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Student Tax Returns

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Student Tax Returns

Student tax returns 6. Student tax returns   How To Report Table of Contents Where To ReportGifts. Student tax returns Statutory employees. Student tax returns 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. Student tax returns Standard mileage rate. Student tax returns Actual expenses. Student tax returns Car rentals. Student tax returns Hours of service limits. Student tax returns Allocating your reimbursement. Student tax returns 1. Student tax returns Limit on meals and entertainment. Student tax returns 2. Student tax returns Limit on miscellaneous itemized deductions. Student tax returns 3. Student tax returns Limit on total itemized deductions. Student tax returns Special Rules This chapter explains where and how to report the expenses discussed in this publication. Student tax returns It discusses reimbursements and how to treat them under accountable and nonaccountable plans. Student tax returns It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. Student tax returns The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. Student tax returns Where To Report This section provides general information on where to report the expenses discussed in this publication. Student tax returns Self-employed. Student tax returns   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. Student tax returns You do not use Form 2106 or 2106-EZ. Student tax returns    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. Student tax returns You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. Student tax returns   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. Student tax returns Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. Student tax returns   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. Student tax returns You can only include 50% of your meals and entertainment in that total. Student tax returns If you include car expenses, you must also complete Part III of the form. Student tax returns    If you file Schedule F (Form 1040): Report your car expenses on line 10. Student tax returns Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. Student tax returns Report all other business expenses discussed in this publication on line 32. Student tax returns You can only include 50% of your meals and entertainment on that line. Student tax returns See your form instructions for more information on how to complete your tax return. Student tax returns Both self-employed and an employee. Student tax returns   If you are both self-employed and an employee, you must keep separate records for each business activity. Student tax returns 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. Student tax returns Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. Student tax returns Employees. Student tax returns    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. Student tax returns However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. Student tax returns You are an employee deducting expenses attributable to your job. Student tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Student tax returns If you claim car expenses, you use the standard mileage rate. Student tax returns   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. Student tax returns Gifts. Student tax returns   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. Student tax returns Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). Student tax returns Statutory employees. Student tax returns    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). Student tax returns Do not complete Form 2106 or 2106-EZ. Student tax returns   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. Student tax returns 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. Student tax returns Reimbursement for personal expenses. Student tax returns    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. Student tax returns You cannot deduct personal expenses. Student tax returns Income-producing property. Student tax returns   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. Student tax returns   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. Student tax returns See Publication 527, Residential Rental Property, for more information on the rental of real estate. Student tax returns If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. Student tax returns 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. Student tax returns 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. Student tax returns You cannot use the standard mileage rate. Student tax returns Value reported on Form W-2. Student tax returns   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). Student tax returns Your employer must separately state the amount if 100% of the annual lease value was included in your income. Student tax returns If you are unsure of the amount included on your Form W-2, ask your employer. Student tax returns Full value included in your income. Student tax returns   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. Student tax returns On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. Student tax returns    To claim your expenses, complete Form 2106, Part II, Sections A and C. Student tax returns Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Student tax returns Complete the rest of the form. Student tax returns Less than full value included in your income. Student tax returns   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. Student tax returns Do not enter this value on your Form 2106 because it is not deductible. Student tax returns   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. Student tax returns Examples of costs that you may have are gas, oil, and repairs. Student tax returns Complete Form 2106, Part II, Sections A and C. Student tax returns Enter your actual costs on line 23 of Section C and leave line 25 blank. Student tax returns Complete the rest of the form. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns It also covers rules for independent contractors. Student tax returns No reimbursement. Student tax returns   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. Student tax returns In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. Student tax returns Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. Student tax returns Reimbursement, allowance, or advance. Student tax returns   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. Student tax returns Arrangements include per diem and car allowances. Student tax returns    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. Student tax returns (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. Student tax returns ) A car allowance is an amount your employer gives you for the business use of your car. Student tax returns   Your employer should tell you what method of reimbursement is used and what records you must provide. Student tax returns Employers. Student tax returns   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. Student tax returns Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Student tax returns Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. Student tax returns See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. Student tax returns 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. Student tax returns You must adequately account to your employer for these expenses within a reasonable period of time. Student tax returns You must return any excess reimbursement or allowance within a reasonable period of time. Student tax returns “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. Student tax returns 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. Student tax returns Reasonable period of time. Student tax returns   The definition of reasonable period of time depends on the facts and circumstances of your situation. Student tax returns 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. Student tax returns You receive an advance within 30 days of the time you have an expense. Student tax returns You adequately account for your expenses within 60 days after they were paid or incurred. Student tax returns You return any excess reimbursement within 120 days after the expense was paid or incurred. Student tax returns 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. Student tax returns Employee meets accountable plan rules. Student tax returns   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. Student tax returns If your expenses equal your reimbursements, you do not complete Form 2106. Student tax returns You have no deduction since your expenses and reimbursement are equal. Student tax returns    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. Student tax returns Accountable plan rules not met. Student tax returns   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. Student tax returns 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). Student tax returns Failure to return excess reimbursements. Student tax returns   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. Student tax returns See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. Student tax returns Reimbursement of nondeductible expenses. Student tax returns   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. Student tax returns 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. Student tax returns Example. Student tax returns 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. Student tax returns 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. Student tax returns The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. Student tax returns 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. Student tax returns Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. Student tax returns 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. Student tax returns (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. Student tax returns ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. Student tax returns See Per Diem and Car Allowances , later. Student tax returns You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. Student tax returns This includes amounts you charged to your employer by credit card or other method. