Free file 2011 taxes   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Free file 2011 taxes You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. Free file 2011 taxes Example 1. Free file 2011 taxes You spend $200 for a business-related meal. Free file 2011 taxes If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Free file 2011 taxes Your deduction cannot be more than $45 (. Free file 2011 taxes 50 × $90). Free file 2011 taxes Example 2. Free file 2011 taxes You purchase two tickets to a concert and give them to a client. Free file 2011 taxes You purchased the tickets through a ticket agent. Free file 2011 taxes You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Free file 2011 taxes Your deduction cannot be more than $80 (. Free file 2011 taxes 50 × $160). Free file 2011 taxes Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Free file 2011 taxes Figure 26-A can help you determine if the 50% limit applies to you. Free file 2011 taxes Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Free file 2011 taxes Employee's reimbursed expenses. Free file 2011 taxes   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Free file 2011 taxes Accountable plans are discussed later under Reimbursements . Free file 2011 taxes Individuals subject to “hours of service” limits. Free file 2011 taxes   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Free file 2011 taxes The percentage is 80%. Free file 2011 taxes   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Free file 2011 taxes Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Free file 2011 taxes Interstate truck operators and bus drivers who are under Department of Transportation regulations. Free file 2011 taxes Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Free file 2011 taxes Certain merchant mariners who are under Coast Guard regulations. Free file 2011 taxes Other exceptions. Free file 2011 taxes   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. Free file 2011 taxes These are discussed in Publication 463. Free file 2011 taxes Figure 26-A. Free file 2011 taxes Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Free file 2011 taxes See Exceptions to the 50% Limit . Free file 2011 taxes Please click here for the text description of the image. Free file 2011 taxes Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Free file 2011 taxes Entertainment. Free file 2011 taxes    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Free file 2011 taxes Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; or on hunting, fishing, vacation, and similar trips. Free file 2011 taxes A meal as a form of entertainment. Free file 2011 taxes   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Free file 2011 taxes A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Free file 2011 taxes To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Free file 2011 taxes You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Free file 2011 taxes Separating costs. Free file 2011 taxes   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Free file 2011 taxes You must have a reasonable basis for making this allocation. Free file 2011 taxes For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Free file 2011 taxes Taking turns paying for meals or entertainment. Free file 2011 taxes   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Free file 2011 taxes Lavish or extravagant expenses. Free file 2011 taxes   You cannot deduct expenses for entertainment that are lavish or extravagant. Free file 2011 taxes An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Free file 2011 taxes Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Free file 2011 taxes Trade association meetings. Free file 2011 taxes    You can deduct entertainment expenses that are directly related to, and necessary for, attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Free file 2011 taxes These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Free file 2011 taxes Entertainment tickets. Free file 2011 taxes   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Free file 2011 taxes For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Free file 2011 taxes What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Free file 2011 taxes Club dues and membership fees. Free file 2011 taxes   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Free file 2011 taxes This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities. Free file 2011 taxes   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Free file 2011 taxes You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Free file 2011 taxes Entertainment facilities. Free file 2011 taxes   Generally, you cannot deduct any expense for the use of an entertainment facility. Free file 2011 taxes This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Free file 2011 taxes   An entertainment facility is any property you own, rent, or use for entertainment. Free file 2011 taxes Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Free file 2011 taxes Out-of-pocket expenses. Free file 2011 taxes   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Free file 2011 taxes These are not expenses for the use of an entertainment facility. Free file 2011 taxes However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. Free file 2011 taxes Additional information. Free file 2011 taxes   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. Free file 2011 taxes Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Free file 2011 taxes This section explains the limits and rules for deducting the costs of gifts. Free file 2011 taxes $25 limit. Free file 2011 taxes   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Free file 2011 taxes A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Free file 2011 taxes   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Free file 2011 taxes This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use or benefit. Free file 2011 taxes   If you and your spouse both give gifts, both of you are treated as one taxpayer. Free file 2011 taxes It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Free file 2011 taxes If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Free file 2011 taxes Incidental costs. Free file 2011 taxes   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Free file 2011 taxes   A cost is