Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

States Without Income Tax

File 1040xEfile For 2012 Tax YearTurbo Tax Free State Filing1040ez Forms 2014Online FilingCan I File State Taxes For Free1040x Form InstructionsHow To File Irs Form 1040xTax Forms 2009Where To File 2011 TaxesWhere Can I File My 2011 Taxes Online For FreeIncome Taxes For StudentsEz Form 2012Irs Free Tax Preparation OnlineTax Credits For Students2012 Tax Return Form 1040File 2011 Tax Returns2009 Tax Returns OnlineEfile 2011 TaxHow To File 2011 Tax ReturnFree Turbo Tax Filing 2012Tax Returns 2011Ohio State Tax Forms 20112011 Tax ScheduleTax Forms For Self EmployedFree Tax Preparation SitesFree Tax Calculator 20122012 Online Tax ReturnAmmendDownload 1040xFree TaxState Income Tax RatesFree Federal And State Tax E FileAmend Taxes OnlineWww Irs Gov Freefile2012 10401040x 2010H&r Block MilitaryFree Download Irs 1040 Form1040ez Worksheet Line F

States Without Income Tax

States without income tax 12. States without income tax   Business Deduction for Work-Related Education Table of Contents What's New Introduction Qualifying Work-Related EducationEducation Required by Employer or by Law Education To Maintain or Improve Skills Education To Meet Minimum Requirements Education That Qualifies You for a New Trade or Business What Expenses Can Be DeductedUnclaimed reimbursement. States without income tax Transportation Expenses Travel Expenses No Double Benefit Allowed How To Treat ReimbursementsAccountable Plans Nonaccountable Plans Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping Illustrated Example What's New Standard mileage rate. States without income tax  Generally, if you claim a business deduction for work-related education and you drive your car to and from school, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013, is 56. States without income tax 5 cents per mile. States without income tax For more information, see Transportation Expenses under What Expenses Can Be Deducted, later. States without income tax Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. States without income tax To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee, File Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education , later. States without income tax What is the tax benefit of taking a business deduction for work-related education. States without income tax   If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. States without income tax Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses (except for impairment-related work expenses of disabled individuals) is greater than 2% of your adjusted gross income. States without income tax An itemized deduction reduces the amount of your income subject to tax. States without income tax   If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. States without income tax This reduces the amount of your income subject to both income tax and self-employment tax. States without income tax   Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits. States without income tax You may qualify for these other benefits even if you do not meet the requirements listed above. States without income tax   Also, your work-related education expenses may qualify you to claim more than one tax benefit. States without income tax Generally, you may claim any number of benefits as long as you use different expenses to figure each one. States without income tax Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. States without income tax This is education that meets at least one of the following two tests. States without income tax The education is required by your employer or the law to keep your present salary, status, or job. States without income tax The required education must serve a bona fide business purpose of your employer. States without income tax The education maintains or improves skills needed in your present work. States without income tax However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business, or Is part of a program of study that will qualify you for a new trade or business. States without income tax You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. States without income tax Use Figure 12-1, Does Your Work-Related Education Qualify as a quick check to see if your education qualifies. States without income tax Education Required by Employer or by Law Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. States without income tax This additional education is qualifying work-related education if all three of the following requirements are met. States without income tax It is required for you to keep your present salary, status, or job, The requirement serves a bona fide business purpose of your employer, and The education is not part of a program that will qualify you for a new trade or business. States without income tax When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. States without income tax See Education To Maintain or Improve Skills , later. States without income tax Example. States without income tax You are a teacher who has satisfied the minimum requirements for teaching. States without income tax Your employer requires you to take an additional college course each year to keep your teaching job. States without income tax If the courses will not qualify you for a new trade or business, they are qualifying work-related education even if you eventually receive a master's degree and an increase in salary because of this extra education. States without income tax This image is too large to be displayed in the current screen. States without income tax Please click the link to view the image. States without income tax Figure 12-1 Education To Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. States without income tax This could include refresher courses, courses on current developments, and academic or vocational courses. States without income tax Example. States without income tax You repair televisions, radios, and stereo systems for XYZ Store. States without income tax To keep up with the latest changes, you take special courses in radio and stereo service. States without income tax These courses maintain and improve skills required in your work. States without income tax Maintaining skills vs. States without income tax qualifying for new job. States without income tax   Education to maintain or improve skills needed in your present work is not qualifying education if it will also qualify you for a new trade or business. States without income tax Education during temporary absence. States without income tax   If you stop working for a year or less in order to get education to maintain or improve skills needed in your present work and then return to the same general type of work, your absence is considered temporary. States without income tax Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. States without income tax Example. States without income tax You quit your biology research job to become a full-time biology graduate student for 1 year. States without income tax If you return to work in biology research after completing the courses, the education is related to your present work even if you do not go back to work with the same employer. States without income tax Education during indefinite absence. States without income tax   If you stop work for more than a year, your absence from your job is considered indefinite. States without income tax Education during an indefinite absence, even if it maintains or improves skills needed in the work from which you are absent, is considered to qualify you for a new trade or business. States without income tax Therefore, it is not qualifying work-related education. States without income tax Education To Meet Minimum Requirements Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. States without income tax The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. States without income tax Once you have met the minimum educational requirements that were in effect when you were hired, you do not have to meet any new minimum educational requirements. States without income tax This means that if the minimum requirements change after you were hired, any education you need to meet the new requirements can be qualifying education. States without income tax You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. States without income tax Example 1. States