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. Student tax returns Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. Student tax returns The allowance is similar in form to and not more than the federal rate (defined later). Student tax returns 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. Student tax returns You are not related to your employer (as defined next). Student tax returns 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. Student tax returns 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. Student tax returns In this case, you must be able to prove your expenses to the IRS. Student tax returns Related to employer. Student tax returns   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. Student tax returns 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. Student tax returns The federal rate. Student tax returns   The federal rate can be figured using any one of the following methods. Student tax returns For per diem amounts: The regular federal per diem rate. Student tax returns The standard meal allowance. Student tax returns The high-low rate. Student tax returns For car expenses: The standard mileage rate. Student tax returns A fixed and variable rate (FAVR). Student tax returns    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. Student tax returns Regular federal per diem rate. Student tax returns   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. Student tax returns The rates are different for different locations. Student tax returns Your employer should have these rates available. Student tax returns You can also find federal per diem rates at www. Student tax returns gsa. Student tax returns gov/perdiem. Student tax returns The standard meal allowance. Student tax returns   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). Student tax returns The rate for most small localities in the United States is $46 a day. Student tax returns Most major cities and many other localities qualify for higher rates. Student tax returns You can find this information on the Internet at www. Student tax returns gsa. Student tax returns gov/perdiem. Student tax returns   You receive an allowance only for meals and incidental expenses when your employer does one of the following. Student tax returns Provides you with lodging (furnishes it in kind). Student tax returns Reimburses you, based on your receipts, for the actual cost of your lodging. Student tax returns Pays the hotel, motel, etc. Student tax returns , directly for your lodging. Student tax returns 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. Student tax returns Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. Student tax returns High-low rate. Student tax returns   This is a simplified method of computing the federal per diem rate for travel within the continental United States. Student tax returns It eliminates the need to keep a current list of the per diem rates for each city. Student tax returns   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. Student tax returns All other areas have a per diem amount of $163 (including $52 for M&IE). Student tax returns For more information, see Notice 2012-63, which can be found on the Internet at www. Student tax returns irs. Student tax returns gov/irb/2012-42_IRB/ar12. Student tax returns html. Student tax returns    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). Student tax returns The rate for all other locations increased to $170 (including $52 for M&IE). Student tax returns Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. Student tax returns For more information, see Notice 2013-65, which can be found on the Internet at www. Student tax returns irs. Student tax returns gov/pub/irs-drop/n-13–65. Student tax returns pdf and Revenue Procedure 2011-47 at www. Student tax returns irs. Student tax returns gov/irb/2011-42_IRB/ar12. Student tax returns html. Student tax returns Prorating the standard meal allowance on partial days of travel. Student tax returns   The standard meal allowance is for a full 24-hour day of travel. Student tax returns 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. Student tax returns This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. Student tax returns   You can use either of the following methods to figure the federal M&IE for that day. Student tax returns Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. Student tax returns For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. Student tax returns Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. Student tax returns 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. Student tax returns m. Student tax returns of one day to 5 p. Student tax returns m. Student tax returns of the next day as being no more than the federal rate. Student tax returns 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. Student tax returns The standard mileage rate. Student tax returns   This is a set rate per mile that you can use to compute your deductible car expenses. Student tax returns For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Student tax returns Fixed and variable rate (FAVR). Student tax returns   This is an allowance your employer may use to reimburse your car expenses. Student tax returns 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. Student tax returns ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. Student tax returns ). Student tax returns If your employer chooses to use this method, your employer will request the necessary records from you. Student tax returns Reporting your expenses with a per diem or car allowance. Student tax returns   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. Student tax returns The federal rate. Student tax returns Whether the allowance or your actual expenses were more than the federal rate. Student tax returns The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. Student tax returns Allowance less than or equal to the federal rate. Student tax returns   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. Student tax returns 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. Student tax returns   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). Student tax returns 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. Student tax returns If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. Student tax returns Example 1. Student tax returns In April, Jeremy takes a 2-day business trip to Denver. Student tax returns The federal rate for Denver is $215 per day. Student tax returns As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. Student tax returns His employer reimburses him $215 a day ($430 total) for living expenses. Student tax returns Jeremy's living expenses in Denver are not more than $215 a day. Student tax returns 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. Student tax returns Example 2. Student tax returns In June, Matt takes a 2-day business trip to Boston. Student tax returns Matt's employer uses the high-low method to reimburse employees. Student tax returns 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. Student tax returns Matt's actual expenses totaled $700. Student tax returns Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. Student tax returns Matt completes Form 2106 (showing all of his expenses and reimbursements). Student tax returns He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . Student tax returns Example 3. Student tax returns Nicole drives 10,000 miles in 2013 for business. Student tax returns Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Student tax returns Her employer pays her a mileage allowance of 40 cents a mile. Student tax returns 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. Student tax returns Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. Student tax returns Allowance more than the federal rate. Student tax returns   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. Student tax returns This amount is not taxable. Student tax returns However, the excess allowance will be included in box 1 of your Form W-2. Student tax returns You must report this part of your allowance as if it were wage income. Student tax returns   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. Student tax returns   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. Student tax returns 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. Student tax returns You should be able to prove these amounts to the IRS. Student tax returns Example 1. Student tax returns Laura lives and works in Austin. Student tax returns In July her employer sent her to Albuquerque for 4 days on business. Student tax returns Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. Student tax returns Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. Student tax returns Table 6-1. Student tax returns 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. Student tax returns No amount. Student tax returns No amount. Student tax returns Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. Student tax returns The excess amount as wages in box 1. Student tax returns No amount. Student tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. Student tax returns No amount. Student tax returns All expenses and reimbursements only if excess expenses are claimed. Student tax returns Otherwise, form is not filed. Student tax returns Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. Student tax returns The excess amount as wages in box 1. Student tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Student tax returns No amount. Student tax returns Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. Student tax returns The excess amount as wages in box 1. Student tax returns The amount up to the federal rate is reported only in box 12—it is not reported in box 1. Student tax returns All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. Student tax returns Otherwise, form is not filed. Student tax returns A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. Student tax returns The entire amount as wages in box 1. Student tax returns All expenses. Student tax returns No reimbursement plan: The entire amount as wages in box 1. Student tax returns All expenses. Student tax returns * You may be able to use Form 2106-EZ. Student tax returns See Completing Forms 2106 and 2106-EZ . Student tax returns Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. Student tax returns Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. Student tax returns This amount is not included in Laura's income. Student tax returns 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). Student tax returns Example 2. Student tax returns Joe also lives in Austin and works for the same employer as Laura. Student tax returns In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. Student tax returns The employer reimbursed Joe $75 a day for his meals and incidental expenses. Student tax returns The federal rate for San Diego is $71 a day. Student tax returns Joe can prove that his actual meal expenses totaled $380. Student tax returns 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. Student tax returns However, he does account for the time, place, and business purpose of the trip. Student tax returns This is Joe's only business trip this year. Student tax returns Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). Student tax returns The employer includes the $16 as income on Joe's Form W-2 in box 1. Student tax returns