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Irs 1040ez Instructions

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Irs 1040ez Instructions

Irs 1040ez instructions Publication 555 - Main Content Table of Contents Domicile Community or Separate Property and Income Identifying Income, Deductions, and CreditsIncome Exemptions Deductions Credits, Taxes, and Payments Community Property Laws DisregardedRequesting relief. Irs 1040ez instructions Equitable relief. Irs 1040ez instructions Earned income. Irs 1040ez instructions Trade or business income. Irs 1040ez instructions Partnership income or loss. Irs 1040ez instructions Separate property income. Irs 1040ez instructions Social security benefits. Irs 1040ez instructions Other income. Irs 1040ez instructions End of the Community Preparing a Federal Income Tax ReturnJoint Return Versus Separate Returns Separate Return Preparation How To Get Tax HelpLow Income Taxpayer Clinics Domicile Whether you have community property and community income depends on the state where you are domiciled. Irs 1040ez instructions If you and your spouse (or your registered domestic partner) have different domiciles, check the laws of each to see whether you have community property or community income. Irs 1040ez instructions You have only one domicile even if you have more than one home. Irs 1040ez instructions Your domicile is a permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. Irs 1040ez instructions The question of your domicile is mainly a matter of your intention as indicated by your actions. Irs 1040ez instructions You must be able to show that you intend a given place or state to be your permanent home. Irs 1040ez instructions If you move into or out of a community property state during the year, you may or may not have community income. Irs 1040ez instructions Factors considered in determining domicile include: Where you pay state income tax, Where you vote, Location of property you own, Your citizenship, Length of residence, and Business and social ties to the community. Irs 1040ez instructions Amount of time spent. Irs 1040ez instructions    The amount of time spent in one place does not always explain the difference between home and domicile. Irs 1040ez instructions A temporary home or residence may continue for months or years while a domicile may be established the first moment you occupy the property. Irs 1040ez instructions Your intent is the determining factor in proving where you have your domicile. Irs 1040ez instructions    Note. Irs 1040ez instructions When this publication refers to where you live, it means your domicile. Irs 1040ez instructions Community or Separate Property and Income If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Irs 1040ez instructions Likewise, a registered domestic partner must report half of all community income and all of his or her separate income on his or her federal tax return. Irs 1040ez instructions You each must attach your Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. Irs 1040ez instructions Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes. Irs 1040ez instructions The following is a summary of the general rules. Irs 1040ez instructions These rules are also shown in Table 1. Irs 1040ez instructions Community property. Irs 1040ez instructions    Generally, community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. Irs 1040ez instructions That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. Irs 1040ez instructions That cannot be identified as separate property. Irs 1040ez instructions Community income. Irs 1040ez instructions    Generally, community income is income from: Community property. Irs 1040ez instructions Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. Irs 1040ez instructions Real estate that is treated as community property under the laws of the state where the property is located. Irs 1040ez instructions Note Separate property. Irs 1040ez instructions    Generally, separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). Irs 1040ez instructions Money earned while domiciled in a noncommunity property state. Irs 1040ez instructions Property that you or your spouse (or your registered domestic partner) received separately as a gift or inheritance during your marriage (or registered domestic partnership). Irs 1040ez instructions Property that you or your spouse (or your registered domestic partner) bought with separate funds, or acquired in exchange for separate property, during your marriage (or registered domestic partnership). Irs 1040ez instructions Property that you and your spouse (or your registered domestic partner) converted from community property to separate property through an agreement valid under state law. Irs 1040ez instructions The part of property bought with separate funds, if part was bought with community funds and part with separate funds. Irs 1040ez instructions Separate income. Irs 1040ez instructions    Generally, income from separate property is the separate income of the spouse (or the registered domestic partner) who owns the property. Irs 1040ez instructions    In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. Irs 1040ez instructions Table 1. Irs 1040ez instructions General Rules — Property and Income: Community or Separate? Community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. Irs 1040ez instructions (Includes the part of property bought with community property funds if part was bought with community funds and part with separate funds. Irs 1040ez instructions ) That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. Irs 1040ez instructions That cannot be identified as separate property. Irs 1040ez instructions Separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). Irs 1040ez instructions Money earned while domiciled in a noncommunity property state. Irs 1040ez instructions Property either of you received as a gift or inherited separately during your marriage (or registered domestic partnership). Irs 1040ez instructions Property bought with separate funds, or exchanged for separate property, during your marriage (or registered domestic partnership). Irs 1040ez instructions Property that you and your spouse (or your registered domestic partner) agreed to convert from community to separate property through an agreement valid under state law. Irs 1040ez instructions The part of property bought with separate funds, if part was bought with community funds and part with separate funds. Irs 1040ez instructions Community income 1,2,3 is income from: Community property. Irs 1040ez instructions Salaries, wages, or pay for services of you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. Irs 1040ez instructions Real estate that is treated as community property under the laws of the state where the property is located. Irs 1040ez instructions Separate income 1,2 is income from: Separate property which belongs to the spouse (or registered domestic partner) who owns the property. Irs 1040ez instructions 1In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. Irs 1040ez instructions 2Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year , later. Irs 1040ez instructions In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. Irs 1040ez instructions In other states, it is separate income. Irs 1040ez instructions 3Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. Irs 1040ez instructions See Community Property Laws Disregarded , later. Irs 1040ez instructions Identifying Income, Deductions, and Credits If you file separate returns, you and your spouse (or your registered domestic partner) each must attach your Form 8958 to your Form 1040 to identify your community and separate income, deductions, credits, and other return amounts according to the laws of your state. Irs 1040ez instructions Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. Irs 1040ez instructions See Community Property Laws Disregarded, later. Irs 1040ez instructions Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year, later. Irs 1040ez instructions In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. Irs 1040ez instructions In other states, it is separate income. Irs 1040ez instructions Income The following is a discussion of the general effect of community property laws on the federal income tax treatment of certain items of income. Irs 1040ez instructions Wages, earnings, and profits. Irs 1040ez instructions    A spouse's (or your registered domestic partner's) wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split. Irs 1040ez instructions Dividends, interest, and rents. Irs 1040ez instructions    Dividends, interest, and rents from community property are community income and must be evenly split. Irs 1040ez instructions Dividends, interest, and rents from separate property are characterized in accordance with the discussion under Income from separate property , later. Irs 1040ez instructions Example. Irs 1040ez instructions If you and your spouse (or your registered domestic partner) buy a bond that is considered community property under your state laws, half the bond interest belongs to you and half belongs to your spouse. Irs 1040ez instructions You each must show the bond interest and the split of that interest on your Form 8958, and report half the interest on your Form 1040. Irs 1040ez instructions Attach your Form 8958 to your Form 1040. Irs 1040ez instructions Alimony received. Irs 1040ez instructions    Alimony or separate maintenance payments made prior to divorce are taxable to the payee spouse only to the extent they exceed 50% (his or her share) of the reportable community income. Irs 1040ez instructions This is so because the payee spouse is already required to report half of the community income. Irs 1040ez instructions See also Alimony paid , later. Irs 1040ez instructions Gains and losses. Irs 1040ez instructions    Gains and losses are classified as separate or community depending on how the property is held. Irs 1040ez instructions For example, a loss on separate property, such as stock held separately, is a separate loss. Irs 1040ez instructions On the other hand, a loss on community property, such as a casualty loss to your home held as community property, is a community loss. Irs 1040ez instructions See Publication 544, Sales and Other Dispositions of Assets, for information on gains and losses. Irs 1040ez instructions See Publication 547, Casualties, Disasters, and Thefts, for information on losses due to a casualty or theft. Irs 1040ez instructions Withdrawals from individual retirement arrangements (IRAs) and Coverdell Education Savings Accounts (ESAs). Irs 1040ez instructions    There are several kinds of individual retirement arrangements (IRAs). Irs 1040ez instructions They are traditional IRAs (including SEP-IRAs), SIMPLE IRAs, and Roth IRAs. Irs 1040ez instructions IRAs and ESAs by law are deemed to be separate property. Irs 1040ez instructions Therefore, taxable IRA and ESA distributions are separate property, even if the funds in the account would otherwise be community property. Irs 1040ez instructions These distributions are wholly taxable to the spouse (or registered domestic partner) whose name is on the account. Irs 1040ez instructions That spouse (or registered domestic partner) is also liable for any penalties and additional taxes on the distributions. Irs 1040ez instructions Pensions. Irs 1040ez instructions    Generally, distributions from pensions will be characterized as community or separate income depending on the respective periods of participation in the pension while married (or during the registered domestic partnership) and domiciled in a community property state or in a noncommunity property state during the total period of participation in the pension. Irs 1040ez instructions See the example under Civil service retirement , later. Irs 1040ez instructions These rules may vary between states. Irs 1040ez instructions Check your state law. Irs 1040ez instructions Lump-sum distributions. Irs 1040ez instructions    If you were born before January 2, 1936, and receive a lump-sum distribution from a qualified retirement plan, you may be able to choose an optional method of figuring the tax on the distribution. Irs 1040ez instructions For the 10-year tax option, you must disregard community property laws. Irs 1040ez instructions For more information, see Publication 575, Pension and Annuity Income, and Form 4972, Tax on Lump-Sum Distributions. Irs 1040ez instructions Civil service retirement. Irs 1040ez instructions    For income tax purposes, community property laws apply to annuities payable under the Civil Service Retirement Act (CSRS) or Federal Employee Retirement System (FERS). Irs 1040ez instructions   Whether a civil service annuity is separate or community income depends on your marital status (or your status as a registered domestic partner) and domicile of the employee when the services were performed for which the annuity is paid. Irs 1040ez instructions Even if you now live in a noncommunity property state and you receive a civil service annuity, it may be community income if it is based on services you performed while married (or during the registered domestic partnership) and domiciled in a community property state. Irs 1040ez instructions   If a civil service annuity is a mixture of community income and separate income, it must be divided between the two kinds of income. Irs 1040ez instructions The division is based on the employee's domicile and marital status (or registered domestic partnership) in community and noncommunity property states during his or her periods of service. Irs 1040ez instructions Example. Irs 1040ez instructions Henry Wright retired this year after 30 years of civil