without income tax You are a full-time engineering student. States without income tax Although you have not received your degree or certification, you work part time as an engineer for a firm that will employ you as a full-time engineer after you finish college. States without income tax Although your college engineering courses improve your skills in your present job, they are also needed to meet the minimum job requirements for a full-time engineer. States without income tax The education is not qualifying work-related education. States without income tax Example 2. States without income tax You are an accountant and you have met the minimum educational requirements of your employer. States without income tax Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. States without income tax These additional courses can be qualifying work-related education because you have already satisfied the minimum requirements that were in effect when you were hired. States without income tax Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. States without income tax The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. States without income tax If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. States without income tax The determination of whether you are a faculty member of an educational institution must be made on the basis of the particular practices of the institution. States without income tax You generally will be considered a faculty member when one or more of the following occurs. States without income tax You have tenure. States without income tax Your years of service count toward obtaining tenure. States without income tax You have a vote in faculty decisions. States without income tax Your school makes contributions for you to a retirement plan other than social security or a similar program. States without income tax Example 1. States without income tax The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. States without income tax In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. States without income tax If the employing school certifies to the state Department of Education that qualified teachers cannot be found, the school can hire persons with only 3 years of college. States without income tax However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. States without income tax Under these facts, the bachelor's degree, whether or not it includes the 10 professional education courses, is considered the minimum educational requirement for qualification as a teacher in your state. States without income tax If you have all the required education except the fifth year, you have met the minimum educational requirements. States without income tax The fifth year of training is qualifying work-related education unless it is part of a program of study that will qualify you for a new trade or business. States without income tax Example 2. States without income tax Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. States without income tax The additional four education courses can be qualifying work-related education. States without income tax Although you do not have all the required courses, you have already met the minimum educational requirements. States without income tax Example 3. States without income tax Assume the same facts as in Example 1 except that you are hired with only 3 years of college. States without income tax The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. States without income tax They are needed to meet the minimum educational requirements for employment as a teacher. States without income tax Example 4. States without income tax You have a bachelor's degree and you work as a temporary instructor at a university. States without income tax At the same time, you take graduate courses toward an advanced degree. States without income tax The rules of the university state that you can become a faculty member only if you get a graduate degree. States without income tax Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. States without income tax You have not met the minimum educational requirements to qualify you as a faculty member. States without income tax The graduate courses are not qualifying work-related education. States without income tax Certification in a new state. States without income tax   Once you have met the minimum educational requirements for teachers for your state, you are considered to have met the minimum educational requirements in all states. States without income tax This is true even if you must get additional education to be certified in another state. States without income tax Any additional education you need is qualifying work-related education. States without income tax You have already met the minimum requirements for teaching. States without income tax Teaching in another state is not a new trade or business. States without income tax Example. States without income tax You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. States without income tax You move to State B and are promptly hired as a teacher. States without income tax You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. States without income tax These additional courses are qualifying work-related education because the teaching position in State B involves the same general kind of work for which you were qualified in State A. States without income tax Education That Qualifies You for a New Trade or Business Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education. States without income tax This is true even if you do not plan to enter that trade or business. States without income tax If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. States without income tax Example 1. States without income tax You are an accountant. States without income tax Your employer requires you to get a law degree at your own expense. States without income tax You register at a law school for the regular curriculum that leads to a law degree. States without income tax Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. States without income tax Example 2. States without income tax You are a general practitioner of medicine. States without income tax You take a 2-week course to review developments in several specialized fields of medicine. States without income tax The course does not qualify you for a new profession. States without income tax It is qualifying work- related education because it maintains or improves skills required in your present profession. States without income tax Example 3. States without income tax While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. States without income tax The program will lead to qualifying you to practice psychoanalysis. States without income tax The psychoanalytic training does not qualify you for a new profession. States without income tax It is qualifying work-related education because it maintains or improves skills required in your present profession. States without income tax Bar or CPA Review Course Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. States without income tax They are part of a program of study that can qualify you for a new profession. States without income tax Teaching and Related Duties All teaching and related duties are considered the same general kind of work. States without income tax A change in duties in any of the following ways is not considered a change to a new business. States without income tax Elementary school teacher to secondary school teacher. States without income tax Teacher of one subject, such as biology, to teacher of another subject, such as art. States without income tax Classroom teacher to guidance counselor. States without income tax Classroom teacher to school administrator. States without income tax What Expenses Can Be Deducted If your education meets the requirements described earlier under Qualifying Work-Related Education you can generally deduct your education expenses as business expenses. States without income tax If you are not self-employed, you can deduct business expenses only if you itemize your deductions. States without income tax You cannot deduct expenses related to tax-exempt and excluded income. States without income tax Deductible expenses. States without income tax   The following education expenses can be deducted. States without income tax Tuition, books, supplies, lab fees, and