The employer also enters $284 in box 12 of Joe's Form W-2. Student tax returns Joe completes Form 2106 to figure his deductible expenses. Student tax returns He enters the total of his actual expenses for the year ($380) on Form 2106. Student tax returns He also enters the reimbursements that were not included in his income ($284). Student tax returns His total deductible expense, before the 50% limit, is $96. Student tax returns After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. Student tax returns Example 3. Student tax returns Debbie drives 10,000 miles in 2013 for business. Student tax returns Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. Student tax returns Her total reimbursement is $6,000. Student tax returns 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. Student tax returns That amount is not taxable. Student tax returns Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. Student tax returns This is the reimbursement that is more than the standard mileage rate. Student tax returns If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. Student tax returns 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). Student tax returns She would then claim the excess expenses as an itemized deduction. Student tax returns 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. Student tax returns Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. Student tax returns 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. Student tax returns “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. Student tax returns Travel advance. Student tax returns   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. Student tax returns 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. Student tax returns   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). Student tax returns Unproved amounts. Student tax returns   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. Student tax returns If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). Student tax returns Per diem allowance more than federal rate. Student tax returns   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. Student tax returns However, the difference will be reported as wages on your Form W-2. Student tax returns This excess amount is considered paid under a nonaccountable plan (discussed later). Student tax returns Example. Student tax returns 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. Student tax returns The federal per diem for meals and incidental expenses for Phoenix is $71. Student tax returns Your trip lasts only 3 days. Student tax returns Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. Student tax returns 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). Student tax returns However, the $27 will be reported on your Form W-2 as wages. Student tax returns 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. Student tax returns 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. Student tax returns See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. Student tax returns 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. Student tax returns This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. Student tax returns If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. Student tax returns Reporting your expenses under a nonaccountable plan. Student tax returns   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. Student tax returns Your employer will report the total in box 1 of your Form W-2. Student tax returns    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. Student tax returns Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. Student tax returns Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. Student tax returns Example 1. Student tax returns Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. Student tax returns 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. Student tax returns Kim is being reimbursed under a nonaccountable plan. Student tax returns Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. Student tax returns If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. Student tax returns Example 2. Student tax returns Kevin is paid $2,000 a month by his employer. Student tax returns 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. Student tax returns Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. Student tax returns No part of the $50 a day designated by his employer is treated as paid under an accountable plan. Student tax returns Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. Student tax returns 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. Student tax returns You are considered an independent contractor if you are self-employed and you perform services for a customer or client. Student tax returns 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. Student tax returns If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. Student tax returns You must keep adequate records of these expenses whether or not you account to your client for these expenses. Student tax returns 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. Student tax returns See 50% Limit in chapter 2. Student tax returns Adequate accounting. Student tax returns   As a self-employed person, you adequately account by reporting your actual expenses. Student tax returns You should follow the recordkeeping rules in chapter 5 . Student tax returns How to report. Student tax returns   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. Student tax returns 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. Student tax returns 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. Student tax returns Contractor adequately accounts. Student tax returns   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 . Student tax returns Use your records as proof for a deduction on your tax return. Student tax returns If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. Student tax returns If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. Student tax returns Contractor does not adequately account. Student tax returns    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. Student tax returns You are not subject to the 50% limit on entertainment in this case. Student tax returns You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. Student tax returns 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. Student tax returns 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. Student tax returns The Two Substantiation Methods High-low method. Student tax returns   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. Student tax returns Notice 2012–63, available at www. Student tax returns irs. Student tax returns gov/irb/2012–42_IRB/ar12. Student tax returns html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. Student tax returns 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. Student tax returns   Notice 2013–65, available at www. Student tax returns irs. Student tax returns gov/pub/irs-drop/n-13–65. Student tax returns pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. Student tax returns For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). Student tax returns Regular federal per diem rate method. Student tax returns   Regular federal per diem rates are published by the General Services Administration (GSA). Student tax returns Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. Student tax returns The rates listed for FY2013 at www. Student tax returns gsa. Student tax returns gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. Student tax returns The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). Student tax returns For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). Student tax returns 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. Student tax returns During this period, you generally may change to the new rates or finish out the year with the rates you had been using. Student tax returns High-low method. Student tax returns   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. Student tax returns However, you must continue using the high-low method for the rest of the calendar year (through December 31). Student tax returns If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. Student tax returns   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. Student tax returns You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. Student tax returns irs. Student tax returns gov/irb. Student tax returns Federal per diem rate method. Student tax returns   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Student tax returns 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). Student tax returns 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. Student tax returns   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. Student tax returns Go to www. Student tax returns gsa. Student tax returns gov/perdiem. Student tax returns Per diem rates for localities listed for FY2014 may change at any time. Student tax returns To be sure you have the most current rate, check www. Student tax returns gsa. Student tax returns gov/perdiem. Student tax returns Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. Student tax returns Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. Student tax returns The instructions for the forms have more information on completing them. Student tax returns If you are self-employed, do not file Form 2106 or 2106-EZ. Student tax returns Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Student tax returns See the instructions for the form that you must file. Student tax returns Form 2106-EZ. Student tax returns   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. Student tax returns You can use this form if you meet all the following conditions. Student tax returns You are an employee deducting ordinary and necessary expenses attributable to your job. Student tax returns You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). Student tax returns If you are claiming car expenses, you are using the standard mileage rate. Student tax returns Car expenses. Student tax returns   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. Student tax returns These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. Student tax returns Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. Student tax returns Information on use of cars. Student tax returns   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. Student tax returns The information relates to the following items. Student tax returns Date placed in service. Student tax returns Mileage (total, business, commuting, and other personal mileage). Student tax returns Percentage of business use. Student tax returns After-work use. Student tax returns Use of other vehicles. Student tax returns Whether you have evidence to support the deduction. Student tax returns Whether or not the