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H&r Block Free Tax Returns

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H&r Block Free Tax Returns

H&r block free tax returns 26. H&r block free tax returns   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. H&r block free tax returns Parking fees. H&r block free tax returns Advertising display on car. H&r block free tax returns Car pools. H&r block free tax returns Hauling tools or instruments. H&r block free tax returns Union members' trips from a union hall. H&r block free tax returns Car Expenses RecordkeepingHow To Prove Expenses How Long To Keep Records and Receipts How To ReportGifts. H&r block free tax returns Statutory employees. H&r block free tax returns Reimbursements Completing Forms 2106 and 2106-EZ Special Rules What's New Standard mileage rate. H&r block free tax returns  For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. H&r block free tax returns Car expenses and use of the standard mileage rate are explained under Transportation Expenses , later. H&r block free tax returns Depreciation limits on cars, trucks, and vans. H&r block free tax returns  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). H&r block free tax returns For trucks and vans the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). H&r block free tax returns For more information, see Depreciation limits in Publication 463. H&r block free tax returns Introduction You may be able to deduct the ordinary and necessary business-related expenses you have for: Travel, Entertainment, Gifts, or Transportation. H&r block free tax returns An ordinary expense is one that is common and accepted in your trade or business. H&r block free tax returns A necessary expense is one that is helpful and appropriate for your business. H&r block free tax returns An expense does not have to be required to be considered necessary. H&r block free tax returns This chapter explains the following. H&r block free tax returns What expenses are deductible. H&r block free tax returns How to report your expenses on your return. H&r block free tax returns What records you need to prove your expenses. H&r block free tax returns How to treat any expense reimbursements you may receive. H&r block free tax returns Who does not need to use this chapter. H&r block free tax returns   If you are an employee, you will not need to read this chapter if all of the following are true. H&r block free tax returns You fully accounted to your employer for your work-related expenses. H&r block free tax returns You received full reimbursement for your expenses. H&r block free tax returns Your employer required you to return any excess reimbursement and you did so. H&r block free tax returns There is no amount shown with a code “L” in box 12 of your Form W-2, Wage and Tax Statement. H&r block free tax returns If you meet all of these conditions, there is no need to show the expenses or the reimbursements on your return. H&r block free tax returns See Reimbursements , later, if you would like more information on reimbursements and accounting to your employer. H&r block free tax returns    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. H&r block free tax returns 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. H&r block free tax returns This section discusses: Traveling away from home, Tax home, Temporary assignment or job, and What travel expenses are deductible. H&r block free tax returns It also discusses the standard meal allowance, rules for travel inside and outside the United States, and deductible convention expenses. H&r block free tax returns Travel expenses defined. H&r block free tax returns   For tax purposes, travel expenses are the ordinary and necessary expenses (defined earlier) of traveling away from home for your business, profession, or job. H&r block free tax returns   You will find examples of deductible travel expenses in Table 26-1 . H&r block free tax returns Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. H&r block free tax returns This rest requirement is not satisfied by merely napping in your car. H&r block free tax returns You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. H&r block free tax returns Example 1. H&r block free tax returns You are a railroad conductor. H&r block free tax returns You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. H&r block free tax returns During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. H&r block free tax returns You are considered to be away from home. H&r block free tax returns Example 2. H&r block free tax returns You are a truck driver. H&r block free tax returns You leave your terminal and return to it later the same day. H&r block free tax returns You get an hour off at your turnaround point to eat. H&r block free tax returns Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. H&r block free tax returns Members of the Armed Forces. H&r block free tax returns   If you are a member of the U. H&r block free tax returns S. H&r block free tax returns Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. H&r block free tax returns You cannot deduct your expenses for meals and lodging. H&r block free tax returns You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. H&r block free tax returns If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. H&r block free tax returns    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. H&r block free tax returns Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. H&r block free tax returns Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. H&r block free tax returns It includes the entire city or general area in which your business or work is located. H&r block free tax returns If you have more than one regular place of business, your tax home is your main place of business. H&r block free tax returns See Main place of business or work , later. H&r block free tax returns If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. H&r block free tax returns See No main place of business or work , later. H&r block free tax returns 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. H&r block free tax returns As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. H&r block free tax returns Main place of business or work. H&r block free tax returns   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. H&r block free tax returns The total time you ordinarily spend in each place. H&r block free tax returns The level of your business activity in each place. H&r block free tax returns Whether your income from each place is significant or insignificant. H&r block free tax returns Example. H&r block free tax returns You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. H&r block free tax returns You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. H&r block free tax returns Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. H&r block free tax returns No main place of business or work. H&r block free tax returns   You may have a tax home even if you do not have a regular or main place of business or work. H&r block free tax returns Your tax home may be the home where you regularly live. H&r block free tax returns Factors used to determine tax home. H&r block free tax returns   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. H&r block free tax returns You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. H&r block free tax returns You have living expenses at your main home that you duplicate because your business requires you to be away from that home. H&r block free tax returns You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. H&r block free tax returns   If you satisfy all three factors, your tax home is the home where you regularly live. H&r block free tax returns If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. H&r block free tax returns If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. H&r block free tax returns Example. H&r block free tax returns You are single and live in Boston in an apartment you rent. H&r block free tax returns You have worked for your employer in Boston for a number of years. H&r block free tax returns Your employer enrolls you in a 12-month executive training program. H&r block free tax returns You do not expect to return to work in Boston after you complete your training. H&r block free tax returns During your training, you do not do any work in Boston. H&r block free tax returns Instead, you receive classroom and on-the-job training throughout the United States. H&r block free tax returns You keep your apartment in Boston and return to it frequently. H&r block free tax returns You use your apartment to conduct your personal business. H&r block free tax returns You also keep up your community contacts in Boston. H&r block free tax returns When you complete your training, you are transferred to Los Angeles. H&r block free tax returns You do not satisfy factor (1) because you did not work in Boston. H&r block free tax returns You satisfy factor (2) because you had duplicate living expenses. H&r block free tax returns You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. H&r block free tax returns Therefore, you have a tax home in Boston. H&r block free tax returns Tax home different from family home. H&r block free tax returns   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. H&r block free tax returns You also cannot deduct the cost of meals and lodging while at your tax home. H&r block free tax returns See Example 1 . H&r block free tax returns   If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. H&r block free tax returns See Example 2 . H&r block free tax returns Example 1. H&r block free tax returns You are a truck driver and you and your family live in Tucson. H&r block free tax returns You are employed by a trucking firm that has its terminal in Phoenix. H&r block free tax returns At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. H&r block free tax returns You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. H&r block free tax returns This is because Phoenix is your tax home. H&r block free tax returns Example 2. H&r block free tax returns Your family home is in Pittsburgh, where you work 12 weeks a year. H&r block free tax returns The rest of the year you work for the same employer in Baltimore. H&r block free tax returns In Baltimore, you eat in restaurants and sleep in a rooming house. H&r block free tax returns Your salary is the same whether you are in Pittsburgh or Baltimore. H&r block free tax returns Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. H&r block free tax returns You cannot deduct any expenses you have for meals and lodging there. H&r block free tax returns However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. H&r block free tax returns You can deduct the cost of your round trip between Baltimore and Pittsburgh. H&r block free tax returns You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. H&r block free tax returns Temporary Assignment or Job You may regularly work at your tax home and also work at another location. H&r block free tax returns It may not be practical to return to your tax home from this other location at the end of each work day. H&r block free tax returns Temporary assignment vs. H&r block free tax returns indefinite assignment. H&r block free tax returns   If your assignment