similar items. States without income tax Certain transportation and travel costs. States without income tax Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. States without income tax Nondeductible expenses. States without income tax   You cannot deduct personal or capital expenses. States without income tax For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. States without income tax This amount is a personal expense. States without income tax Unclaimed reimbursement. States without income tax   If you do not claim reimbursement that you are entitled to receive from your employer, you cannot deduct the expenses that apply to that unclaimed reimbursement. States without income tax Example. States without income tax Your employer agrees to pay your education expenses if you file a voucher showing your expenses. States without income tax You do not file a voucher and you do not get reimbursed. States without income tax Because you did not file a voucher, you cannot deduct the expenses on your tax return. States without income tax Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. States without income tax If you are regularly employed and go to school on a temporary basis, you can also deduct the costs of returning from school to home. States without income tax Temporary basis. States without income tax   You go to school on a temporary basis if either of the following situations applies to you. States without income tax Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. States without income tax Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. States without income tax Your attendance is temporary up to the date you determine it will last more than 1 year. States without income tax If you are in either situation (1) or (2) above, your attendance is not temporary if facts and circumstances indicate otherwise. States without income tax Attendance not on a temporary basis. States without income tax   You do not go to school on a temporary basis if either of the following situations apply to you. States without income tax Your attendance at school is realistically expected to last more than 1 year. States without income tax It does not matter how long you actually attend. States without income tax Initially, your attendance at school is realistically expected to last 1 year or less, but at a later date your attendance is reasonably expected to last more than 1 year. States without income tax Your attendance is not temporary after the date you determine it will last more than 1 year. States without income tax Deductible Transportation Expenses If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. States without income tax This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. States without income tax Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. States without income tax Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. States without income tax Example 1. States without income tax You regularly work in a nearby town, and go directly from work to home. States without income tax You also attend school every work night for 3 months to take a course that improves your job skills. States without income tax Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. States without income tax This is true regardless of the distance traveled. States without income tax Example 2. States without income tax Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. States without income tax You can deduct your transportation expenses from your regular work site to school and then home. States without income tax Example 3. States without income tax Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. States without income tax Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. States without income tax Example 4. States without income tax Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. States without income tax Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. States without income tax If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. States without income tax If you go from work to home to school and return home, your transportation expenses cannot be more than if you had gone directly from work to school. States without income tax Using your car. States without income tax    If you use your car (whether you own or lease it) for transportation to school, you can deduct your actual expenses or use the standard mileage rate to figure the amount you can deduct. States without income tax The standard mileage rate for miles driven from January 1, 2013 through December 31, 2013, is 56. States without income tax 5 cents per mile. States without income tax Whichever method you use, you can also deduct parking fees and tolls. States without income tax See Publication 463, chapter 4, for information on deducting your actual expenses of using a car. States without income tax Travel Expenses You can deduct expenses for travel, meals (see 50% limit on meals , later), and lodging if you travel overnight mainly to obtain qualifying work-related education. States without income tax Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. States without income tax For more information, see chapter 1 of Publication 463. States without income tax You cannot deduct expenses for personal activities such as sightseeing, visiting, or entertaining. States without income tax Mainly personal travel. States without income tax   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. States without income tax You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. States without income tax   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. States without income tax An important factor is the comparison of time spent on personal activities with time spent on educational activities. States without income tax If you spend more time on personal activities, the trip is considered mainly educational only if you can show a substantial nonpersonal reason for traveling to a particular location. States without income tax Example 1. States without income tax John works in Newark, New Jersey. States without income tax He traveled to Chicago to take a deductible 1-week course at the request of his employer. States without income tax His main reason for going to Chicago was to take the course. States without income tax While there, he took a sightseeing trip, entertained some friends, and took a side trip to Pleasantville for a day. States without income tax Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. States without income tax He cannot deduct his transportation expenses of going to Pleasantville. States without income tax He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. States without income tax Example 2. States without income tax Sue works in Boston. States without income tax She went to a university in Michigan to take a course for work. States without income tax The course is qualifying work-related education. States without income tax She took one course, which is one-fourth of a full course load of study. States without income tax She spent the rest of the time on personal activities. States without income tax Her reasons for taking the course in Michigan were all personal. States without income tax Sue's trip is mainly personal because three-fourths of her time is considered personal time. States without income tax She cannot deduct the cost of her round-trip train ticket to Michigan. States without income tax She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. States without income tax Example 3. States without income tax Dave works in Nashville and recently traveled to California to take a 2-week seminar. States without income tax The seminar is qualifying work-related education. States without income tax While there, he spent an extra 8 weeks on personal activities. States without income tax The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. States without income tax Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. States without income tax He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. States without income tax Cruises and conventions. States without income tax   Certain cruises and conventions offer seminars or courses as part of their itinerary. States without income tax Even if the seminars or courses are work related, your deduction for travel may be limited. States without income tax