evidence is written. Student tax returns Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. Student tax returns Standard mileage rate. Student tax returns   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. Student tax returns The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. Student tax returns In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. Student tax returns If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. Student tax returns See Standard Mileage Rate in chapter 4 for information on using this rate. Student tax returns Actual expenses. Student tax returns   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. Student tax returns You must complete Form 2106, Part II, Section C. Student tax returns In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. Student tax returns   If you are still using a car that is fully depreciated, continue to complete Section C. Student tax returns Since you have no depreciation deduction, enter zero on line 28. Student tax returns In this case, do not complete Section D. Student tax returns Car rentals. Student tax returns   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. Student tax returns If so, you can show your car expenses and any inclusion amount as follows. Student tax returns Compute the inclusion amount without taking into account your business use percentage for the tax year. Student tax returns Report the inclusion amount from (1) on Form 2106, Part II, line 24b. Student tax returns Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). Student tax returns 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. Student tax returns Transportation expenses. Student tax returns   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. Student tax returns Also include on this line business expenses you have for parking fees and tolls. Student tax returns Do not include expenses of operating your car or expenses of commuting between your home and work. Student tax returns Employee business expenses other than meals and entertainment. Student tax returns   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. Student tax returns Do not include expenses for meals and entertainment on those lines. Student tax returns Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. Student tax returns    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. Student tax returns Claim these amounts directly on Schedule A (Form 1040), line 21. Student tax returns List the type and amount of each expense on the dotted lines and include the total on line 21. Student tax returns Meal and entertainment expenses. Student tax returns   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. Student tax returns Include meals while away from your tax home overnight and other business meals and entertainment. Student tax returns Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. Student tax returns   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%. Student tax returns Enter the result on line 5. Student tax returns Hours of service limits. Student tax returns   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. Student tax returns Reimbursements. Student tax returns   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. Student tax returns This includes any amount reported under code L in box 12 of Form W-2. Student tax returns Allocating your reimbursement. Student tax returns   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. Student tax returns 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. Student tax returns You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. Student tax returns Example. Student tax returns Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. Student tax returns The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. Student tax returns The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. Student tax returns Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). Student tax returns Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. Student tax returns To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. Student tax returns His completed worksheet follows. Student tax returns Reimbursement Allocation Worksheet (Keep for your records)   1. Student tax returns 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. Student tax returns Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. Student tax returns Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. Student tax returns Divide line 3 by line 2. Student tax returns Enter the result as a decimal (rounded to at least three places) . Student tax returns 529   5. Student tax returns Multiply line 1 by line 4. Student tax returns Enter the result here and in Column B, line 7 3,703   6. Student tax returns Subtract line 5 from line 1. Student tax returns 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. Student tax returns After you complete the form. Student tax returns   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. Student tax returns For most taxpayers, this is line 21 of Schedule A (Form 1040). Student tax returns 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. Student tax returns Limits on employee business expenses. Student tax returns   Your employee business expenses may be subject to either of the limits described next. Student tax returns They are figured in the following order on the specified form. Student tax returns 1. Student tax returns Limit on meals and entertainment. Student tax returns   Certain meal and entertainment expenses are subject to a 50% limit. Student tax returns If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. Student tax returns (See 50% Limit in chapter 2. Student tax returns ) 2. Student tax returns Limit on miscellaneous itemized deductions. Student tax returns   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). Student tax returns Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. Student tax returns This limit is figured on line 26 of Schedule A (Form 1040). Student tax returns 3. Student tax returns Limit on total itemized deductions. Student tax returns   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. Student tax returns See your form instructions for information on how to figure this limit. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns See Per Diem and Car Allowances , earlier, for more information. Student tax returns Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. Student tax returns Member of a reserve component. Student tax returns   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. Student tax returns How to report. Student tax returns   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. Student tax returns 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. Student tax returns 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. Student tax returns   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. Student tax returns Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. Student tax returns 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). Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns To qualify, you must meet all of the following requirements. Student tax returns During the tax year, you perform services in the performing arts as an employee for at least two employers. Student tax returns You receive at least $200 each from any two of these employers. Student tax returns Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. Student tax returns Your adjusted gross income is not more than $16,000 before deducting these business expenses. Student tax returns Special rules for married persons. Student tax returns   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. Student tax returns If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. Student tax returns However, requirement (4) applies to your and your spouse's combined adjusted gross income. Student tax returns Where to report. Student tax returns   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. Student tax returns 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. Student tax returns   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns 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. Student tax returns Example 1. Student tax returns You are blind. Student tax returns You must use a reader to do your work. Student tax returns 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. Student tax returns The reader's services are only for your work. Student tax returns You can deduct your expenses for the reader as business expenses. Student tax returns Example 2. Student tax returns You are deaf. Student tax returns You must use a sign language interpreter during meetings while you are at work. Student tax returns The interpreter's services are used only for your work. Student tax returns You can deduct your expenses for the interpreter as business expenses. Student tax returns Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Individual Tax Statistics

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Here you will find links to various studies relating to the individual taxpayer.

 

Individual Income Tax Numerous studies which provide statistics on income, deductions, tax, and credits reported on individual Form 1040 income tax returns and associated schedules are available in this area. Find statistics on high income tax returns, income tax rates, nonfarm sole proprietorships, data by geographic areas, and more...

Estate Tax

Estate Tax Statistics OneSheet

This annual study includes information on gross estate and its composition, deductions, and tax; and information on the age, sex, and marital status of decedents. Basic estate tax return data by year in which returns are filed are produced each year. Also included are data on nonresident aliens who had more than $60,000 of assets in the United States. These data come from taxpayers filing Form 706.
International Numerous studies which provide statistics on the individual taxpayer in the international context. Find statistics on foreign recipients of U.S. income, foreign trusts, individual foreign earned income and the foreign tax credit, international boycotts and nonresident alien estate tax returns. These data come from taxpayers filing Forms 706-NA, 1042-S, 1116, 2555, 3520, 5713 and more.
Personal Wealth This periodic study provides estimates of personal wealth of top wealth holders that are generated from estate tax return data using the "estate multiplier" technique, in conjunction with both filing-year and year-of-death estate databases.

Income from Trusts and Estates

Snapshot of Estate and Trust Income Tax Statistics

The U.S. Income Tax Return for Estates and Trusts (Form 1041) is used to report the income, deductions, gains, and losses of estates and trusts, as well as distributions to beneficiaries and income tax liability. Entities are classified into types based on their purpose.  