or job away from your main place of work is temporary, your tax home does not change. H&r block free tax returns You are considered to be away from home for the whole period you are away from your main place of work. H&r block free tax returns You can deduct your travel expenses if they otherwise qualify for deduction. H&r block free tax returns Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. H&r block free tax returns   However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. H&r block free tax returns An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. H&r block free tax returns   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. H&r block free tax returns You may be able to deduct the cost of relocating to your new tax home as a moving expense. H&r block free tax returns See Publication 521 for more information. H&r block free tax returns Exception for federal crime investigations or prosecutions. H&r block free tax returns   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. H&r block free tax returns This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year, provided you meet the other requirements for deductibility. H&r block free tax returns   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate or prosecute, or provide support services for the investigation or prosecution of a federal crime. H&r block free tax returns Determining temporary or indefinite. H&r block free tax returns   You must determine whether your assignment is temporary or indefinite when you start work. H&r block free tax returns If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. H&r block free tax returns An assignment or job that is initially temporary may become indefinite due to changed circumstances. H&r block free tax returns A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. H&r block free tax returns Going home on days off. H&r block free tax returns   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. H&r block free tax returns You cannot deduct the cost of your meals and lodging there. H&r block free tax returns However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. H&r block free tax returns You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. H&r block free tax returns   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. H&r block free tax returns In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. H&r block free tax returns Probationary work period. H&r block free tax returns   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. H&r block free tax returns You cannot deduct any of your expenses for meals and lodging during the probationary period. H&r block free tax returns What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. H&r block free tax returns You can deduct ordinary and necessary expenses you have when you travel away from home on business. H&r block free tax returns The type of expense you can deduct depends on the facts and your circumstances. H&r block free tax returns Table 26-1 summarizes travel expenses you may be able to deduct. H&r block free tax returns You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. H&r block free tax returns When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. H&r block free tax returns You can use a log, diary, notebook, or any other written record to keep track of your expenses. H&r block free tax returns The types of expenses you need to record, along with supporting documentation, are described in Table 26-2 , later. H&r block free tax returns Separating costs. H&r block free tax returns   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. H&r block free tax returns You must have a reasonable basis for making this allocation. H&r block free tax returns For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. H&r block free tax returns Travel expenses for another individual. H&r block free tax returns   If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. H&r block free tax returns Employee. H&r block free tax returns   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. H&r block free tax returns Business associate. H&r block free tax returns   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. H&r block free tax returns A business associate is someone with whom you could reasonably expect to engage or deal in the active conduct of your business. H&r block free tax returns A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. H&r block free tax returns Bona fide business purpose. H&r block free tax returns   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. H&r block free tax returns Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. H&r block free tax returns Example. H&r block free tax returns Jerry drives to Chicago on business and takes his wife, Linda, with him. H&r block free tax returns Linda is not Jerry's employee. H&r block free tax returns Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. H&r block free tax returns The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. H&r block free tax returns Her expenses are not deductible. H&r block free tax returns Jerry pays $199 a day for a double room. H&r block free tax returns A single room costs $149 a day. H&r block free tax returns He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. H&r block free tax returns If he uses public transportation, he can deduct only his fare. H&r block free tax returns Table 26-1. H&r block free tax returns Travel Expenses You Can Deduct This chart summarizes expenses you can deduct when you travel away from home for business purposes. H&r block free tax returns IF you have expenses for. H&r block free tax returns . H&r block free tax returns . H&r block free tax returns THEN you can deduct the cost of. H&r block free tax returns . H&r block free tax returns . H&r block free tax returns transportation travel by airplane, train, bus, or car between your home and your business destination. H&r block free tax returns 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. H&r block free tax returns If you travel by ship, see Luxury Water Travel and Cruise ships (under Conventions) in Publication 463 for additional rules and limits. H&r block free tax returns taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. H&r block free tax returns baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. H&r block free tax returns car operating and maintaining your car when traveling away from home on business. H&r block free tax returns You can deduct actual expenses or the standard mileage rate as well as business-related tolls and parking. H&r block free tax returns If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. H&r block free tax returns lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. H&r block free tax returns Meals include amounts spent for food, beverages, taxes, and related tips. H&r block free tax returns See Meals and Incidental Expenses for additional rules and limits. H&r block free tax returns cleaning dry cleaning and laundry. H&r block free tax returns telephone business calls while on your business trip. H&r block free tax returns This includes business communication by fax machine or other communication devices. H&r block free tax returns tips tips you pay for any expenses in this chart. H&r block free tax returns other other similar ordinary and necessary expenses related to your business travel. H&r block free tax returns These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. H&r block free tax returns Meals and Incidental Expenses You can deduct the cost of meals in either of the following situations. H&r block free tax returns It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. H&r block free tax returns The meal is business-related entertainment. H&r block free tax returns Business-related entertainment is discussed under Entertainment Expenses , later. H&r block free tax returns The following discussion deals only with meals (and incidental expenses) that are not business-related entertainment. H&r block free tax returns Lavish or extravagant. H&r block free tax returns   You cannot deduct expenses for meals that are lavish or extravagant. H&r block free tax returns An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. H&r block free tax returns Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. H&r block free tax returns 50% limit on meals. H&r block free tax returns   You can figure your meal expenses using either of the following methods. H&r block free tax returns Actual cost. H&r block free tax returns The standard meal allowance. H&r block free tax returns Both of these methods are explained below. H&r block free tax returns But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. H&r block free tax returns   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. H&r block free tax returns If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. H&r block free tax returns The 50% limit is explained later under Entertainment Expenses . H&r block free tax returns Accountable and nonaccountable plans are discussed later under Reimbursements . H&r block free tax returns Actual cost. H&r block free tax returns   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. H&r block free tax returns If you use this method, you must keep records of your actual cost. H&r block free tax returns Standard meal allowance. H&r block free tax returns   Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. H&r block free tax returns It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. H&r block free tax returns The set amount varies depending on where and when you travel. H&r block free tax returns In this chapter, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . H&r block free tax returns If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. H&r block free tax returns See Recordkeeping , later. H&r block free tax returns Incidental expenses. H&r block free tax returns   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. H&r block free tax returns Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. H&r block free tax returns Incidental expenses only method. H&r block free tax returns   You can use an optional method (instead of actual cost) for deducting incidental expenses only. H&r block free tax returns The amount of the deduction is $5 a day. H&r block free tax returns You can use this method only if you did not pay or incur any meal expenses. H&r block free tax returns You cannot use this method on any day that you use the standard meal allowance. H&r block free tax returns    Federal employees should refer to the Federal Travel Regulations at  www. H&r block free tax returns gsa. H&r block free tax returns gov. H&r block free tax returns Find “What GSA Offers” and click on “Regulations: FMR, FTR, & FAR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. H&r block free tax returns 50% limit may apply. H&r block free tax returns   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. H&r block free tax returns If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. H&r block free tax returns The 50% limit is explained later under Entertainment Expenses . H&r block free tax returns Accountable and nonaccountable plans are discussed later under Reimbursements . H&r block free tax returns There is no optional standard lodging amount similar to the standard meal allowance. H&r block free tax