incidental only if it does not add substantial value to the gift. Free file 2011 taxes For example, the cost of customary gift wrapping is an incidental cost. Free file 2011 taxes However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Free file 2011 taxes Exceptions. Free file 2011 taxes   The following items are not considered gifts for purposes of the $25 limit. Free file 2011 taxes An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Free file 2011 taxes Examples include pens, desk sets, and plastic bags and cases. Free file 2011 taxes Signs, display racks, or other promotional material to be used on the business premises of the recipient. Free file 2011 taxes Gift or entertainment. Free file 2011 taxes   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Free file 2011 taxes However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Free file 2011 taxes    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Free file 2011 taxes You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Free file 2011 taxes    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Free file 2011 taxes You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Free file 2011 taxes Transportation Expenses This section discusses expenses you can deduct for business transportation when you are not traveling away from home as defined earlier under Travel Expenses . Free file 2011 taxes These expenses include the cost of transportation by air, rail, bus, taxi, etc. Free file 2011 taxes , and the cost of driving and maintaining your car. Free file 2011 taxes Transportation expenses include the ordinary and necessary costs of all of the following. Free file 2011 taxes Getting from one workplace to another in the course of your business or profession when you are traveling within the area of your tax home. Free file 2011 taxes (Tax home is defined earlier under Travel Expenses . Free file 2011 taxes ) Visiting clients or customers. Free file 2011 taxes Going to a business meeting away from your regular workplace. Free file 2011 taxes Getting from your home to a temporary workplace when you have one or more regular places of work. Free file 2011 taxes These temporary workplaces can be either within the area of your tax home or outside that area. Free file 2011 taxes Transportation expenses do not include expenses you have while traveling away from home overnight. Free file 2011 taxes Those expenses are travel expenses, discussed earlier. Free file 2011 taxes However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. Free file 2011 taxes See Car Expenses , later. Free file 2011 taxes Illustration of transportation expenses. Free file 2011 taxes    Figure 26-B illustrates the rules for when you can deduct transportation expenses when you have a regular or main job away from your home. Free file 2011 taxes You may want to refer to it when deciding whether you can deduct your transportation expenses. Free file 2011 taxes Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Free file 2011 taxes However, there are many exceptions for deducting transportation expenses, like whether your work location is temporary (inside or outside the metropolitan area), traveling for same trade or business, or if you have a home office. Free file 2011 taxes Temporary work location. Free file 2011 taxes   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Free file 2011 taxes   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Free file 2011 taxes   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Free file 2011 taxes   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Free file 2011 taxes It will not be treated as temporary after the date you determine it will last more than 1 year. Free file 2011 taxes   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Free file 2011 taxes You may have deductible travel expenses as discussed earlier in this chapter. Free file 2011 taxes No regular place of work. Free file 2011 taxes   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Free file 2011 taxes   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Free file 2011 taxes   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Free file 2011 taxes These are nondeductible commuting expenses. Free file 2011 taxes Two places of work. Free file 2011 taxes   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Free file 2011 taxes However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Free file 2011 taxes   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Free file 2011 taxes You cannot deduct them. Free file 2011 taxes Armed Forces reservists. Free file 2011 taxes   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Free file 2011 taxes You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. Free file 2011 taxes   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Free file 2011 taxes In this case, your transportation generally is a nondeductible commuting expense. Free file 2011 taxes However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Free file 2011 taxes   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Free file 2011 taxes   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Free file 2011 taxes These expenses are discussed earlier under Travel Expenses . Free file 2011 taxes   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to income rather than as an itemized deduction. Free file 2011 taxes See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. Free file 2011 taxes Commuting expenses. Free file 2011 taxes   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Free file 2011 taxes These costs are personal commuting expenses. Free file 2011 taxes You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Free file 2011 taxes You cannot deduct commuting expenses even if you work during the commuting trip. Free file 2011 taxes Example. Free file 2011 taxes You sometimes use your cell phone to make business calls while commuting to and from work. Free file 2011 taxes Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Free file 2011 taxes These activities do not change the trip from personal to business. Free file 2011 taxes You cannot deduct your commuting expenses. Free file 2011 taxes Parking fees. Free file 2011 taxes   Fees you pay to park your car at your place of business are nondeductible commuting expenses. Free file 2011 