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Page Last Reviewed or Updated: 24-Mar-2014

The Student Tax Returns

Student tax returns Publication 929 - Main Content Table of Contents Part 1. Student tax returns Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. Student tax returns Designated as representative. Student tax returns IRS notice. Student tax returns Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Student tax returns Part 2. Student tax returns Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. Student tax returns Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Student tax returns Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Student tax returns Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Student tax returns Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. Student tax returns Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. Student tax returns A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. Student tax returns See Other Filing Requirements, later. Student tax returns The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Student tax returns  To find out whether a dependent must file, read the section that applies, or use Table 1. Student tax returns Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. Student tax returns Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Student tax returns Example. Student tax returns William is 16. Student tax returns His mother claims an exemption for him on her income tax return. Student tax returns He worked part time on weekends during the school year and full time during the summer. Student tax returns He earned $7,000 in wages. Student tax returns He did not have any unearned income. Student tax returns He must file a tax return because he has earned income only and his gross income is more than $6,100. Student tax returns If he is blind, he does not have to file a return because his gross income is not more than $7,600. Student tax returns Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. Student tax returns Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Student tax returns Example. Student tax returns Sarah is 18 and single. Student tax returns Her parents can claim an exemption for her on their income tax return. Student tax returns She received $1,970 of taxable interest and dividend income. Student tax returns She did not work during the year. Student tax returns She must file a tax return because she has unearned income only and her gross income is more than $1,000. Student tax returns If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. Student tax returns Election to report child's unearned income on parent's return. Student tax returns   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. Student tax returns See Parent's Election To Report Child's Interest and Dividends in Part 2. Student tax returns If the parent makes this election, the child does not have to file a return. Student tax returns Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. Student tax returns Filing Requirement Worksheet for Most Dependents 1. Student tax returns Enter dependent's earned income plus $350     2. Student tax returns Minimum amount   $1,000 3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger amount     4. Student tax returns Maximum amount   6,100 5. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount     6. Student tax returns Enter the dependent's gross income. Student tax returns If line 6 is more than line 5, the dependent must file an income tax return. Student tax returns If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Student tax returns       Table 1. Student tax returns 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Student tax returns   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Student tax returns   Single dependents—Were you either age 65 or older or blind?     No. Student tax returns You must file a return if any of the following apply. Student tax returns       Your unearned income was over $1,000. Student tax returns Your earned income was over $6,100. Student tax returns Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Student tax returns         Yes. Student tax returns You must file a return if any of the following apply. Student tax returns     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Student tax returns       Married dependents—Were you either age 65 or older or blind?     No. Student tax returns You must file a return if any of the following apply. Student tax returns       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Student tax returns Your unearned income was over $1,000. Student tax returns Your earned income was over $6,100. Student tax returns Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Student tax returns       Yes. Student tax returns You must file a return if any of the following apply. Student tax returns       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Student tax returns Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Student tax returns       Example 1. Student tax returns Joe is 20, single, not blind, and a full-time college student. Student tax returns He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. Student tax returns He received $200 taxable interest income and earned $2,750 from a part-time job. Student tax returns He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). Student tax returns Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. Student tax returns Enter dependent's earned income plus $350   $ 3,100 2. Student tax returns Minimum amount   1,000 3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger amount   3,100 4. Student tax returns Maximum amount   6,100 5. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount   3,100 6. Student tax returns Enter the dependent's gross income. Student tax returns If line 6 is more than line 5, the dependent must file an income tax return. Student tax returns If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Student tax returns   $ 2,950   Example 2. Student tax returns The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Student tax returns He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). Student tax returns Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Student tax returns Enter dependent's earned income plus $350   $ 3,100 2. Student tax returns Minimum amount   1,000 3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger amount   3,100 4. Student tax returns Maximum amount   6,100 5. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount   3,100 6. Student tax returns Enter the dependent's gross income. Student tax returns If line 6 is more than line 5, the dependent must file an income tax return. Student tax returns If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Student tax returns   $ 3,350   Age 65 or older or blind. Student tax returns A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. Student tax returns Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Student tax returns Enter dependent's earned income plus $350     2. Student tax returns Minimum amount   $1,000 3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger amount     4. Student tax returns Maximum amount   6,100 5. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount     6. Student tax returns Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Student tax returns Add lines 5 and 6. Student tax returns Enter the total     8. Student tax returns Enter the dependent's gross income. Student tax returns If line 8 is more than line 7, the dependent must file an income tax return. Student tax returns If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. Student tax returns The facts are the same as in Example 2 except that Joe is also blind. Student tax returns He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). Student tax returns   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Student tax returns Enter dependent's earned income plus $350   $3,100 2. Student tax returns Minimum amount   1,000 3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger amount   3,100 4. Student tax returns Maximum amount   6,100 5. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount   3,100 6. Student tax returns Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Student tax returns Add lines 5 and 6. Student tax returns Enter the total   4,600 8. Student tax returns Enter the dependent's gross income. Student tax returns If line 8 is more than line 7, the dependent must file an income tax return. Student tax returns If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. Student tax returns A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Student tax returns But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Student tax returns A dependent must also file a tax return if he or she: Had wages of $108. Student tax returns 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. Student tax returns Spouse itemizes. Student tax returns   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). Student tax returns Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. Student tax returns Income tax was withheld from his or her income. Student tax returns He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Student tax returns See the tax return instructions to find out who qualifies for these credits. Student tax returns  By filing a return, the dependent can get a refund. Student tax returns Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. Student tax returns If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Student tax returns Signing the child's return. Student tax returns   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. Student tax returns ” Authority of parent or guardian. Student tax returns   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. Student tax returns   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. Student tax returns That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. Student tax returns Third party designee. Student tax returns   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. Student tax returns The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. Student tax returns   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. Student tax returns This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. Student tax returns See the return instructions for more information. Student tax returns Designated as representative. Student tax returns   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. Student tax returns Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Student tax returns See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Student tax returns   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. Student tax returns IRS notice. Student tax returns   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. Student tax returns The notice will show who to contact. Student tax returns The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Student tax returns Child's earnings. Student tax returns   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. Student tax returns This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Student tax returns If the child does not pay the tax due on this income, the parent may be liable for the tax. Student tax returns Child's expenses. Student tax returns   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. Student tax returns Example. Student tax returns You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Student tax returns You made the payments out of your child's earnings. Student tax returns These items can be deducted only on the child's return. Student tax returns Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). Student tax returns However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Student tax returns Certain dependents cannot claim any standard deduction. Student tax returns See Standard Deduction of Zero , later. Student tax returns Worksheet 1. Student tax returns   Use Worksheet 1 to figure the dependent's standard deduction. Student tax returns Worksheet 1. Student