returns Your allowable lodging expense deduction is your actual cost. H&r block free tax returns Who can use the standard meal allowance. H&r block free tax returns   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. H&r block free tax returns   Use of the standard meal allowance for other travel. H&r block free tax returns    You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. H&r block free tax returns You can also use it to figure your meal expenses when you travel for qualifying educational purposes. H&r block free tax returns You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. H&r block free tax returns Amount of standard meal allowance. H&r block free tax returns   The standard meal allowance is the federal M&IE rate. H&r block free tax returns For travel in 2013, the daily rate for most small localities in the United States is $46. H&r block free tax returns   Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. H&r block free tax returns You can find this information (organized by state) on the Internet at www. H&r block free tax returns gsa. H&r block free tax returns gov. H&r block free tax returns 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. H&r block free tax returns 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. H&r block free tax returns 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. H&r block free tax returns   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. H&r block free tax returns If you work in the transportation industry, however, see Special rate for transportation workers , later. H&r block free tax returns Standard meal allowance for areas outside the continental United States. H&r block free tax returns    The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. H&r block free tax returns The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. H&r block free tax returns S. H&r block free tax returns Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. H&r block free tax returns The Department of State establishes per diem rates for all other foreign areas. H&r block free tax returns    You can access per diem rates for non-foreign areas outside the continental United States at: www. H&r block free tax returns defensetravel. H&r block free tax returns dod. H&r block free tax returns mil/site/perdiemCalc. H&r block free tax returns cfm. H&r block free tax returns You can access all other foreign per diem rates at www. H&r block free tax returns state. H&r block free tax returns gov/travel/. H&r block free tax returns Click on “Travel Per Diem Allowances for Foreign Areas” under “Foreign Per Diem Rates,” to obtain the latest foreign per diem rates. H&r block free tax returns Special rate for transportation workers. H&r block free tax returns   You can use a special standard meal allowance if you work in the transportation industry. H&r block free tax returns You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. H&r block free tax returns If this applies to you, you can claim a standard daily meal allowance of $59 ($65 for travel outside the continental United States). H&r block free tax returns   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. H&r block free tax returns If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. H&r block free tax returns Travel for days you depart and return. H&r block free tax returns   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). H&r block free tax returns You can do so by one of two methods. H&r block free tax returns Method 1: You can claim 3/4 of the standard meal allowance. H&r block free tax returns Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. H&r block free tax returns Example. H&r block free tax returns Jen is employed in New Orleans as a convention planner. H&r block free tax returns In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. H&r block free tax returns She left her home in New Orleans at 10 a. H&r block free tax returns m. H&r block free tax returns on Wednesday and arrived in Washington, DC, at 5:30 p. H&r block free tax returns m. H&r block free tax returns After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. H&r block free tax returns m. H&r block free tax returns Jen's employer gave her a flat amount to cover her expenses and included it with her wages. H&r block free tax returns Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. H&r block free tax returns Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. H&r block free tax returns For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. H&r block free tax returns Travel in the United States The following discussion applies to travel in the United States. H&r block free tax returns For this purpose, the United States includes only the 50 states and the District of Columbia. H&r block free tax returns The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. H&r block free tax returns See Part of Trip Outside the United States , later. H&r block free tax returns Trip Primarily for Business You can deduct all your travel expenses if your trip was entirely business related. H&r block free tax returns If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses. H&r block free tax returns These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. H&r block free tax returns Example. H&r block free tax returns You work in Atlanta and take a business trip to New Orleans in May. H&r block free tax returns On your way home, you stop in Mobile to visit your parents. H&r block free tax returns You spend $1,996 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. H&r block free tax returns If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,696. H&r block free tax returns You can deduct $1,696 for your trip, including the cost of round-trip transportation to and from New Orleans. H&r block free tax returns The deduction for your meals is subject to the 50% limit on meals mentioned earlier. H&r block free tax returns Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. H&r block free tax returns However, you can deduct any expenses you have while at your destination that are directly related to your business. H&r block free tax returns A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. H&r block free tax returns The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. H&r block free tax returns 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. H&r block free tax returns For the part of your trip that is inside the United States, use the rules for travel in the United States. H&r block free tax returns Travel outside the United States does not include travel from one point in the United States to another point in the United States. H&r block free tax returns The following discussion can help you determine whether your trip was entirely within the United States. H&r block free tax returns Public transportation. H&r block free tax returns   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. H&r block free tax returns Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . H&r block free tax returns Example. H&r block free tax returns You fly from New York to Puerto Rico with a scheduled stop in Miami. H&r block free tax returns You return to New York nonstop. H&r block free tax returns The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. H&r block free tax returns Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. H&r block free tax returns Private car. H&r block free tax returns   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. H&r block free tax returns Example. H&r block free tax returns You travel by car from Denver to Mexico City and return. H&r block free tax returns Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. H&r block free tax returns The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. H&r block free tax returns Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. H&r block free tax returns For this purpose, the United States includes only the 50 states and the District of Columbia. H&r block free tax returns How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. H&r block free tax returns See chapter 1 of Publication 463 for information on luxury water travel. H&r block free tax returns Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. H&r block free tax returns Travel entirely for business. H&r block free tax returns   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. H&r block free tax returns Travel considered entirely for business. H&r block free tax returns   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. H&r block free tax returns Exception 1 - No substantial control. H&r block free tax returns   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. H&r block free tax returns The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. H&r block free tax returns   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, Are not related to your employer, and Are not a managing executive. H&r block free tax returns    “Related to your employer” is defined later in this chapter under Per Diem and Car Allowances . H&r block free tax returns   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. H&r block free tax returns    A self-employed person generally has substantial control over arranging business trips. H&r block free tax returns Exception 2 - Outside United States no more than a week. H&r block free tax returns   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. H&r block free tax returns One week means 7 consecutive days. H&r block free tax returns In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. H&r block free tax returns Exception 3 - Less than 25% of time on personal activities. H&r block free tax returns   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. H&r block free tax returns For this purpose, count both the day your trip began and the day it ended. H&r block free tax returns Exception 4 - Vacation not a major consideration. H&r block free tax returns   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. H&r block free tax returns 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. H&r block free tax returns You can only deduct the business portion of your cost of getting to and from your destination. H&r block free tax returns You must allocate the costs between your business and nonbusiness activities to determine your deductible amount. H&r block free tax returns These travel allocation rules are discussed in chapter 1 of Publication 463. H&r block free tax returns 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. H&r block free tax returns In those cases, you can deduct the total cost of getting to and from your destination. H&r block free tax returns Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. H&r block free tax returns 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. H&r block free tax returns Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. H&r block free tax returns You cannot deduct the travel expenses for your family. H&r block free tax returns If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. H&r block free tax returns Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. H&r block free tax returns You can deduct your travel expenses only if your attendance is connected to your own trade or business. H&r block free tax returns Convention agenda. H&r block free tax returns   The convention agenda or program generally