service. Irs 1040ez instructions He and his wife were domiciled in a community property state during the past 15 years. Irs 1040ez instructions Since half the service was performed while the Wrights were married and domiciled in a community property state, half the civil service retirement pay is considered to be community income. Irs 1040ez instructions If Mr. Irs 1040ez instructions Wright receives $1,000 a month in retirement pay, $500 is considered community income—half ($250) is his income and half ($250) is his wife's. Irs 1040ez instructions Military retirement pay. Irs 1040ez instructions    State community property laws apply to military retirement pay. Irs 1040ez instructions Generally, the pay is either separate or community income based on the marital status and domicile of the couple while the member of the Armed Forces was in active military service. Irs 1040ez instructions For example, military retirement pay for services performed during marriage and domicile in a community property state is community income. Irs 1040ez instructions   Active military pay earned while married and domiciled in a community property state is also community income. Irs 1040ez instructions This income is considered to be received half by the member of the Armed Forces and half by the spouse. Irs 1040ez instructions Partnership income. Irs 1040ez instructions    If an interest is held in a partnership, and income from the partnership is attributable to the efforts of either spouse (or registered domestic partner), the partnership income is community property. Irs 1040ez instructions If it is merely a passive investment in a separate property partnership, the partnership income will be characterized in accordance with the discussion under Income from separate property , later. Irs 1040ez instructions Tax-exempt income. Irs 1040ez instructions    For spouses, community income exempt from federal tax generally keeps its exempt status for both spouses. Irs 1040ez instructions For example, under certain circumstances, income earned outside the United States is tax exempt. Irs 1040ez instructions If you earned income and met the conditions that made it exempt, the income is also exempt for your spouse even though he or she may not have met the conditions. Irs 1040ez instructions Registered domestic partners should consult the particular exclusion provision to see if the exempt status applies to both. Irs 1040ez instructions Income from separate property. Irs 1040ez instructions    In some states, income from separate property is separate income. Irs 1040ez instructions These states include Arizona, California, Nevada, New Mexico, and Washington. Irs 1040ez instructions Other states characterize income from separate property as community income. Irs 1040ez instructions These states include Idaho, Louisiana, Texas, and Wisconsin. Irs 1040ez instructions Exemptions When you file separate returns, you must claim your own exemption amount for that year. Irs 1040ez instructions (See your tax return instructions. Irs 1040ez instructions ) You cannot divide the amount allowed as an exemption for a dependent between you and your spouse (or your registered domestic partner). Irs 1040ez instructions When community funds provide support for more than one person, each of whom otherwise qualifies as a dependent, you and your spouse (or your registered domestic partner) may divide the number of dependency exemptions as explained in the following example. Irs 1040ez instructions Example. Irs 1040ez instructions Ron and Diane White have three dependent children and live in Nevada. Irs 1040ez instructions If Ron and Diane file separately, only Ron can claim his own exemption, and only Diane can claim her own exemption. Irs 1040ez instructions Ron and Diane can agree that one of them will claim the exemption for one, two, or all of their children and the other will claim any remaining exemptions. Irs 1040ez instructions They cannot each claim half of the total exemption amount for their three children. Irs 1040ez instructions Deductions If you file separate returns, your deductions generally depend on whether the expenses involve community or separate income. Irs 1040ez instructions Business and investment expenses. Irs 1040ez instructions    If you file separate returns, expenses incurred to earn or produce community business or investment income are generally divided equally between you and your spouse (or your registered domestic partner). Irs 1040ez instructions Each of you is entitled to deduct one-half of the expenses on your separate returns. Irs 1040ez instructions Expenses incurred by a spouse (or registered domestic partner) to produce separate business or investment income is deductible by the spouse (or the registered domestic partner) who earns the corresponding separate business or investment income. Irs 1040ez instructions    Other limits may also apply to business and investment expenses. Irs 1040ez instructions For more information, see Publication 535, Business Expenses, and Publication 550, Investment Income and Expenses. Irs 1040ez instructions Alimony paid. Irs 1040ez instructions    Payments that may otherwise qualify as alimony are not deductible by the payer if they are the recipient spouse's part of community income. Irs 1040ez instructions They are deductible as alimony only to the extent they are more than that spouse's part of community income. Irs 1040ez instructions Example. Irs 1040ez instructions You live in a community property state. Irs 1040ez instructions You are separated but the special rules explained later under Spouses living apart all year do not apply. Irs 1040ez instructions Under a written agreement, you pay your spouse $12,000 of your $20,000 total yearly community income. Irs 1040ez instructions Your spouse receives no other community income. Irs 1040ez instructions Under your state law, earnings of a spouse living separately and apart from the other spouse continue as community property. Irs 1040ez instructions On your separate returns, each of you must report $10,000 of the total community income. Irs 1040ez instructions In addition, your spouse must report $2,000 as alimony received. Irs 1040ez instructions You can deduct $2,000 as alimony paid. Irs 1040ez instructions IRA deduction. Irs 1040ez instructions    Deductions for IRA contributions cannot be split between spouses (or registered domestic partners). Irs 1040ez instructions The deduction for each spouse (or each registered domestic partner) is figured separately and without regard to community property laws. Irs 1040ez instructions Personal expenses. Irs 1040ez instructions   Expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. Irs 1040ez instructions If these expenses are paid from community funds, divide the deduction equally between you and your spouse. Irs 1040ez instructions Credits, Taxes, and