This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. States without income tax   For a discussion of the limits on travel expense deductions that apply to cruises and conventions, see Luxury Water Travel and Conventions in chapter 1 of Publication 463. States without income tax 50% limit on meals. States without income tax   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. States without income tax If you were reimbursed for the meals, see How To Treat Reimbursements , later. States without income tax   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. States without income tax Travel as Education You cannot deduct the cost of travel as a form of education even if it is directly related to your duties in your work or business. States without income tax Example. States without income tax You are a French language teacher. States without income tax While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. States without income tax You chose your itinerary and most of your activities to improve your French language skills. States without income tax You cannot deduct your travel expenses as education expenses. States without income tax This is true even if you spent most of your time learning French by visiting French schools and families, attending movies or plays, and engaging in similar activities. States without income tax No Double Benefit Allowed You cannot do either of the following. States without income tax Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, as a tuition and fees deduction. States without income tax Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. States without income tax See Adjustments to Qualifying Work-Related Education Expenses, next. States without income tax Adjustments to Qualifying Work-Related Education Expenses If you pay qualifying work-related education expenses with certain tax-free funds, you cannot claim a deduction for those amounts. States without income tax You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. States without income tax Tax-free educational assistance. States without income tax   This includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). States without income tax Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. States without income tax Amounts that do not reduce qualifying work-related education expenses. States without income tax   Do not reduce the qualifying work-related education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. States without income tax Also, do not reduce the qualifying work-related education expenses by any scholarship or fellowship reported as income on the student's return or any scholarship which, by its terms, cannot be applied to qualifying work-related education expenses. States without income tax How To Treat Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. States without income tax There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. States without income tax You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. States without income tax Note. States without income tax The following rules about reimbursement arrangements also apply to expense allowances received from your employer. States without income tax Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. States without income tax Your expenses must have a business connection. States without income tax This means your expenses must be deductible under the rules for qualifying work-related education explained earlier. States without income tax You must adequately account to your employer for your expenses within a reasonable period of time. States without income tax You must return any reimbursement or allowance in excess of the expenses accounted for within a reasonable period of time. States without income tax If you are reimbursed under an accountable plan, your employer should not include any reimbursement in your income in box 1 of your Form W-2. States without income tax If your employer included reimbursements in box 1 of your Form W-2 and you meet all three rules for accountable plans, ask your employer for a corrected Form W-2. States without income tax Accountable plan rules not met. States without income tax   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules for accountable plans. States without income tax Those expenses that fail to meet the three rules are treated as having been reimbursed under a Nonaccountable Plan (discussed later). States without income tax Expenses equal reimbursement. States without income tax   Under an accountable plan, if your expenses equal your reimbursement, you do not complete Form 2106 or 2106-EZ. States without income tax Because your expenses and reimbursements are equal, you do not have a deduction. States without income tax Excess expenses. States without income tax   If your expenses are more than your reimbursement, you can deduct your excess expenses. States without income tax This is discussed later, under Deducting Business Expenses . States without income tax Allocating your reimbursements for meals. States without income tax   Because your excess meal expenses are subject to the 50% limit, you must figure them separately from your other expenses. States without income tax If your employer paid you a single amount to cover both meals and other expenses, you must allocate the reimbursement so that you can figure your excess meal expenses separately. States without income tax Make the allocation as follows. States without income tax Divide your meal expenses by your total expenses. States without income tax Multiply your total reimbursement by the result from (1). States without income tax This is the allocated reimbursement for your meal expenses. States without income tax Subtract the amount figured in (2) from your total reimbursement. States without income tax The difference is the allocated reimbursement for your other expenses of qualifying work-related education. States without income tax Example. States without income tax Your employer paid you an expense allowance of $2,000 under an accountable plan. States without income tax The allowance was to cover all of your expenses of traveling away from home to take a 2-week training course for work. States without income tax There was no indication of how much of the reimbursement was for each type of expense. States without income tax Your actual expenses equal $2,500 ($425 for meals + $700 lodging + $150 transportation expenses + $1,225 for books and tuition). States without income tax Using the steps listed above, allocate the reimbursement between the $425 meal expenses and the $2,075 other expenses. States without income tax   1. States without income tax $425 meal expenses  $2,500 total expenses = . States without income tax 17   2. States without income tax $2,000 (reimbursement)×. States without income tax 17     =$340 (allocated reimbursement for meal expenses)   3. States without income tax $2,000 (reimbursement)−$340 (meals)     = $1,660 (allocated reimbursement for other qualifying work-related education expenses) Your excess meal expenses are $85 ($425 − $340) and your excess other expenses are $415 ($2,075 − $1,660). States without income tax After you apply the 50% limit to your meals, you have a deduction for work-related education expenses of $458 (($85 × 50%) + $415). States without income tax Nonaccountable Plans 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 and report the total in box 1 of your Form W-2. States without income tax You can deduct your expenses regardless of whether they are more than, less than, or equal to your reimbursement. States without income tax This is discussed later under Deducting Business Expenses . States without income tax An illustrated example of a nonaccountable plan, using Form 2106-EZ, is shown at the end of this chapter. States without income tax Reimbursements for nondeductible expenses. States without income tax   Reimbursements you received for nondeductible expenses are treated as paid under a nonaccountable plan. States without income tax You must include them in your income. States without income tax For example, you must include in your income reimbursements your employer gave you for expenses of education that: You need to meet the minimum educational requirements for your job, or Is part of a program of study that can qualify you for a new trade or business. States without income tax   For