shows the purpose of the convention. H&r block free tax returns You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. H&r block free tax returns The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. H&r block free tax returns Conventions held outside the North American area. H&r block free tax returns    See chapter 1 of Publication 463 for information on conventions held outside the North American area. H&r block free tax returns Entertainment Expenses You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. H&r block free tax returns 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. H&r block free tax returns Directly-related test. H&r block free tax returns Associated test. H&r block free tax returns Both of these tests are explained in chapter 2 of Publication 463. H&r block free tax returns The amount you can deduct for entertainment expenses may be limited. H&r block free tax returns Generally, you can deduct only 50% of your unreimbursed entertainment expenses. H&r block free tax returns This limit is discussed next. H&r block free tax returns 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. H&r block free tax returns (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. H&r block free tax returns See Individuals subject to “hours of service” limits , later. H&r block free tax returns ) 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. H&r block free tax returns Figure 26-A summarizes the general rules explained in this section. H&r block free tax returns 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. H&r block free tax returns Included expenses. H&r block free tax returns   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. H&r block free tax returns However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. H&r block free tax returns Application of 50% limit. H&r block free tax returns   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. H&r block free tax returns   The 50% limit also applies to certain meal and entertainment expenses that are not business related. H&r block free tax returns It applies to meal and entertainment expenses incurred for the production of income, including rental or royalty income. H&r block free tax returns It also applies to the cost of meals included in deductible educational expenses. H&r block free tax returns When to apply the 50% limit. H&r block free tax returns   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. H&r block free tax returns You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this chapter. H&r block free tax returns Example 1. H&r block free tax returns You spend $200 for a business-related meal. H&r block free tax returns If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. H&r block free tax returns Your deduction cannot be more than $45 (. H&r block free tax returns 50 × $90). H&r block free tax returns Example 2. H&r block free tax returns You purchase two tickets to a concert and give them to a client. H&r block free tax returns You purchased the tickets through a ticket agent. H&r block free tax returns You paid $200 for the two tickets, which had a face value of $80 each ($160 total). H&r block free tax returns Your deduction cannot be more than $80 (. H&r block free tax returns 50 × $160). H&r block free tax returns Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. H&r block free tax returns Figure 26-A can help you determine if the 50% limit applies to you. H&r block free tax returns Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. H&r block free tax returns Employee's reimbursed expenses. H&r block free tax returns   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. H&r block free tax returns Accountable plans are discussed later under Reimbursements . H&r block free tax returns Individuals subject to “hours of service” limits. H&r block free tax returns   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. H&r block free tax returns The percentage is 80%. H&r block free tax returns   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. H&r block free tax returns Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. H&r block free tax returns Interstate truck operators and bus drivers who are under Department of Transportation regulations. H&r block free tax returns Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. H&r block free tax returns Certain merchant mariners who are under Coast Guard regulations. H&r block free tax returns Other exceptions. H&r block free tax returns   There are also exceptions for the self-employed, advertising expenses, selling meals or entertainment, and charitable sports events. H&r block free tax returns These are discussed in Publication 463. H&r block free tax returns Figure 26-A. H&r block free tax returns Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. H&r block free tax returns See Exceptions to the 50% Limit . H&r block free tax returns Please click here for the text description of the image. H&r block free tax returns Entertainment expenses: 50% limit What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. H&r block free tax returns Entertainment. H&r block free tax returns    Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. H&r block free tax returns 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. H&r block free tax returns A meal as a form of entertainment. H&r block free tax returns   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. H&r block free tax returns A meal expense includes the cost of food, beverages, taxes, and tips for the meal. H&r block free tax returns To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. H&r block free tax returns You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. H&r block free tax returns Separating costs. H&r block free tax returns   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. H&r block free tax returns You must have a reasonable basis for making this allocation. H&r block free tax returns For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. H&r block free tax returns Taking turns paying for meals or entertainment. H&r block free tax returns   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. H&r block free tax returns Lavish or extravagant expenses. H&r block free tax returns   You cannot deduct expenses for entertainment that are lavish or extravagant. H&r block free tax returns An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. H&r block free tax returns 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. H&r block free tax returns Trade association meetings. H&r block free tax returns    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. H&r block free tax returns These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. H&r block free tax returns Entertainment tickets. H&r block free tax returns   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. H&r block free tax returns 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. H&r block free tax returns What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. H&r block free tax returns Club dues and membership fees. H&r block free tax returns   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. H&r block free tax returns 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. H&r block free tax returns   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. H&r block free tax returns 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. H&r block free tax returns Entertainment facilities. H&r block free tax returns   Generally, you cannot deduct any expense for the use of an entertainment facility. H&r block free tax returns This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. H&r block free tax returns   An entertainment facility is any property you own, rent, or use for entertainment. H&r block free tax returns 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. H&r block free tax returns Out-of-pocket expenses. H&r block free tax returns   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. H&r block free tax returns These are not expenses for the use of an entertainment facility. H&r block free tax returns However, these expenses are subject to the directly-related and associated tests and to the 50% Limit discussed earlier. H&r block free tax returns Additional information. H&r block free tax returns   For more information on entertainment expenses, including discussions of the directly-related and associated tests, see chapter 2 of Publication 463. H&r block free tax returns Gift Expenses If you give gifts in the course of your trade or business, you can deduct all or part of the cost. H&r block free tax returns This section explains the limits and rules for deducting the costs of gifts. H&r block free tax returns $25 limit. H&r block free tax returns   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. H&r block free tax returns 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. H&r block free tax returns   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. H&r block free tax returns 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. H&r block free tax returns   If you and your spouse both give gifts, both of you are treated as one taxpayer. H&r block free tax returns It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. H&r block free tax returns If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. H&r block free tax returns Incidental costs. H&r block free tax returns   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. H&r block free tax returns   A cost is incidental only if it does not add substantial value to the gift. H&r block free tax returns For example, the cost of customary gift wrapping is an incidental cost. H&r block free tax returns 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. H&r block free tax returns Exceptions. H&r block free tax returns   The following items are not considered gifts for purposes of the $25 limit. H&r block free tax returns 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. H&r block free tax returns Examples include pens, desk sets, and plastic bags and cases. H&r block free tax returns Signs, display racks, or other promotional material to be used on the business premises of the recipient. H&r block free tax returns Gift or entertainment. H&r block free tax returns   Any item that might be considered either a gift or entertainment generally will be considered entertainment. H&r block free tax returns 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. H&r block free tax returns    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. H&r block free tax returns You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. H&r block free tax returns    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. H&r block free tax returns You cannot choose, in this case, to treat the cost of the tickets as a gift expense. H&r block free tax returns 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 . H&r block free tax returns These expenses include the cost of transportation by air, rail, bus, taxi, etc. H&r block free tax returns , and the cost of driving and maintaining your car. H&r block free tax returns Transportation expenses include the ordinary and necessary costs of all of the following. H&r block free tax returns 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. H&r block free tax returns (Tax home is defined earlier under