Payments The following is a discussion of the general effect of community property laws on the treatment of certain credits, taxes, and payments on your separate return. Irs 1040ez instructions Child tax credit. Irs 1040ez instructions    You may be entitled to a child tax credit for each of your qualifying children. Irs 1040ez instructions You must provide the name and identification number (usually the social security number) of each qualifying child on your return. Irs 1040ez instructions See your tax return instructions for the maximum amount of the credit you can claim for each qualifying child. Irs 1040ez instructions Limit on credit. Irs 1040ez instructions    The credit is limited if your modified adjusted gross income (modified AGI) is above a certain amount. Irs 1040ez instructions The amount at which the limitation (phaseout) begins depends on your filing status. Irs 1040ez instructions Generally, your credit is limited to your tax liability unless you have three or more qualifying children. Irs 1040ez instructions See your tax return instructions for more information. Irs 1040ez instructions Self-employment tax. Irs 1040ez instructions    For the effect of community property laws on the income tax treatment of income from a sole proprietorship and partnerships, see Wages, earnings, and profits and Partnership income , earlier. Irs 1040ez instructions The following rules only apply to persons married for federal tax purposes. Irs 1040ez instructions Registered domestic partners report community income for self-employment tax purposes the same way they do for income tax purposes. Irs 1040ez instructions Sole proprietorship. Irs 1040ez instructions    With regard to net income from a trade or business (other than a partnership) that is community income, self-employment tax is imposed on the spouse carrying on the trade or business. Irs 1040ez instructions Partnerships. Irs 1040ez instructions    All of the distributive share of a married partner's income or loss from a partnership trade or business is attributable to the partner for computing any self-employment tax, even if a portion of the partner's distributive share of income or loss is community income or loss that is otherwise attributable to the partner's spouse for income tax purposes. Irs 1040ez instructions If both spouses are partners, any self-employment tax is allocated based on their distributive shares. Irs 1040ez instructions Federal income tax withheld. Irs 1040ez instructions    Report the credit for federal income tax withheld on community wages in the same manner as your wages. Irs 1040ez instructions If you and your spouse file separate returns on which each of you reports half the community wages, each of you is entitled to credit for half the income tax withheld on those wages. Irs 1040ez instructions Likewise, each registered domestic partner is entitled to credit for half the income tax withheld on those wages. Irs 1040ez instructions Estimated tax payments. Irs 1040ez instructions    In determining whether you must pay estimated tax, apply the estimated tax rules to your estimated income. Irs 1040ez instructions These rules are explained in Publication 505. Irs 1040ez instructions   If you think you may owe estimated tax and want to pay the tax separately (registered domestic partners must pay the tax separately), determine whether you must pay it by taking into account: Half the community income and deductions, All of your separate income and deductions, and Your own exemption and any exemptions for dependents that you may claim. Irs 1040ez instructions   Whether you and your spouse pay estimated tax jointly or separately will not affect your choice of filing joint or separate income tax returns. Irs 1040ez instructions   If you and your spouse paid estimated tax jointly but file separate income tax returns, either of you can claim all of the estimated tax paid, or you may divide it between you in any way that you agree upon. Irs 1040ez instructions   If you cannot agree on how to divide it, the estimated tax you can claim equals the total estimated tax paid times the tax shown on your separate return, divided by the total of the tax shown on your return and your spouse's return. Irs 1040ez instructions   If you paid your estimated taxes separately, you get credit for only the estimated taxes you paid. Irs 1040ez instructions Earned income credit. Irs 1040ez instructions    You may be entitled to an earned income credit (EIC). Irs 1040ez instructions You cannot claim this credit if your filing status is married filing separately. Irs 1040ez instructions   If you are married, but qualify to file as head of household under rules for married taxpayers living apart (see Publication 501, Exemptions, Standard Deduction, and Filing Information), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under community property laws. Irs 1040ez instructions That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Irs 1040ez instructions Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Irs 1040ez instructions The same rule applies to registered domestic partners. Irs 1040ez instructions    This rule does not apply when determining your adjusted gross income (AGI) for the EIC. Irs 1040ez instructions Your AGI includes that part of both your and your spouse's (or your registered domestic partner's) wages that you are required to include in gross income shown on your tax return. Irs 1040ez instructions   For more information about the EIC, see Publication 596, Earned Income Credit (EIC). Irs 1040ez instructions Overpayments. Irs 1040ez instructions    The amount of an overpayment on a joint return is allocated under the community property laws of the state in which you are domiciled. Irs 1040ez instructions If, under the laws of your state, community property is subject to premarital or other separate debts of either spouse, the full joint overpayment may be used to offset the obligation. Irs 1040ez instructions If, under the laws of your state, community property is not subject to premarital or other separate debts of either spouse, only the portion of the joint overpayment allocated to the spouse liable for the obligation can be used to offset that liability. Irs 1040ez instructions The portion allocated to the other spouse can be refunded. Irs 1040ez instructions Community Property Laws Disregarded The following discussions are situations where special rules apply to community property and community income for spouses. Irs 1040ez instructions These rules do not apply to registered domestic partners. Irs 1040ez instructions Certain community income not treated as community income by one spouse. Irs 1040ez instructions    Community property laws may not apply to an item of community income that you received but did not treat as community income. Irs 1040ez instructions You are responsible for