more information on accountable and nonaccountable plans, see chapter 6 of Publication 463. States without income tax Deducting Business Expenses Self-employed persons and employees report their business expenses differently. States without income tax The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. States without income tax Self-Employed Persons If you are self-employed, you must report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040)). States without income tax If your education expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. States without income tax See the instructions for the form you file for information on how to complete it. States without income tax Employees If you are an employee, you can deduct the cost of qualifying work-related education only if you: Did not receive (and were not entitled to receive) any reimbursement from your employer, Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement. States without income tax If either (1) or (2) applies, you can deduct the total qualifying cost. States without income tax If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. States without income tax In order to deduct the cost of your qualifying work-related education as a business expense, include the amount with your deduction for any other employee business expenses on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. States without income tax (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. States without income tax ) This deduction (except for impairment-related work expenses of disabled individuals) is subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. States without income tax Form 2106 or 2106-EZ. States without income tax   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or 2106-EZ. States without income tax Form not required. States without income tax   Do not complete either Form 2106 or 2106-EZ if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are not claiming travel, transportation, meal, or entertainment expenses. States without income tax   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7. States without income tax (Special rules for expenses of certain Performing Artists and Fee-Basis Officials and for Impairment-Related Work Expenses are explained later. States without income tax ) Using Form 2106-EZ. States without income tax   This form is shorter and easier to use than Form 2106. States without income tax Generally, you can use this form if: All reimbursements, if any, are included in box 1 of your Form W-2, and You are using the standard mileage rate if you are claiming vehicle expenses. States without income tax   If you do not meet both of these requirements, use Form 2106. States without income tax Performing Artists and Fee-Basis Officials If you are a qualified performing artist, or a state (or local) government official who is paid in whole or in part on a fee basis, you can deduct the cost of your qualifying work-related education as an adjustment to gross income rather than as an itemized deduction. States without income tax Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24, or Form 1040NR, line 35. States without income tax You do not have to itemize your deductions on Schedule A (Form 1040 or 1040NR), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. States without income tax You must complete Form 2106 or 2106-EZ to figure your deduction even if you meet the requirements described earlier under Form not required . States without income tax For more information on qualified performing artists, see chapter 6 of Publication 463. States without income tax Impairment-Related Work Expenses If you are disabled and have impairment-related work expenses that are necessary for you to be able to get qualifying work-related education, you can deduct these expenses on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14. States without income tax They are not subject to the 2%-of-adjusted-gross-income limit. States without income tax To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . States without income tax For more information on impairment-related work expenses, see chapter 6 of Publication 463. States without income tax Recordkeeping You must keep records as proof of any deduction claimed on your tax return. States without income tax Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. States without income tax If you are an employee who is reimbursed for expenses and you give your records and documentation to your employer, you do not have to keep duplicate copies of this information. States without income tax However, you should keep your records for a 3-year period if: You claim deductions for expenses that are more than your reimbursement, Your employer does not use adequate accounting procedures to verify expense accounts, You are related to your employer, or Your expenses are reimbursed under a nonaccountable plan. States without income tax Examples of records to keep. States without income tax   If any of the above cases apply to you, you must be able to prove that your expenses are deductible. States without income tax You should keep adequate records or have sufficient evidence that will support your expenses. States without income tax Estimates or approximations do not qualify as proof of an expense. States without income tax Some examples of what can be used to help prove your expenses are: Documents, such as transcripts, course descriptions, catalogs, etc. States without income tax , showing periods of enrollment in educational institutions, principal subjects studied, and descriptions of educational activity. States without income tax Canceled checks and receipts to verify amounts you spent for: Tuition and books, Meals and lodging while away from home overnight for educational purposes, Travel and transportation, and Other education expenses. States without income tax Statements from your employer explaining whether the education was necessary for you to keep your job, salary, or status; how the education helped maintain or improve skills needed in your job; how much reimbursement you received; and, if you are a teacher, the type of certificate and subjects taught. States without income tax Complete information about any scholarship or fellowship grants, including amounts you received during the year. States without income tax Illustrated Example Victor Jones teaches math at a private high school in North Carolina. States without income tax He was selected to attend a 3-week math seminar at a university in California. States without income tax The seminar will improve his skills in his current job and is qualifying work-related education. States without income tax He was reimbursed for his expenses under his employer's nonaccountable plan, so his reimbursement of $2,100 is included in the wages shown in box 1 of his Form W-2. States without income tax Victor will file Form 1040. States without income tax His actual expenses for the seminar are as follows:   Lodging   $1,050     Meals   526     Airfare   550     Taxi fares   50     Tuition and books   400     Total Expenses   $2,576   Victor files Form 2106-EZ with his tax return. States without income tax He shows his expenses for the seminar in Part I of the form. States without income tax He enters $1,650 ($1,050 + $550 + $50) on line 3 to account for his lodging, airfare, and taxi fares. States without income tax He enters $400 on line 4 for his tuition and books. States without income tax On the line provided for total meals and entertainment expenses, Victor enters $526 for meal expenses. States without income tax He multiplies that amount by 50% and enters the result, $263, on line 5. States without income tax On line 6, Victor totals the amounts from lines 3 through 5. States without income tax He carries the total, $2,313, to Schedule A (Form 1040), line 21. States without income tax Since he does not claim any vehicle expenses, Victor leaves Part II blank. States without income tax His filled-in form is shown on the next page. States without income tax This image is too large to be displayed in the current screen. States without income tax Please click the link to view the image. States without income tax Form 2106-EZ for V. States without income tax Jones Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Requirements for Tax Return Preparers: Frequently Asked Questions