Travel Expenses . H&r block free tax returns ) Visiting clients or customers. H&r block free tax returns Going to a business meeting away from your regular workplace. H&r block free tax returns Getting from your home to a temporary workplace when you have one or more regular places of work. H&r block free tax returns These temporary workplaces can be either within the area of your tax home or outside that area. H&r block free tax returns Transportation expenses do not include expenses you have while traveling away from home overnight. H&r block free tax returns Those expenses are travel expenses, discussed earlier. H&r block free tax returns However, if you use your car while traveling away from home overnight, use the rules in this section to figure your car expense deduction. H&r block free tax returns See Car Expenses , later. H&r block free tax returns Illustration of transportation expenses. H&r block free tax returns    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. H&r block free tax returns You may want to refer to it when deciding whether you can deduct your transportation expenses. H&r block free tax returns Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. H&r block free tax returns 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. H&r block free tax returns Temporary work location. H&r block free tax returns   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. H&r block free tax returns   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. H&r block free tax returns   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. H&r block free tax returns   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. H&r block free tax returns It will not be treated as temporary after the date you determine it will last more than 1 year. H&r block free tax returns   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. H&r block free tax returns You may have deductible travel expenses as discussed earlier in this chapter. H&r block free tax returns No regular place of work. H&r block free tax returns   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. H&r block free tax returns   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. H&r block free tax returns   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. H&r block free tax returns These are nondeductible commuting expenses. H&r block free tax returns Two places of work. H&r block free tax returns   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. H&r block free tax returns 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. H&r block free tax returns   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. H&r block free tax returns You cannot deduct them. H&r block free tax returns Armed Forces reservists. H&r block free tax returns   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. H&r block free tax returns You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work , earlier. H&r block free tax returns   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. H&r block free tax returns In this case, your transportation generally is a nondeductible commuting expense. H&r block free tax returns 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. H&r block free tax returns   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. H&r block free tax returns   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. H&r block free tax returns These expenses are discussed earlier under Travel Expenses . H&r block free tax returns   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. H&r block free tax returns See Armed Forces reservists traveling more than 100 miles from home under Special Rules, later. H&r block free tax returns Commuting expenses. H&r block free tax returns   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. H&r block free tax returns These costs are personal commuting expenses. H&r block free tax returns You cannot deduct commuting expenses no matter how far your home is from your regular place of work. H&r block free tax returns You cannot deduct commuting expenses even if you work during the commuting trip. H&r block free tax returns Example. H&r block free tax returns You sometimes use your cell phone to make business calls while commuting to and from work. H&r block free tax returns Sometimes business associates ride with you to and from work, and you have a business discussion in the car. H&r block free tax returns These activities do not change the trip from personal to business. H&r block free tax returns You cannot deduct your commuting expenses. H&r block free tax returns Parking fees. H&r block free tax returns   Fees you pay to park your car at your place of business are nondeductible commuting expenses. H&r block free tax returns You can, however, deduct business-related parking fees when visiting a customer or client. H&r block free tax returns Advertising display on car. H&r block free tax returns   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. H&r block free tax returns If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. H&r block free tax returns Car pools. H&r block free tax returns   You cannot deduct the cost of using your car in a nonprofit car pool. H&r block free tax returns Do not include payments you receive from the passengers in your income. H&r block free tax returns These payments are considered reimbursements of your expenses. H&r block free tax returns However, if you operate a car pool for a profit, you must include payments from passengers in your income. H&r block free tax returns You can then deduct your car expenses (using the rules in this chapter). H&r block free tax returns Hauling tools or instruments. H&r block free tax returns   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. H&r block free tax returns 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). H&r block free tax returns Union members' trips from a union hall. H&r block free tax returns   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. H&r block free tax returns Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. H&r block free tax returns Office in the home. H&r block free tax returns   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. H&r block free tax returns (See chapter 28 for information on determining if your home office qualifies as a principal place of business. H&r block free tax returns ) Figure 26-B. H&r block free tax returns When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. H&r block free tax returns (Do not use this chart if your home is your principal place of business. H&r block free tax returns See Office in the home . H&r block free tax returns ) Please click here for the text description of the image. H&r block free tax returns Figure 26-B. H&r block free tax returns Local Transportation Examples of deductible transportation. H&r block free tax returns   The following examples show when you can deduct transportation expenses based on the location of your work and your home. H&r block free tax returns Example 1. H&r block free tax returns You regularly work in an office in the city where you live. H&r block free tax returns Your employer sends you to a 1-week training session at a different office in the same city. H&r block free tax returns You travel directly from your home to the training location and return each day. H&r block free tax returns You can deduct the cost of your daily round-trip transportation between your home and the training location. H&r block free tax returns Example 2. H&r block free tax returns Your principal place of business is in your home. H&r block free tax returns You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. H&r block free tax returns Example 3. H&r block free tax returns You have no regular office, and you do not have an office in your home. H&r block free tax returns In this case, the location of your first business contact inside the metropolitan area is considered your office. H&r block free tax returns Transportation expenses between your home and this first contact are nondeductible commuting expenses. H&r block free tax returns Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. H&r block free tax returns 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. H&r block free tax returns 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. H&r block free tax returns Car Expenses If you use your car for business purposes, you may be able to deduct car expenses. H&r block free tax returns You generally can use one of the two following methods to figure your deductible expenses. H&r block free tax returns Standard mileage rate. H&r block free tax returns Actual car expenses. H&r block free tax returns 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. H&r block free tax returns See Leasing a car under Actual Car Expenses, later. H&r block free tax returns In this chapter, “car” includes a van, pickup, or panel truck. H&r block free tax returns Rural mail carriers. H&r block free tax returns   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. H&r block free tax returns Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the amount of reimbursement in your income. H&r block free tax returns   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). H&r block free tax returns You must complete Form 2106 and attach it to your Form 1040. H&r block free tax returns   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. H&r block free tax returns It is given as an equipment maintenance allowance (EMA) to employees of the U. H&r block free tax returns S. H&r block free tax returns Postal Service. H&r block free tax returns It is at the rate contained in the 1991 collective bargaining agreement. H&r block free tax returns Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. H&r block free tax returns See your employer for information on your reimbursement. H&r block free tax returns If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. H&r block free tax returns 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. H&r block free tax returns For 2013, the standard mileage rate for business use is 56½ cents per mile. H&r block free tax returns 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. H&r block free tax returns 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. H&r block free tax returns See Reimbursements under How To Report, later. H&r block free tax returns Choosing the standard mileage rate. H&r block free tax returns   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. H&r block free tax returns Then in later years, you can choose to use either the standard mileage rate or actual expenses. H&r block free tax returns   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. H&r block free tax returns   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. H&r block free tax returns You cannot revoke the choice. H&r block free tax returns However, in a later year, you can switch from the standard mileage rate to the actual expenses method. H&r block free tax returns 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. H&r block free tax returns Example. H&r block free tax returns Larry is an employee who occasionally uses his own car for business purposes. H&r block free tax returns He purchased the car in 2011, but he did not claim any unreimburse
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The Premium Tax Credit