reporting all of that income item if: You treat the item as if only you are entitled to the income, and You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions). Irs 1040ez instructions Relief from liability arising from community property law. Irs 1040ez instructions    You are not responsible for the tax relating to an item of community income if all the following conditions are met. Irs 1040ez instructions You did not file a joint return for the tax year. Irs 1040ez instructions You did not include an item of community income in gross income. Irs 1040ez instructions The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. Irs 1040ez instructions Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. Irs 1040ez instructions Your spouse's (or former spouse's) distributive share of partnership income. Irs 1040ez instructions Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). Irs 1040ez instructions Use the appropriate community property law to determine what is separate property. Irs 1040ez instructions Any other income that belongs to your spouse (or former spouse) under community property law. Irs 1040ez instructions You establish that you did not know of, and had no reason to know of, that community income. Irs 1040ez instructions Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. Irs 1040ez instructions Requesting relief. Irs 1040ez instructions    For information on how and when to request relief from liabilities arising from community property laws, see Community Property Laws in Publication 971, Innocent Spouse Relief. Irs 1040ez instructions Equitable relief. Irs 1040ez instructions    If you do not qualify for the relief discussed earlier under Relief from liability arising from community property law and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief. Irs 1040ez instructions To request equitable relief, you must file Form 8857, Request for Innocent Spouse Relief. Irs 1040ez instructions Also see Publication 971. Irs 1040ez instructions Spousal agreements. Irs 1040ez instructions    In some states a married couple may enter into an agreement that affects the status of property or income as community or separate property. Irs 1040ez instructions Check your state law to determine how it affects you. Irs 1040ez instructions Nonresident alien spouse. Irs 1040ez instructions    If you are a U. Irs 1040ez instructions S. Irs 1040ez instructions citizen or resident alien and you choose to treat your nonresident alien spouse as a U. Irs 1040ez instructions S. Irs 1040ez instructions resident for tax purposes and you are domiciled in a community property state or country, use the community property rules. Irs 1040ez instructions You must file a joint return for the year you make the choice. Irs 1040ez instructions You can file separate returns in later years. Irs 1040ez instructions For details on making this choice, see Publication 519, U. Irs 1040ez instructions S. Irs 1040ez instructions Tax Guide for Aliens. Irs 1040ez instructions   If you are a U. Irs 1040ez instructions S. Irs 1040ez instructions citizen or resident alien and do not choose to treat your nonresident alien spouse as a U. Irs 1040ez instructions S. Irs 1040ez instructions resident for tax purposes, treat your community income as explained next under Spouses living apart all year. Irs 1040ez instructions However, you do not have to meet the four conditions discussed there. Irs 1040ez instructions Spouses living apart all year. Irs 1040ez instructions    If you are married at any time during the calendar year, special rules apply for reporting certain community income. Irs 1040ez instructions You must meet all the following conditions for these special rules to apply. Irs 1040ez instructions You and your spouse lived apart all year. Irs 1040ez instructions You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year. Irs 1040ez instructions You and/or your spouse had earned income for the calendar year that is community income. Irs 1040ez instructions You and your spouse have not transferred, directly or indirectly, any of the earned income in condition (3) above between yourselves before the end of the year. Irs 1040ez instructions Do not take into account transfers satisfying child support obligations or transfers of very small amounts or value. Irs 1040ez instructions If all these conditions are met, you and your spouse must report your community income as discussed next. Irs 1040ez instructions See also Certain community income not treated as community income by one spouse , earlier. Irs 1040ez instructions Earned income. Irs 1040ez instructions    Treat earned income that is not trade or business or partnership income as the income of the spouse who performed the services to earn the income. Irs 1040ez instructions Earned income is wages, salaries, professional fees, and other pay for personal services. Irs 1040ez instructions   Earned income does not include amounts paid by a corporation that are a distribution of earnings and profits rather than a reasonable allowance for personal services rendered. Irs 1040ez instructions Trade or business income. Irs 1040ez instructions    Treat income and related deductions from a trade or business that is not a partnership as those of the spouse carrying on the trade or business. Irs 1040ez instructions Partnership income or loss. Irs 1040ez instructions    Treat income or loss from a trade or business carried on by a partnership as the income or loss of the spouse who is the partner. Irs 1040ez instructions Separate property income. Irs 1040ez instructions    Treat income from the separate property of one spouse as the income of that spouse. Irs 1040ez instructions Social security benefits. Irs 1040ez instructions    Treat social security and equivalent railroad retirement benefits as the income of the spouse who receives the benefits. Irs 1040ez instructions Other income. Irs 1040ez instructions    Treat all other community income, such as dividends, interest, rents, royalties, or gains, as provided under your state's community property law. Irs 1040ez instructions Example. Irs 1040ez instructions George and Sharon were married throughout the year but did not live together at any time during the year. Irs 1040ez instructions Both domiciles were in a community property state. Irs 1040ez instructions They did not file a joint return or transfer any of their earned income between themselves. Irs 1040ez instructions During the year their incomes were as follows:   George Sharon Wages $20,000 $22,000 Consulting business 5,000   Partnership   10,000 Dividends from separate property 1,000 2,000 Interest from community property 500 500 Total $26,500 $34,500 Under the community property law of their state, all the income is considered community income. Irs 1040ez instructions (Some states treat income from separate property as separate income—check