 

Top PTIN Frequently Asked Questions

1. How do I access my online account?
2. How do I renew my PTIN?
3. How do I sign up for a new PTIN?
4. How much does it cost to obtain or renew a PTIN?
5. How do I check my PTIN status?
6. Do I need a PTIN?
7. How do I submit a name change request?


Other Frequently Asked Questions

1. Do I Need a PTIN and How Do I Get One?
(scenarios; supervised, non-signing and non-1040 preparers; and SSN requirements)

2. PTIN Application and Renewal Assistance
(application, renewal, fees and logon problems)

3. Understanding your PTIN-related Letter

4. Registered Tax Return Preparer Test Refunds


Return to the Return Preparer Regulations Homepage

 

Page Last Reviewed or Updated: 11-Oct-2013

The States Without Income Tax

States without income tax 7. States without income tax   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. States without income tax Costs not included. States without income tax Intangible Drilling Costs Exploration CostsPartnerships and S corporations. States without income tax Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. States without income tax Film and Television Production Costs What's New Film and television productions costs. States without income tax  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. States without income tax See Film and Television Production Costs , later. States without income tax Introduction This chapter discusses costs you can elect to deduct or capitalize. States without income tax You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. States without income tax If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. States without income tax When you capitalize a cost, you add it to the basis of property to which it relates. States without income tax A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. States without income tax Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. States without income tax You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. States without income tax For more information on the alternative minimum tax, see the instructions for the following forms. States without income tax Form 6251, Alternative Minimum Tax—Individuals. States without income tax Form 4626, Alternative Minimum Tax—Corporations. States without income tax Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. States without income tax Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. States without income tax Certain carrying charges must be capitalized under the uniform capitalization rules. States without income tax (For information on capitalization of interest, see chapter 4 . States without income tax ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. States without income tax You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. States without income tax For unimproved and unproductive real property, your election is good for only 1 year. States without income tax You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. States without income tax For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. States without income tax For personal property, your election is effective until the date you install or first use it, whichever is later. States without income tax How to make the election. States without income tax   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. States without income tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Attach the statement to the amended return and write “Filed pursuant to section 301. States without income tax 9100-2” on the statement. States without income tax File the amended return at the same address you filed the original return. States without income tax Research and Experimental Costs The costs of research and experimentation are generally capital expenses. States without income tax However, you can elect to deduct these costs as a current business expense. States without income tax Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. States without income tax If you meet certain requirements, you may elect to defer and amortize research and experimental costs. States without income tax For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. States without income tax Research and experimental costs defined. States without income tax   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. States without income tax Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. States without income tax Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. States without income tax      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. States without income tax However, costs paid or incurred to obtain another's patent are not research and experimental costs. States without income tax Product. States without income tax   The term “product” includes any of the following items. States without income tax Formula. States without income tax Invention. States without income tax Patent. States without income tax Pilot model. States without income tax Process. States without income tax Technique. States without income tax Property similar to the items listed above. States without income tax It also includes products used by you in your trade or business or held for sale, lease, or license. States without income tax Costs not included. States without income tax   Research and experimental costs do not include expenses for any of the following activities. States without income tax Advertising or promotions. States without income tax Consumer surveys. States without income tax Efficiency surveys. States without income tax Management studies. States without income tax Quality control testing. States without income tax Research in connection with literary, historical, or similar projects. States without income tax The acquisition of another's patent, model, production, or process. States without income tax When and how to elect. States without income tax   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. States without income tax If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. States without income tax Deducting or Amortizing Research and Experimentation Costs IF you . States without income tax . States without income tax . States without income tax THEN . States without income tax . States without income tax . States without income tax Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. States without income tax Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. States without income tax See Research and Experimental Costs in chapter 8. States without income tax Research credit. States without income tax   If you pay or incur qualified research expenses, you may be able to take the research credit. States without income tax For more information see Form 6765, Credit for Increasing Research Activities and its instructions. States without income tax Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. States without income tax You can usually recover them through depreciation or depletion. States without income tax However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. States without income tax These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. States without income tax You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. States without income tax You can elect to deduct only the costs of items with no salvage value. States without income tax These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. States without income tax Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. States without income tax However, see Amounts paid to contractor that must be capitalized , later. States without income tax You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. States without income tax It does not matter whether there is any intent to produce hydrocarbons. States without income tax If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. States without income tax Amounts paid to contractor that must be capitalized. States without income tax   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. States without income tax How to make the election. States without income tax   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. States without income tax No formal statement is required. States without income tax If you file Schedule C (Form 1040), enter these costs under “Other