tax returns Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Student tax returns If you were 65 or older and/or blind, check the correct number of boxes below. Student tax returns Put the total number of boxes checked in box c and go to line 1. Student tax returns a. Student tax returns You 65 or older   Blind   b. Student tax returns Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Student tax returns Total boxes checked         1. Student tax returns Enter your earned income (defined below) plus $350. Student tax returns If none, enter -0-. Student tax returns 1. Student tax returns     2. Student tax returns Minimum amount. Student tax returns   2. Student tax returns $1,000   3. Student tax returns Compare lines 1 and 2. Student tax returns Enter the larger of the two amounts here. Student tax returns 3. Student tax returns     4. Student tax returns Enter on line 4 the amount shown below for your filing status. Student tax returns       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Student tax returns     5. Student tax returns Standard deduction. Student tax returns         a. Student tax returns Compare lines 3 and 4. Student tax returns Enter the smaller amount here. Student tax returns If under 65 and not blind, stop here. Student tax returns This is your standard deduction. Student tax returns Otherwise, go on to line 5b. Student tax returns 5a. Student tax returns     b. Student tax returns If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Student tax returns Enter the result here. Student tax returns 5b. Student tax returns     c. Student tax returns Add lines 5a and 5b. Student tax returns This is your standard deduction for 2013. Student tax returns 5c. Student tax returns     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Student tax returns It also includes any amount received as a scholarship that you must include in income. Student tax returns   Example 1. Student tax returns Michael is single, age 15, and not blind. Student tax returns His parents can claim him as a dependent on their tax return. Student tax returns He has taxable interest income of $800 and wages of $150. Student tax returns He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Student tax returns On line 3, he enters $1,000, the larger of $500 or $1,000. Student tax returns Michael enters $6,100 on line 4. Student tax returns On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Student tax returns His standard deduction is $1,000. Student tax returns Example 2. Student tax returns Judy, a full-time student, is single, age 22, and not blind. Student tax returns Her parents can claim her as a dependent on their tax return. Student tax returns She has dividend income of $275 and wages of $2,500. Student tax returns She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Student tax returns On line 3, she enters $2,850, the larger of $2,850 or $1,000. Student tax returns She enters $6,100 on line 4. Student tax returns On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Student tax returns Example 3. Student tax returns Amy, who is single, is claimed as a dependent on her parents' tax return. Student tax returns She is 18 years old and blind. Student tax returns She has taxable interest income of $1,000 and wages of $2,000. Student tax returns She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Student tax returns She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. Student tax returns Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Student tax returns She enters $1,500 (the number in box c times $1,500) on line 5b. Student tax returns Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Student tax returns Standard Deduction of Zero The standard deduction for the following dependents is zero. Student tax returns A married dependent filing a separate return whose spouse itemizes deductions. Student tax returns A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. Student tax returns A nonresident or dual-status alien dependent, unless the dependent is married to a U. Student tax returns S. Student tax returns citizen or resident alien at the end of the year and chooses to be treated as a U. Student tax returns S. Student tax returns resident for the year. Student tax returns See Publication 519, U. Student tax returns S. Student tax returns Tax Guide for Aliens, for information on making this choice. Student tax returns Example. Student tax returns Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Student tax returns However, her husband elects to file a separate return and itemize his deductions. Student tax returns Because he itemizes, Jennifer's standard deduction on her return is zero. Student tax returns She can, however, itemize any of her allowable deductions. Student tax returns Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. Student tax returns This is true even if the other taxpayer does not actually claim the exemption. Student tax returns Example. Student tax returns James and Barbara can claim their child, Ben, as a dependent on their return. Student tax returns Ben is a college student who works during the summer and must file a tax return. Student tax returns Ben cannot claim his own exemption on his return. Student tax returns This is true even if James and Barbara do not claim him as a dependent on their return. Student tax returns Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Student tax returns If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Student tax returns The exemption from withholding does not apply to social security and Medicare taxes. Student tax returns Conditions for exemption from withholding. Student tax returns   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Student tax returns For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Student tax returns For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Student tax returns Dependents. Student tax returns   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Student tax returns The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Student tax returns The employee's unearned income will be more than $350. Student tax returns Exceptions. Student tax returns   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. Student tax returns The above exceptions do not apply to supplemental wages greater than $1,000,000. Student tax returns For more information, see Exemption From Withholding in chapter 1 of Publication 505. Student tax returns Example. Student tax returns Guy is 17 and a student. Student tax returns During the summer he works part time at a grocery store. Student tax returns He expects to earn about $1,200 this year. Student tax returns He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. Student tax returns The only other income he expects during the year is $375 interest on a savings account. Student tax returns He expects that his parents will be able to claim him as a dependent on their tax return. Student tax returns He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Student tax returns Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. Student tax returns Claiming exemption from withholding. Student tax returns    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Student tax returns The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Student tax returns Renewing an exemption from withholding. Student tax returns   An exemption from withholding is good for only one year. Student tax returns An employee must file a new Form W-4 by February 15 each year to continue the exemption. Student tax returns Part 2. Student tax returns Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Student tax returns If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. Student tax returns (See Parent's Election To Report Child's Interest and Dividends , later. Student tax returns ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Student tax returns (See Tax for Certain Children Who Have Unearned Income , later. Student tax returns ) For these rules, the term “child” includes a legally adopted child and a stepchild. Student tax returns These rules apply whether or not the child is a dependent. Student tax returns These rules do not apply if neither of the child's parents were living at the end of the year. Student tax returns Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. Student tax returns The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . Student tax returns Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. Student tax returns Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Student tax returns Parents are married. Student tax returns   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Student tax returns Parents not living together. Student tax returns   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. Student tax returns If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Student tax returns   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. Student tax returns Parents are divorced. Student tax returns   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. Student tax returns Custodial parent remarried. Student tax returns   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Student tax returns Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Student tax returns Do not use the return of the noncustodial parent. Student tax returns   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Student tax returns If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Student tax returns Parents never married. Student tax returns   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. Student tax returns If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Student tax returns Widowed parent remarried. Student tax returns   If a widow or widower remarries, the new spouse is treated as the child's other parent. Student tax returns The rules explained earlier under Custodial parent remarried apply. Student tax returns Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. Student tax returns If you do, your child will not have to file a return. Student tax returns You can make this election only if all the following conditions are met. Student tax returns Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Student tax returns Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Student tax returns The child's gross income was less than $10,000. Student tax returns The child is required to file a return unless you make this election. Student tax returns The child does not file a joint return for the year. Student tax returns No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. Student tax returns No federal income tax was withheld from your child's income under the backup withholding rules. Student tax returns You are the parent whose return must be used when applying the special tax rules for children. Student tax returns (See Which Parent's Return To Use , earlier. Student tax returns ) These conditions are also shown in Figure 1. Student tax returns Certain January 1 birthdays. Student tax returns   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Student tax returns You cannot make this election for such a child unless the child was a full-time student. Student tax returns   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Student tax returns You cannot make this election for such a child. Student tax returns How to make the election. Student tax returns    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Student tax returns (If you make this election, you cannot file Form 1040A or Form 1040EZ. Student tax returns ) Attach a separate Form 8814 for each child for whom you make the election. Student tax returns You can make the election for one or more children and not for others. Student tax returns Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Student tax returns Rate may be higher. Student tax returns   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. Student tax returns This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Student tax returns However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. Student tax