your state law. Irs 1040ez instructions ) Sharon did not take part in George's consulting business. Irs 1040ez instructions Ordinarily, on their separate returns they would each report $30,500, half the total community income of $61,000 ($26,500 + $34,500). Irs 1040ez instructions But because they meet the four conditions listed earlier under Spouses living apart all year , they must disregard community property law in reporting all their income (except the interest income) from community property. Irs 1040ez instructions They each report on their returns only their own earnings and other income, and their share of the interest income from community property. Irs 1040ez instructions George reports $26,500 and Sharon reports $34,500. Irs 1040ez instructions Other separated spouses. Irs 1040ez instructions    If you and your spouse are separated but do not meet the four conditions discussed earlier under Spouses living apart all year , you must treat your income according to the laws of your state. Irs 1040ez instructions In some states, income earned after separation but before a decree of divorce continues to be community income. Irs 1040ez instructions In other states, it is separate income. Irs 1040ez instructions End of the Community The marital community may end in several ways. Irs 1040ez instructions When the marital community ends, the community assets (money and property) are divided between the spouses. Irs 1040ez instructions Similarly, a registered domestic partnership may end in several ways and the community assets must be divided between the registered domestic partners. Irs 1040ez instructions Death of spouse. Irs 1040ez instructions    If you own community property and your spouse dies, the total fair market value (FMV) of the community property, including the part that belongs to you, generally becomes the basis of the entire property. Irs 1040ez instructions For this rule to apply, at least half the value of the community property interest must be includible in your spouse's gross estate, whether or not the estate must file a return (this rule does not apply to registered domestic partners). Irs 1040ez instructions Example. Irs 1040ez instructions Bob and Ann owned community property that had a basis of $80,000. Irs 1040ez instructions When Bob died, his and Ann's community property had an FMV of $100,000. Irs 1040ez instructions One-half of the FMV of their community interest was includible in Bob's estate. Irs 1040ez instructions The basis of Ann's half of the property is $50,000 after Bob died (half of the $100,000 FMV). Irs 1040ez instructions The basis of the other half to Bob's heirs is also $50,000. Irs 1040ez instructions   For more information about the basis of assets, see Publication 551, Basis of Assets. Irs 1040ez instructions    The above basis rule does not apply if your spouse died in 2010 and the spouse's executor elected out of the estate tax, in which case section 1022 will apply. Irs 1040ez instructions See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for additional information. Irs 1040ez instructions Divorce or separation. Irs 1040ez instructions    If spouses divorce or separate, the (equal or unequal) division of community property in connection with the divorce or property settlement does not result in a gain or loss. Irs 1040ez instructions For registered domestic partners, an unequal division of community property in a property settlement may result in a gain or loss. Irs 1040ez instructions For information on the tax consequences of the division of property under a property settlement or divorce decree, see Publication 504. Irs 1040ez instructions   Each spouse (or each registered domestic partner) is taxed on half the community income for the part of the year before the community ends. Irs 1040ez instructions However, see Spouses living apart all year , earlier. Irs 1040ez instructions Any income received after the community ends is separate income. Irs 1040ez instructions This separate income is taxable only to the spouse (or the registered domestic partner) to whom it belongs. Irs 1040ez instructions   An absolute decree of divorce or annulment ends the marital community in all community property states. Irs 1040ez instructions A decree of annulment, even though it holds that no valid marriage ever existed, usually does not nullify community property rights arising during the “marriage. Irs 1040ez instructions ” However, you should check your state law for exceptions. Irs 1040ez instructions   A decree of legal separation or of separate maintenance may or may not end the marital community. Irs 1040ez instructions The court issuing the decree may terminate the marital community and divide the property between the spouses. Irs 1040ez instructions   A separation agreement may divide the community property between you and your spouse. Irs 1040ez instructions It may provide that this property, along with future earnings and property acquired, will be separate property. Irs 1040ez instructions This agreement may end the community. Irs 1040ez instructions   In some states, the marital community ends when the spouses permanently separate, even if there is no formal agreement. Irs 1040ez instructions Check your state law. Irs 1040ez instructions   If you are a registered domestic partner, you should check your state law to determine when the community ends. Irs 1040ez instructions Preparing a Federal Income Tax Return The following discussion does not apply to spouses who meet the conditions under Spouses living apart all year , discussed earlier. Irs 1040ez instructions Those spouses must report their community income as explained in that discussion. Irs 1040ez instructions Joint Return Versus Separate Returns Ordinarily, filing a joint return will give you a greater tax advantage than filing a separate return. Irs 1040ez instructions But in some cases, your combined income tax on separate returns may be less than it would be on a joint return. Irs 1040ez instructions This discussion concerning joint versus separate returns does not apply to registered domestic partners. Irs 1040ez instructions The following rules apply if your filing status is married filing separately. Irs 1040ez instructions You should itemize deductions if your spouse itemizes deductions, because you cannot claim the standard deduction. Irs 1040ez instructions You cannot take the credit for child and dependent care expenses in most instances. Irs 1040ez instructions You cannot take the earned income credit. Irs 1040ez instructions You cannot exclude any interest income from qualified U. Irs 1040ez instructions S. Irs 1040ez instructions savings bonds that you used for higher education expenses. Irs 1040ez instructions You cannot take the credit for the elderly or the disabled unless you lived apart from your spouse all year. Irs 1040ez instructions