 

Facts about the Premium Tax Credit

 

Publication 5120 –Your Credit, Your Choice – Get it Now or Get it Later   English | Spanish

 

Publication 5121 –Need help paying for health insurance premiums?   English | Spanish

 

NOTE - The following information does not affect your 2013 tax return that you are filing in 2014. You do not need to file a 2013 federal tax return solely to establish eligibility or qualify for advance payment of the premium tax credit.
 

Basic Information

Starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013, through March 31, 2014.

The Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Eligibility

In general, you may be eligible for the credit if you meet all of the following:

  • buy health insurance through the Marketplace;
  • are ineligible for coverage through an employer or government plan;
  • are within certain income limits;
  • do not file a Married Filing Separately tax return (unless you meet the criteria in Notice 2014-23, which allows certain victims of domestic abuse to claim the premium tax credit using the Married Filing Separately filing status for the 2014 calendar year); and
  • cannot be claimed as a dependent by another person.

Filing Status

If you file your tax return using the filing status Single, Married Filing Jointly, Head of Household (including married individuals who qualify to use the Head of Household status) or Qualifying Widow/Widower, you may be eligible for the premium tax credit if you meet the other criteria. If you are married and you file your tax return using the filing status Married Filing Separately, you will not be eligible for the premium tax credit unless you meet the criteria in Notice 2014-23, which allows certain victims of domestic abuse to claim the premium tax credit using the Married Filing Separately filing status for the 2014 calendar year.

Getting the Credit

To qualify for the credit, you must get insurance through the Marketplace.

If you are eligible for the credit, you can choose to:

  • Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums during 2014; or
  • Get It Later: wait to get all of the credit when you file your 2014 tax return in 2015.

During enrollment through the Marketplace, using information you provide about your projected income and family composition for 2014, the Marketplace will estimate the amount of the premium tax credit you will be able to claim for the 2014 tax year that you will file in 2015.

You will then decide whether you want to have all, some or none of your estimated credit paid in advance directly to your insurance company.

Change in Circumstances

Report income and family size changes to the Marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your 2014 tax return in 2015.

For example, if you do not report income or family size changes to the Marketplace when they happen in 2014, the advance payments may not match your actual qualified credit amount on your federal tax return that you will file in 2015. This might result in a smaller refund or a balance due.

Claiming the Credit on Your Federal Tax Return

For any tax year, if you receive advance credit payments in any amount or if you plan to claim the premium tax credit, you must file a federal income tax return for that year. 

If you choose to get it now: When you file your 2014 tax return in 2015, you will subtract the total advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. If the premium tax credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.

If you choose to get it later: You will claim the full amount of the premium tax credit when you file your 2014 tax return in 2015. This will either increase your refund or lower your balance due.