expenses. States without income tax ”   For oil and gas wells, your election is binding for the year it is made and for all later years. States without income tax For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. States without income tax You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. States without income tax Energy credit for costs of geothermal wells. States without income tax   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. States without income tax See the Instructions for Form 3468 for more information. States without income tax Nonproductive well. States without income tax   If you capitalize your IDCs, you have another option if the well is nonproductive. States without income tax You can deduct the IDCs of the nonproductive well as an ordinary loss. States without income tax You must indicate and clearly state your election on your tax return for the year the well is completed. States without income tax Once made, the election for oil and gas wells is binding for all later years. States without income tax You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. States without income tax Costs incurred outside the United States. States without income tax   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. States without income tax However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. States without income tax If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. States without income tax These rules do not apply to a nonproductive well. States without income tax Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. States without income tax You recover these costs through depletion as the mineral is removed from the ground. States without income tax However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). States without income tax How to make the election. States without income tax   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. States without income tax Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. States without income tax The election applies to the tax year you make this election and all later tax years. States without income tax Partnerships and S corporations. States without income tax   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. States without income tax Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. States without income tax Reduced corporate deductions for exploration costs. States without income tax   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. States without income tax It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. States without income tax A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. States without income tax For more information on this method of amortization, see Internal Revenue Code section 59(e). States without income tax   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. States without income tax However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. States without income tax See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. States without income tax   These rules also apply to the deduction of development costs by corporations. States without income tax See Development Costs , later. States without income tax Recapture of exploration expenses. States without income tax   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. States without income tax Use either of the following methods. States without income tax Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. States without income tax Your election must be clearly indicated on the return. States without income tax Increase your adjusted basis in the mine by the amount included in income. States without income tax Generally, you must elect this recapture method by the due date (including extensions) of your return. States without income tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Make the election on your amended return and write “Filed pursuant to section 301. States without income tax 9100-2” on the form where you are including the income. States without income tax File the amended return at the same address you filed the original return. States without income tax Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. States without income tax   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. States without income tax Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. States without income tax   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. States without income tax Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. States without income tax If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. States without income tax Foreign exploration costs. States without income tax   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. States without income tax You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. States without income tax (Cost depletion is discussed in chapter 9 . States without income tax ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. States without income tax These rules also apply to foreign development costs. States without income tax Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. States without income tax These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. States without income tax Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. States without income tax Development costs do not include the costs for the acquisition or improvement of depreciable property. States without income tax Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. States without income tax This election applies each tax year to expenses paid or incurred in that year. States without income tax Once made, the election is binding for the year and cannot be revoked for any reason. States without income tax How to make the election. States without income tax   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. States without income tax Generally, you must make the election by the due date of the return (including extensions). States without income tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. States without income tax 9100-2. States without income tax ” File the amended return at the same address you filed the original return. States without income tax Foreign development costs. States without income tax   The rules discussed earlier for foreign exploration costs apply to foreign development costs. States without income tax Reduced corporate deductions for development costs. States without income tax   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. States without income tax Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. States without income tax For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. States without income tax Circulation costs are deductible even if they normally would be capitalized. States without income tax This rule does not apply to the following costs that must be capitalized. States without income tax The purchase of land or depreciable property. States without income tax The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. States without income tax Other treatment of circulation costs. States without income tax   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. States without income tax Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). States without income tax Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. States without income tax How to make the election. States without income tax   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. States without income tax Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. States without income tax Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. States without income tax However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. States without income tax The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. States without income tax Any remaining costs must be amortized. States without income tax For information about amortizing start-up and organizational costs, see chapter 8 . States without income tax Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. States without income tax Organizational costs include the costs of creating a corporation. States without income tax For more information on start-up and organizational costs, see chapter 8 . States without income tax How to make the