You may have to include in income more of any social security benefits (including any equivalent railroad retirement benefits) you received during the year than you would on a joint return. Irs 1040ez instructions You cannot deduct interest paid on a qualified student loan. Irs 1040ez instructions You cannot take the education credits. Irs 1040ez instructions You may have a smaller child tax credit than you would on a joint return. Irs 1040ez instructions You cannot take the exclusion or credit for adoption expenses in most instances. Irs 1040ez instructions Figure your tax both on a joint return and on separate returns under the community property laws of your state. Irs 1040ez instructions You can then compare the tax figured under both methods and use the one that results in less tax. Irs 1040ez instructions Separate Return Preparation If you file separate returns, you and your spouse must each report half of your combined community income and deductions in addition to your separate income and deductions. Irs 1040ez instructions Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. Irs 1040ez instructions On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc. Irs 1040ez instructions ). Irs 1040ez instructions The same reporting rule applies to registered domestic partners. Irs 1040ez instructions For a discussion of the effect of community property laws on certain items of income, deductions, credits, and other return amounts, see Identifying Income, Deductions, and Credits , earlier. Irs 1040ez instructions Attach your Form 8958 to your separate return showing how you figured the income, deductions, and federal income tax withheld that each of you reported. Irs 1040ez instructions Form 8958 is used for married spouses in community property states who choose to file married filing separately. Irs 1040ez instructions Form 8958 is also used for registered domestic partners who are domiciled in Nevada, Washington, or California. Irs 1040ez instructions A registered domestic partner in Nevada, Washington, or California must follow state community property laws and report half the combined community income of the individual and his or her registered domestic partner. Irs 1040ez instructions Extension of time to file. Irs 1040ez instructions    An extension of time for filing your separate return does not extend the time for filing your spouse's (or your registered domestic partner's) separate return. Irs 1040ez instructions If you and your spouse file a joint return, you cannot file separate returns after the due date for filing either separate return has passed. Irs 1040ez instructions How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Irs 1040ez instructions Free help with your tax return. Irs 1040ez instructions    You can get free help preparing your return nationwide from IRS-certified volunteers. Irs 1040ez instructions The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Irs 1040ez instructions The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Irs 1040ez instructions Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Irs 1040ez instructions In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Irs 1040ez instructions To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Irs 1040ez instructions gov, download the IRS2Go app, or call 1-800-906-9887. Irs 1040ez instructions   As part of the TCE program, AARP offers the Tax-Aide counseling program. Irs 1040ez instructions To find the nearest AARP Tax-Aide site, visit AARP's website at www. Irs 1040ez instructions aarp. Irs 1040ez instructions org/money/taxaide or call 1-888-227-7669. Irs 1040ez instructions For more information on these programs, go to IRS. Irs 1040ez instructions gov and enter “VITA” in the search box. Irs 1040ez instructions Internet. Irs 1040ez instructions    IRS. Irs 1040ez instructions gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Irs 1040ez instructions Download the free IRS2Go app from the iTunes app store or from Google Play. Irs 1040ez instructions Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Irs 1040ez instructions Check the status of your 2013 refund with the Where's My Refund? application on IRS. Irs 1040ez instructions gov or download the IRS2Go app and select the Refund Status option. Irs 1040ez instructions The IRS issues more than 9 out of 10 refunds in less than 21 days. Irs 1040ez instructions Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Irs 1040ez instructions You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs 1040ez instructions The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Irs 1040ez instructions Use the Interactive Tax Assistant (ITA) to research your tax questions. Irs 1040ez instructions No need to wait on the phone or stand in line. Irs 1040ez instructions The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Irs 1040ez instructions When you reach the response screen, you can print the entire interview and the final response for your records. Irs 1040ez instructions New subject areas are added on a regular basis. Irs 1040ez instructions  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Irs 1040ez instructions gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Irs 1040ez instructions You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Irs 1040ez instructions The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Irs 1040ez instructions When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Irs 1040ez instructions Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Irs 1040ez instructions You can also ask the IRS to mail a return or an account transcript to you. Irs 1040ez instructions Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Irs 1040ez instructions gov or by calling 1-800-908-9946. Irs 1040ez instructions Tax return and tax account transcripts are generally available for the current year and the past three years. Irs 1040ez instructions Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Irs 1040ez instructions Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Irs 1040ez instructions If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Irs 1040ez instructions Check the status of your amended return using Where's My Amended Return? Go to IRS. Irs 1040ez instructions gov and enter Where's My Amended Return? in the search box. Irs 1040ez instructions You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Irs 1040ez instructions It can take up to 3 weeks from the date you mailed it to show up in our system. Irs 1040ez instructions Make a payment using one of several safe and convenient electronic payment options available on IRS. Irs 1040ez instructions gov. Irs 1040ez instructions Select the Payment tab on the front page of IRS. Irs 1040ez instructions gov for more information. Irs 1040ez instructions Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Irs 1040ez instructions Figure your