returns Deductions you cannot take. Student tax returns   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. Student tax returns The additional standard deduction if the child is blind. Student tax returns The deduction for a penalty on an early withdrawal of your child's savings. Student tax returns Itemized deductions (such as your child's investment expenses or charitable contributions). Student tax returns Figure 1. Student tax returns Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Student tax returns Figure 1. Student tax returns Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Student tax returns   If you use Form 8814, your child's unearned income is considered your unearned income. Student tax returns To figure the limit on your deductible investment interest, add the child's unearned income to yours. Student tax returns However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. Student tax returns Alternative minimum tax. Student tax returns    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. Student tax returns If it is, you must include it with your own tax preference items when figuring your AMT. Student tax returns See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Student tax returns Reduced deductions or credits. Student tax returns   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Student tax returns Deduction for contributions to a traditional individual retirement arrangement (IRA). Student tax returns Deduction for student loan interest. Student tax returns Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Student tax returns Credit for child and dependent care expenses. Student tax returns Child tax credit. Student tax returns Education tax credits. Student tax returns Earned income credit. Student tax returns Penalty for underpayment of estimated tax. Student tax returns   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. Student tax returns If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. Student tax returns Get Publication 505 for more information. Student tax returns Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Student tax returns Only the amount over $2,000 is added to your income. Student tax returns The amount over $2,000 is shown on Form 8814, line 6. Student tax returns Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Student tax returns Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Student tax returns If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. Student tax returns On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Student tax returns Note. Student tax returns The tax on the first $2,000 is figured on Form 8814, Part II. Student tax returns See Figuring Additional Tax , later. Student tax returns Qualified dividends. Student tax returns   Enter on Form 8814, line 2a, any ordinary dividends your child received. Student tax returns This amount may include qualified dividends. Student tax returns Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. Student tax returns For detailed information about qualified dividends, see Publication 550. Student tax returns   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Student tax returns You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Student tax returns   Enter the child's qualified dividends on Form 8814, line 2b. Student tax returns But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Student tax returns Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Student tax returns (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Student tax returns ) Capital gain distributions. Student tax returns   Enter on Form 8814, line 3, any capital gain distributions your child received. Student tax returns The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. Student tax returns You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Student tax returns   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Student tax returns (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Student tax returns ) Collectibles (28% rate) gain. Student tax returns    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. Student tax returns Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Student tax returns The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Student tax returns The denominator is the child's total capital gain distribution. Student tax returns Enter the result on line 4 of the 28% Rate Gain Worksheet. Student tax returns Unrecaptured section 1250 gain. Student tax returns   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. Student tax returns Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Student tax returns The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Student tax returns The denominator is the child's total capital gain distribution. Student tax returns Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Student tax returns Section 1202 gain. Student tax returns   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. Student tax returns (For information about the exclusion, see chapter 4 of Publication 550. Student tax returns ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Student tax returns The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Student tax returns The denominator is the child's total capital gain distribution. Student tax returns Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Student tax returns In some cases, the exclusion is more than 50%. Student tax returns See the instructions for Schedule D for details and information on how to report the exclusion amount. Student tax returns Example. Student tax returns Fred is 6 years old. Student tax returns In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. Student tax returns (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Student tax returns ) All of the ordinary dividends are qualified dividends. Student tax returns He has no other income and is not subject to backup withholding. Student tax returns No estimated tax payments were made under his name and social security number. Student tax returns Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Student tax returns They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. Student tax returns They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Student tax returns They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Student tax returns They enter the amount of Fred's capital gain distributions, $525, on line 3. Student tax returns Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Student tax returns They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. Student tax returns This is the total amount from Form 8814 to be reported on their return. Student tax returns Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Student tax returns They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Student tax returns They enter the result, . Student tax returns 75, on line 7. Student tax returns They divide the amount on line 3, $525, by the amount on line 4, $2,100. Student tax returns They enter the result, . Student tax returns 25, on line 8. Student tax returns They multiply the amount on line 6, $100, by the decimal on line 7, . Student tax returns 75, and enter the result, $75, on line 9. Student tax returns They multiply the amount on line 6, $100, by the decimal on line 8, . Student tax returns 25, and enter the result, $25, on line 10. Student tax returns They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. Student tax returns They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. Student tax returns They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Student tax returns Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Student tax returns Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. Student tax returns This tax is added to the tax figured on your income. Student tax returns This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Student tax returns Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Student tax returns Check box a on Form 1040, line 44, or Form 1040NR, line 42. Student tax returns Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Student tax returns If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Student tax returns Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Student tax returns When Form 8615 must be filed. Student tax returns   Form 8615 must be filed for a child if all of the following statements are true. Student tax returns The child's unearned income was more than $2,000. Student tax returns The child is required to file a return for 2013. Student tax returns The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. Student tax returns At least one of the child's parents was alive at the end of 2013. Student tax returns The child does not file a joint return for 2013. Student tax returns These conditions are also shown in Figure 2. Student tax returns Certain January 1 birthdays. Student tax returns   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Student tax returns IF a child was born on. Student tax returns . Student tax returns . Student tax returns THEN, at the end of 2013, the child is considered to be. Student tax returns . Student tax returns . Student tax returns January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Student tax returns The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Student tax returns  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. Student tax returns  ***Do not use Form 8615 for this child. Student tax returns Figure 2. Student tax returns Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Student tax returns Figure 2. Student tax returns Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Student tax returns (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Student tax returns ) On line C, check the box for the parent's filing status. Student tax returns See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Student tax returns Parent with different tax year. Student tax returns   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. Student tax returns Example. Student tax returns Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Student tax returns Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Student tax returns Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Student tax returns Parent's return information not known timely. Student tax returns   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. Student tax returns   You can use any reasonable estimate. Student tax returns This includes using information from last year's return. Student tax returns If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Student tax returns   When you get the correct information, file an amended return on Form 1040X, Amended U. Student tax returns S. Student tax returns Individual Income Tax Return. Student tax returns Extension of time to file. Student tax returns   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Student tax returns S. Student tax returns Individual Income Tax Return. Student tax returns See the instructions for Form 4868 for details. Student tax returns    An extension of time to file is not an extension of time to pay. Student tax returns You must make an accurate estimate of the tax for 2013. Student tax returns If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. Student tax returns See Form 4868 and its instructions. Student tax returns Parent's return information not available. Student tax returns   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). Student tax returns How to request. Student tax returns   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. Student tax returns (The IRS cannot process a request received before the end of the tax year. Student tax returns )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. Student tax returns   The request must contain all of the following. Student tax returns A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. Student tax returns Proof of the child's age (for example, a copy of the child's birth certificate). Student tax returns Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). Student