election. States without income tax   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. States without income tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. States without income tax 9100-2. States without income tax ” File the amended return at the same address you filed the original return. States without income tax The election applies when computing taxable income for the current tax year and all subsequent years. States without income tax Reforestation Costs Reforestation costs are generally capital expenditures. States without income tax However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. States without income tax The remaining costs can be amortized over an 84-month period. States without income tax For information about amortizing reforestation costs, see chapter 8 . States without income tax Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. States without income tax Qualified timber property is property that contains trees in significant commercial quantities. States without income tax See chapter 8 for more information on qualifying reforestation costs and qualified timber property. States without income tax If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. States without income tax Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. States without income tax How to make the election. States without income tax   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. States without income tax If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. States without income tax If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. States without income tax The unique stand identification numbers. States without income tax The total number of acres reforested during the tax year. States without income tax The nature of the reforestation treatments. States without income tax The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. States without income tax   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. States without income tax 9100-2. States without income tax ” File the amended return at the same address you filed the original return. States without income tax The election applies when computing taxable income for the current tax year and all subsequent years. States without income tax   For additional information on reforestation costs, see chapter 8 . States without income tax Recapture. States without income tax   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. States without income tax For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. States without income tax Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. States without income tax However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. States without income tax Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. States without income tax However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. States without income tax You must own or lease the facility or vehicle for use in connection with your trade or business. States without income tax A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. States without income tax A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). States without income tax You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. States without income tax Deduction limit. States without income tax   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. States without income tax However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. States without income tax Partners and partnerships. States without income tax   The $15,000 limit applies to a partnership and also to each partner in the partnership. States without income tax A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. States without income tax If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. States without income tax   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). States without income tax If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. States without income tax Example. States without income tax Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. States without income tax Emilio had $12,000 of similar expenses in his sole proprietorship. States without income tax He elected to deduct $7,000 of them. States without income tax Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. States without income tax Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. States without income tax Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. States without income tax Qualification standards. States without income tax   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. States without income tax You can view the Americans with Disabilities Act at www. States without income tax ada. States without income tax gov/pubs/ada. States without income tax htm. States without income tax   The following is a list of some architectural barrier removal costs that can be deducted. States without income tax Ground and floor surfaces. States without income tax Walks. States without income tax Parking lots. States without income tax Ramps. States without income tax Entrances. States without income tax Doors and doorways. States without income tax Stairs. States without income tax Floors. States without income tax Toilet rooms. States without income tax Water fountains. States without income tax Public telephones. States without income tax Elevators. States without income tax Controls. States without income tax Signage. States without income tax Alarms. States without income tax Protruding objects. States without income tax Symbols of accessibility. States without income tax You can find the ADA guidelines and requirements for architectural barrier removal at www. States without income tax usdoj. States without income tax gov/crt/ada/reg3a. States without income tax html. States without income tax   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. States without income tax You can find the guidelines and requirements for transportation barrier removal at www. States without income tax fta. States without income tax dot. States without income tax gov. States without income tax   Also, you can access the ADA website at www. States without income tax ada. States without income tax gov for additional information. States without income tax Other barrier removals. States without income tax   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. States without income tax The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. States without income tax The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). States without income tax The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. States without income tax How to make the election. States without income tax   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. States without income tax Identify the deduction as a separate item. States without income tax The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. States without income tax If you make this election, you must maintain adequate records to support your deduction. States without income tax   For your election to be valid, you generally must file your return by its due date, including extensions. States without income tax However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). States without income tax Clearly indicate the election on your amended return and write “Filed pursuant to section 301. States without income tax 9100-2. States without income tax ” File the amended return at the same address you filed the original return. States without income tax Your election is irrevocable after the due date, including extensions, of your return. States without income tax Disabled access credit. States without income tax   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. States without income tax If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. States without income tax   For more information, see Form 8826, Disabled Access Credit. States without income tax Film and Television Production Costs Film and television production costs are generally capital expenses. States without income tax However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. States without income tax For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. States without income tax Prev  Up  Next   Home   More Online Publications