income tax withholding with the IRS Withholding Calculator on IRS. Irs 1040ez instructions gov. Irs 1040ez instructions Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Irs 1040ez instructions Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Irs 1040ez instructions gov. Irs 1040ez instructions Request an Electronic Filing PIN by going to IRS. Irs 1040ez instructions gov and entering Electronic Filing PIN in the search box. Irs 1040ez instructions Download forms, instructions and publications, including accessible versions for people with disabilities. Irs 1040ez instructions Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Irs 1040ez instructions gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Irs 1040ez instructions An employee can answer questions about your tax account or help you set up a payment plan. Irs 1040ez instructions Before you visit, check the Office Locator on IRS. Irs 1040ez instructions gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Irs 1040ez instructions If you have a special need, such as a disability, you can request an appointment. Irs 1040ez instructions Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Irs 1040ez instructions Apply for an Employer Identification Number (EIN). Irs 1040ez instructions Go to IRS. Irs 1040ez instructions gov and enter Apply for an EIN in the search box. Irs 1040ez instructions Read the Internal Revenue Code, regulations, or other official guidance. Irs 1040ez instructions Read Internal Revenue Bulletins. Irs 1040ez instructions Sign up to receive local and national tax news and more by email. Irs 1040ez instructions Just click on “subscriptions” above the search box on IRS. Irs 1040ez instructions gov and choose from a variety of options. Irs 1040ez instructions    Phone. Irs 1040ez instructions You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Irs 1040ez instructions Download the free IRS2Go app from the iTunes app store or from Google Play. Irs 1040ez instructions Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Irs 1040ez instructions gov, or download the IRS2Go app. Irs 1040ez instructions Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs 1040ez instructions The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Irs 1040ez instructions Most VITA and TCE sites offer free electronic filing. Irs 1040ez instructions Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Irs 1040ez instructions Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Irs 1040ez instructions Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Irs 1040ez instructions If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs 1040ez instructions The IRS issues more than 9 out of 10 refunds in less than 21 days. Irs 1040ez instructions Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs 1040ez instructions Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Irs 1040ez instructions The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Irs 1040ez instructions Note, the above information is for our automated hotline. Irs 1040ez instructions Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Irs 1040ez instructions Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Irs 1040ez instructions You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Irs 1040ez instructions It can take up to 3 weeks from the date you mailed it to show up in our system. Irs 1040ez instructions Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Irs 1040ez instructions You should receive your order within 10 business days. Irs 1040ez instructions Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Irs 1040ez instructions If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Irs 1040ez instructions Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Irs 1040ez instructions The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Irs 1040ez instructions These individuals can also contact the IRS through relay services such as the Federal Relay Service. Irs 1040ez instructions    Walk-in. Irs 1040ez instructions You can find a selection of forms, publications and services — in-person. Irs 1040ez instructions Products. Irs 1040ez instructions You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Irs 1040ez instructions Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Irs 1040ez instructions Services. Irs 1040ez instructions You can walk in to your local TAC for face-to-face tax help. Irs 1040ez instructions An employee can answer questions about your tax account or help you set up a payment plan. Irs 1040ez instructions Before visiting, use the Office Locator tool on IRS. Irs 1040ez instructions gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Irs 1040ez instructions    Mail. Irs 1040ez instructions You can send your order for forms, instructions, and publications to the address below. Irs 1040ez instructions You should receive a response within 10 business days after your request is received. Irs 1040ez instructions Internal Revenue Service 1201 N. Irs 1040ez instructions Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. Irs 1040ez instructions The Taxpayer Advocate Service (TAS) is your voice at the IRS. Irs 1040ez instructions Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Irs 1040ez instructions   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Irs 1040ez instructions We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Irs 1040ez instructions You face (or your business is facing) an immediate threat of adverse action. Irs 1040ez instructions You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Irs 1040ez instructions   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Irs 1040ez instructions Here's why we can help: TAS is an independent organization within the IRS. Irs 1040ez instructions Our advocates know how to work with the IRS. Irs 1040ez instructions Our services are free and tailored to meet your needs. Irs 1040ez instructions We have offices in every state, the District of Columbia, and Puerto Rico. Irs 1040ez instructions   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Irs 1040ez instructions irs. Irs 1040ez instructions gov/advocate, or call us toll-free at 1-877-777-4778. Irs 1040ez instructions   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Irs 1040ez instructions If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Irs 1040ez instructions irs. Irs 1040ez instructions gov/sams. Irs 1040ez instructions Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Irs 1040ez instructions Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Irs 1040ez instructions Visit www. Irs 1040ez instructions irs. Irs 1040ez instructions gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List. Irs 1040ez instructions Prev  Up  Next   Home   More Online Publications
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The Irs 1040ez Instructions

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