tax returns The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. Student tax returns    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. Student tax returns Step 1. Student tax returns Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. Student tax returns To do that, use Form 8615, Part I. Student tax returns Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Student tax returns Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Student tax returns Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Student tax returns If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. Student tax returns However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. Student tax returns Alternate Worksheet for Form 8615, Line 1 A. Student tax returns Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Student tax returns Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Student tax returns Enter this total as a positive number (greater than zero)   C. Student tax returns Add line A and line B and  enter the total   D. Student tax returns Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. Student tax returns Subtract line D from line C. Student tax returns Enter the result here and on Form 8615, line 1   Unearned income defined. Student tax returns   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Student tax returns It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Student tax returns Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). Student tax returns Nontaxable income. Student tax returns   For this purpose, unearned income includes only amounts the child must include in gross income. Student tax returns Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Student tax returns Capital loss. Student tax returns   A child's capital losses are taken into account in figuring the child's unearned income. Student tax returns Capital losses are first applied against capital gains. Student tax returns If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. Student tax returns Any difference over $3,000 is carried to the next year. Student tax returns Income from property received as a gift. Student tax returns   A child's unearned income includes all income produced by property belonging to the child. Student tax returns This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. Student tax returns   A child's unearned income includes income produced by property given as a gift to the child. Student tax returns This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Student tax returns Example. Student tax returns Amanda Black, age 13, received the following income. Student tax returns Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. Student tax returns Amanda's unearned income is $2,100. Student tax returns This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Student tax returns Her wages are earned (not unearned) income because they are received for work actually performed. Student tax returns Her tax-exempt interest is not included because it is nontaxable. Student tax returns Trust income. Student tax returns   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. Student tax returns   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Student tax returns See the Form 8615 instructions for details. Student tax returns Adjustment to income. Student tax returns   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. Student tax returns Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Student tax returns If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. Student tax returns Directly connected. Student tax returns   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. Student tax returns These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Student tax returns    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Student tax returns Only the amount greater than 2% of the child's adjusted gross income can be deducted. Student tax returns See Publication 529, Miscellaneous Deductions, for more information. Student tax returns Example 1. Student tax returns Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. Student tax returns His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Student tax returns Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. Student tax returns Example 2. Student tax returns Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Student tax returns She has no other income. Student tax returns She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. Student tax returns Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Student tax returns The amount on line 2 is $2,050. Student tax returns This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Student tax returns Line 3 Subtract line 2 from line 1 and enter the result on this line. Student tax returns If zero or less, do not complete the rest of the form. Student tax returns However, you must still attach Form 8615 to the child's tax return. Student tax returns Figure the tax on the child's taxable income in the normal manner. Student tax returns Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Student tax returns Child files Form 2555 or 2555-EZ. Student tax returns   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. Student tax returns Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Student tax returns Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Student tax returns Enter on Form 8615, line 5, the smaller of line 3 or line 4. Student tax returns This is the child's net unearned income. Student tax returns If zero or less, do not complete the rest of the form. Student tax returns However, you must still attach Form 8615 to the child's tax return. Student tax returns Figure the tax on the child's taxable income in the normal manner. Student tax returns Step 2. Student tax returns Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. Student tax returns The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. Student tax returns When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. Student tax returns For example, do not refigure the medical expense deduction. Student tax returns Figure the tentative tax on Form 8615, lines 6 through 13. Student tax returns Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. Student tax returns If the parent's taxable income is zero or less, enter zero on line 6. Student tax returns Parent files Form 2555 or 2555-EZ. Student tax returns   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. Student tax returns Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. Student tax returns Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Student tax returns Do not include the amount from line 5 of the Form 8615 being completed. Student tax returns (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. Student tax returns ) Example. Student tax returns Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Student tax returns The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. Student tax returns Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Student tax returns Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Student tax returns Other children's information not available. Student tax returns   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. Student tax returns Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Student tax returns Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Student tax returns You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Student tax returns Net capital gain. Student tax returns   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. Student tax returns If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Student tax returns Qualified dividends. Student tax returns   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Student tax returns Net capital gain and qualified dividends on line 8. Student tax returns   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Student tax returns   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Student tax returns   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. Student tax returns   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. Student tax returns   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Student tax returns See the instructions for Form 8615 for more details. Student tax returns Note. Student tax returns The amount of any net capital gain or qualified dividends is not separately reported on line 8. Student tax returns It is  needed, however, when figuring the tax on line 9. Student tax returns Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. Student tax returns If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. Student tax returns But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. Student tax returns If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Student tax returns For details, see the instructions for Form 8615, line 9. Student tax returns However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Student tax returns But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Student tax returns Child files Form 2555 or 2555-EZ. Student tax returns   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. Student tax returns Using the Schedule D Tax Worksheet for line 9 tax. Student tax returns    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. Student tax returns If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. Student tax returns Then figure the line 9 tax using another Schedule D Tax Worksheet. Student tax returns (Do not attach this Schedule D Tax Worksheet to the child's return. Student tax returns )   Complete this Schedule D Tax Worksheet as follows. Student tax returns On line 1, enter the amount from Form 8615, line 8. Student tax returns On line 2, enter the qualified dividends included on Form 8615, line 8. Student tax returns (See the earlier discussion for line 8. Student tax returns ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. Student tax returns On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. Student tax returns If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Student tax returns On lines 5 and 6, follow the worksheet instructions. Student tax returns On line 7, enter the net capital gain included on Form 8615, line 8. Student tax returns (See the earlier discussion for line 8. Student tax returns ) On lines 8 through 10, follow the worksheet instructions. Student tax returns On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Student tax returns Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Student tax returns Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Student tax returns If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Student tax returns Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Student tax returns Determine whether there is a line 8 capital gain excess as follows. Student tax returns Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. Student tax returns (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Student tax returns ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Student tax returns Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Student tax returns If the result is more than zero, that amount is the line 8 capital gain excess. Student tax returns If the result is zero or less, there is no line 8 capital gain excess. Student tax returns If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Student tax returns If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. Student tax returns (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Student tax returns ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Student tax returns Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. Student tax returns If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. Student tax returns If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. Student tax returns Complete lines 12 through 45 following the worksheet instructions. Student tax returns Use the parent's filing status to complete lines 15, 42, and 44. Student tax returns Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line