taxes You can, however, deduct business-related parking fees when visiting a customer or client. Free file 2011 taxes Advertising display on car. Free file 2011 taxes   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Free file 2011 taxes If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Free file 2011 taxes Car pools. Free file 2011 taxes   You cannot deduct the cost of using your car in a nonprofit car pool. Free file 2011 taxes Do not include payments you receive from the passengers in your income. Free file 2011 taxes These payments are considered reimbursements of your expenses. Free file 2011 taxes However, if you operate a car pool for a profit, you must include payments from passengers in your income. Free file 2011 taxes You can then deduct your car expenses (using the rules in this chapter). Free file 2011 taxes Hauling tools or instruments. Free file 2011 taxes   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Free file 2011 taxes However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Free file 2011 taxes Union members' trips from a union hall. Free file 2011 taxes   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Free file 2011 taxes Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Free file 2011 taxes Office in the home. Free file 2011 taxes   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Free file 2011 taxes (See chapter 28 for information on determining if your home office qualifies as a principal place of business. Free file 2011 taxes ) Figure 26-B. Free file 2011 taxes When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Free file 2011 taxes (Do not use this chart if your home is your principal place of business. Free file 2011 taxes See Office in the home . Free file 2011 taxes ) Please click here for the text description of the image. Free file 2011 taxes Figure 26-B. Free file 2011 taxes Local Transportation Examples of deductible transportation. Free file 2011 taxes   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Free file 2011 taxes Example 1. Free file 2011 taxes You regularly work in an office in the city where you live. Free file 2011 taxes Your employer sends you to a 1-week training session at a different office in the same city. Free file 2011 taxes You travel directly from your home to the training location and return each day. Free file 2011 taxes You can deduct the cost of your daily round-trip transportation between your home and the training location. Free file 2011 taxes Example 2. Free file 2011 taxes Your principal place of business is in your home. Free file 2011 taxes You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Free file 2011 taxes Example 3. Free file 2011 taxes You have no regular office, and you do not have an office in your home. Free file 2011 taxes In this case, the location of your first business contact inside the metropolitan area is considered your office. Free file 2011 taxes Transportation expenses between your home and this first contact are nondeductible commuting expenses. Free file 2011 taxes Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Free file 2011 taxes While you cannot deduct the costs of these first and last trips, you can deduct the costs of going from one client or customer to another. Free file 2011 taxes With no regular or home office, the costs of travel between two or more business contacts in a metropolitan area are deductible while the costs of travel between the home to (and from) business contacts are not deductible. Free file 2011 taxes Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. Free file 2011 taxes You generally can use one of the two following methods to figure your deductible expenses. Free file 2011 taxes Standard mileage rate. Free file 2011 taxes Actual car expenses. Free file 2011 taxes If you use actual car expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Free file 2011 taxes See Leasing a car under Actual Car Expenses, later. Free file 2011 taxes In this chapter, “car” includes a van, pickup, or panel truck. Free file 2011 taxes Rural mail carriers. Free file 2011 taxes   If you are a rural mail carrier, you may be able to treat the amount of qualified reimbursement you received as the amount of your allowable expense. Free file 2011 taxes Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. Free file 2011 taxes   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Free file 2011 taxes You must complete Form 2106 and attach it to your Form 1040. Free file 2011 taxes   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Free file 2011 taxes It is given as an equipment maintenance allowance (EMA) to employees of the U. Free file 2011 taxes S. Free file 2011 taxes Postal Service. Free file 2011 taxes It is at the rate contained in the 1991 collective bargaining agreement. Free file 2011 taxes Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Free file 2011 taxes See your employer for information on your reimbursement. Free file 2011 taxes If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Free file 2011 taxes Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Free file 2011 taxes For 2013, the standard mileage rate for business use is 56½ cents per mile. Free file 2011 taxes If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year, but see Parking fees and tolls, later. Free file 2011 taxes You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Free file 2011 taxes See Reimbursements under How To Report, later. Free file 2011 taxes Choosing the standard mileage rate. Free file 2011 taxes   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Free file 2011 taxes Then in later years, you can choose to use either the standard mileage rate or actual expenses. Free file 2011 taxes   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Free file 2011 taxes   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Free file 2011 taxes You cannot revoke the choice. Free file 2011 taxes However, in a later year, you can switch from the standard mileage rate to the actual expenses method. Free file 2011 taxes If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Free file 2011 taxes Example. Free file 2011 taxes Larry is an employee who occasionally uses his own car for business purposes. Free file 2011 taxes He purchased the car in 2011, but he did not claim any unreimburse