More Information

More detailed information about the credit is available in our Questions and Answers.
The Department of the Treasury and the IRS issued the following legal guidance related to the premium tax credit:

  • Final regulations on the rules for individuals who enroll in qualified health plans through Marketplaces and claim the premium tax credit.
  • Final regulations on the premium tax credit affordability test for related individuals.
  • Proposed regulations on determining minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit.
  • Notice 2013-41 on determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs.

An electronic flyer (Publication 5120 English | Spanish ) and trifold (Publication 5121 English | Spanish ) entitled Facts about the Premium Tax Credit are available for public use and distribution.

 

Page Last Reviewed or Updated: 26-Mar-2014

The H&r Block Free Tax Returns

H&r block free tax returns 4. H&r block free tax returns   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. H&r block free tax returns Private communication service. H&r block free tax returns Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. H&r block free tax returns If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. H&r block free tax returns If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. H&r block free tax returns See chapter 14, later. H&r block free tax returns Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. H&r block free tax returns The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. H&r block free tax returns Regular method taxpayers. H&r block free tax returns   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. H&r block free tax returns Alternative method taxpayers. H&r block free tax returns   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. H&r block free tax returns See Alternative method in  chapter 11. H&r block free tax returns Where to file. H&r block free tax returns    Do not file the uncollected tax report with Form 720. H&r block free tax returns Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. H&r block free tax returns  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. H&r block free tax returns Local telephone service. H&r block free tax returns   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. H&r block free tax returns Local telephone service also includes any facility or services provided in connection with this service. H&r block free tax returns The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. H&r block free tax returns Local-only service. H&r block free tax returns   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. H&r block free tax returns Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. H&r block free tax returns Private communication service. H&r block free tax returns   Private communication service is not local telephone service. H&r block free tax returns Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. H&r block free tax returns However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. H&r block free tax returns Teletypewriter exchange service. H&r block free tax returns   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. H&r block free tax returns Figuring the tax. H&r block free tax returns   The tax is based on the sum of all charges for local telephone service included in the bill. H&r block free tax returns However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. H&r block free tax returns The tax on the remaining items not included in any group is based on the charge for each item separately. H&r block free tax returns Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. H&r block free tax returns Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. H&r block free tax returns Nontaxable service. H&r block free tax returns   Nontaxable service means bundled service and long distance service. H&r block free tax returns Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. H&r block free tax returns Bundled service. H&r block free tax returns   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. H&r block free tax returns Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. H&r block free tax returns Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. H&r block free tax returns If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. H&r block free tax returns   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. H&r block free tax returns Long distance service. H&r block free tax returns   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. H&r block free tax returns Pre-paid telephone cards (PTC). H&r block free tax returns   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. H&r block free tax returns Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. H&r block free tax returns The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. H&r block free tax returns The transferee is the person liable for the tax and is eligible to request a credit or refund. H&r block free tax returns For more information, see Regulations section 49. H&r block free tax returns 4251-4. H&r block free tax returns   The holder is the person that purchases a PTC to use and not to resell. H&r block free tax returns Holders are not liable for the tax and cannot request a credit or refund. H&r block free tax returns Pre-paid cellular telephones. H&r block free tax returns   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. H&r block free tax returns The transferee is the person eligible to request the credit or refund. H&r block free tax returns Installation charges. H&r block free tax returns   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. H&r block free tax returns However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. H&r block free tax returns Answering services. H&r block free tax returns   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. H&r block free tax returns Mobile radio telephone service. H&r block free tax returns   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. H&r block free tax returns Coin-operated telephones. H&r block free tax returns   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. H&r block free tax returns But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. H&r block free tax returns Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. H&r block free tax returns Telephone-operated security systems. H&r block free tax returns   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. H&r block free tax returns In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. H&r block free tax returns News services. H&r block free tax returns   The tax on teletypewriter exchange service does not apply to charges for the following news services. H&r block free tax returns Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. H&r block free tax returns Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. H&r block free tax returns This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). H&r block free tax returns For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. H&r block free tax returns Services not exempted. H&r block free tax returns   The tax applies to amounts paid by members of the news media for local telephone service. H&r block free tax returns International organizations and the American Red Cross. H&r block free tax returns   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. H&r block free tax returns Nonprofit hospitals. H&r block free tax returns   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. H&r block free tax returns Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. H&r block free tax returns Nonprofit educational organizations. H&r block free tax returns   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. H&r block free tax returns A nonprofit educational organization is one that satisfies all the following requirements. H&r block free tax returns It normally maintains a regular faculty and curriculum. H&r block free tax returns It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. H&r block free tax returns It is exempt from income tax under section 501(a). H&r block free tax returns This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. H&r block free tax returns Qualified blood collector organizations. H&r block free tax returns   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. H&r block free tax returns A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. H&r block free tax returns Federal, state, and local government. H&r block free tax returns   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. H&r block free tax returns Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. H&r block free tax returns Exemption certificate. H&r block free tax returns   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. H&r block free tax returns See Regulations section 49. H&r block free tax returns 4253-11. H&r block free tax returns File the certificate with the provider of the communication services. H&r block free tax returns An exemption certificate is not required for nontaxable services. H&r block free tax returns   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. H&r block free tax returns The American National Red Cross and other international organizations. H&r block free tax returns Nonprofit hospitals. H&r block free tax returns Nonprofit educational organizations. H&r block free tax returns Qualified blood collector organizations. H&r block free tax returns State and local governments. H&r block free tax returns   The federal government does not have to file any exemption certificate. H&r block free tax returns   All other organizations must furnish exemption certificates when required. H&r block free tax returns Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. H&r block free tax returns Alternatively, the person who paid the tax may claim a refund. H&r block free tax returns For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. H&r block free tax returns Collectors. H&r block free tax returns   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. H&r block free tax returns These requirements also apply to nontaxable service refunds. H&r block free tax returns Collectors using the regular method for deposits. H&r block free tax returns   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. H&r block free tax returns Collectors using the alternative method for deposits. H&r block free tax returns   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. H&r block free tax returns For more information, see the Instructions for Form 720. H&r block free tax returns Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. H&r block free tax returns Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. H&r block free tax returns Percentage tax. H&r block free tax returns   A tax of 7. H&r block free tax returns 5% applies to amounts paid for taxable transportation of persons by air. H&r block free tax returns Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. H&r block free tax returns Mileage awards. H&r block free tax returns   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. H&r block free tax returns For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. H&r block free tax returns   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. H&r block free tax returns Until regulations are issued, the following rules apply to mileage awards. H&r block free tax returns Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. H&r block free tax returns For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. H&r block free tax returns Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. H&r block free tax returns Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. H&r block free tax returns Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. H&r block free tax returns Domestic-segment tax. H&r block free tax returns   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. H&r block free tax returns However, see Rural airports, later. H&r block free tax returns A segment is a single takeoff and a single landing. H&r block free tax returns The amount of the domestic-segment tax is in the Instructions for Form 720. H&r block free tax returns Charter flights. H&r block free tax returns    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. H&r block free tax returns Rural airports. H&r block free tax returns   The domestic-segment tax does not apply to a segment to or from a rural airport. H&r block free tax returns An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. H&r block free tax returns   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. H&r block free tax returns   An updated list of rural airports can be found on the Department of Transportation website at www. H&r block free tax returns dot. H&r block free tax returns gov and enter the phrase “Essential Air Service” in the search box. H&r block free tax returns Taxable transportation. H&r block free tax returns   Taxable transportation is transportation by air that meets either of the following tests. H&r block free tax returns It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). H&r block free tax returns It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. H&r block free tax returns Round trip. H&r block free tax returns   A round trip is considered two separate trips. H&r block free tax returns The first trip is from the point of departure to the destination. H&r block free tax returns The second trip is the return trip from that destination. H&r block free tax returns Uninterrupted international air transportation. H&r block free tax returns   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. H&r block free tax returns For a special rule that applies to military personnel, see Exemptions, later. H&r block free tax returns Transportation between the continental U. H&r block free tax returns S. H&r block free tax returns and Alaska or Hawaii. H&r block free tax returns   This transportation is partially exempt from the tax on transportation of persons by air. H&r block free tax returns The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. H&r block free tax returns Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. H&r block free tax returns 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. H&r block free tax returns Therefore, this transportation is subject to the percentage tax on the part of the trip in U. H&r block free tax returns S. H&r block free tax returns airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. H&r block free tax returns Transportation within Alaska or Hawaii. H&r block free tax returns   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. H&r block free tax returns The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). H&r block free tax returns Package tours. H&r block free tax returns   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. H&r block free tax returns The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. H&r block free tax returns ” This rule also applies to the tax on the use of international air travel facilities, discussed later. H&r block free tax returns Liability for tax. H&r block free tax returns   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. H&r block free tax returns However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. H&r block free tax returns    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. H&r block free tax returns However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. H&r block free tax returns An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. H&r block free tax returns For more information on resellers of air transportation, see Revenue Ruling 2006-52. H&r block free tax returns You can find Revenue Ruling 2006-52 on page 761 of I. H&r block free tax returns R. H&r block free tax returns B. H&r block free tax returns 2006-43 at www. H&r block free tax returns irs. H&r block free tax returns gov/pub/irs-irbs/irb06-43. H&r block free tax returns pdf. H&r block free tax returns   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. H&r block free tax returns But see Certain helicopter uses, later. H&r block free tax returns   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. H&r block free tax returns   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. H&r block free tax returns Exemptions. H&r block free tax returns   The tax on transportation of persons by air does not apply in the following situations. H&r block free tax returns See also Special Rules on Transportation Taxes, later. H&r block free tax returns Military personnel on international trips. H&r block free tax returns   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. H&r block free tax returns However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. H&r block free tax returns The trip must begin or end outside the United States and the 225-mile zone. H&r block free tax returns Certain helicopter uses. H&r block free tax returns   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. H&r block free tax returns Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. H&r block free tax returns Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). H&r block free tax returns Providing emergency medical transportation. H&r block free tax returns   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. H&r block free tax returns For item (1), treat each flight segment as a separate flight. H&r block free tax returns Fixed-wing aircraft uses. H&r block free tax returns   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. H&r block free tax returns Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). H&r block free tax returns Providing emergency medical transportation. H&r block free tax returns The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. H&r block free tax returns   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. H&r block free tax returns Skydiving. H&r block free tax returns   The tax does not apply to any air transportation exclusively for the purpose of skydiving. H&r block free tax returns Seaplanes. H&r block free tax returns   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. H&r block free tax returns Bonus tickets. H&r block free tax returns   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. H&r block free tax returns However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. H&r block free tax returns International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. H&r block free tax returns However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. H&r block free tax returns This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. H&r block free tax returns It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. H&r block free tax returns See the Instructions for Form 720 for the tax rates. H&r block free tax returns Transportation of Property by Air A tax of 6. H&r block free tax returns 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. H&r block free tax returns The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. H&r block free tax returns The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. H&r block free tax returns The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. H&r block free tax returns Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. H&r block free tax returns Exemptions. H&r block free tax returns   The tax on transportation of property by air does not apply in the following situations. H&r block free tax returns See also Special Rules on Transportation Taxes, later. H&r block free tax returns Cropdusting and firefighting service. H&r block free tax returns   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. H&r block free tax returns Exportation. H&r block free tax returns    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. H&r block free tax returns See Form 1363 for more information. H&r block free tax returns Certain helicopter and fixed-wing air ambulance uses. H&r block free tax returns   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. H&r block free tax returns   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. H&r block free tax returns The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. H&r block free tax returns Skydiving. H&r block free tax returns   The tax does not apply to any air transportation exclusively for the purpose of skydiving. H&r block free tax returns Excess baggage. H&r block free tax returns    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. H&r block free tax returns Surtax on fuel used in a fractional ownership program aircraft. H&r block free tax returns   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. H&r block free tax returns Alaska and Hawaii. H&r block free tax returns   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). H&r block free tax returns But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. H&r block free tax returns The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. H&r block free tax returns Liability for tax. H&r block free tax returns   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. H&r block free tax returns   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. H&r block free tax returns Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. H&r block free tax returns Aircraft used by affiliated corporations. H&r block free tax returns   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. H&r block free tax returns However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. H&r block free tax returns Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. H&r block free tax returns   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. H&r block free tax returns Small aircraft. H&r block free tax returns   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. H&r block free tax returns However, the taxes do apply if the aircraft is operated on an established line. H&r block free tax returns “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. H&r block free tax returns However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. H&r block free tax returns   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. H&r block free tax returns   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. H&r block free tax returns Mixed load of persons and property. H&r block free tax returns   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. H&r block free tax returns The allocation must be reasonable and supported by adequate records. H&r block free tax returns Credits or refunds. H&r block free tax returns   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. H&r block free tax returns Alternatively, the person who paid the tax may claim a refund. H&r block free tax returns For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. H&r block free tax returns Prev  Up  Next   Home   More Online Publications