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Turbo Tax Filing

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Turbo Tax Filing

Turbo tax filing Index A Adjusted basis for installment sale, Adjusted basis for installment sale purposes. Turbo tax filing Assistance (see Tax help) B Basis Adjusted, Adjusted basis. Turbo tax filing Assumed mortgage, Buyer Assumes Mortgage Installment obligation, Basis. Turbo tax filing , Basis in installment obligation. Turbo tax filing , Basis in installment obligation. Turbo tax filing Installment sale, Adjusted basis for installment sale purposes. Turbo tax filing Repossessed property, Basis in repossessed property. Turbo tax filing , Basis. Turbo tax filing Bond, Bond. Turbo tax filing Buyer's note, Buyer's note. Turbo tax filing C Contingent payment sale, Contingent Payment Sale Contract price, Contract price. Turbo tax filing D Dealer sales, special rule, Dealer sales. Turbo tax filing Depreciation recapture income, Depreciation Recapture Income Disposition of installment obligation, Disposition of an Installment Obligation E Electing out, Electing Out of the Installment Method Escrow account, Escrow Account F Fair market value, Fair market value (FMV). Turbo tax filing , Fair market value (FMV). Turbo tax filing Figuring installment sale income, Figuring Installment Sale Income Form 4797, Form 4797, Form 4797. Turbo tax filing 6252, Form 6252, Reporting an Installment Sale 8594, Reporting requirement. Turbo tax filing Schedule D (Form 1040), Schedule D (Form 1040), Other forms. Turbo tax filing , Schedule D (Form 1040). Turbo tax filing Free tax services, Free help with your tax return. Turbo tax filing G Gross profit percentage, Gross profit percentage. Turbo tax filing Gross profit, defined, Gross profit. Turbo tax filing Guarantee, Debt not payable on demand. Turbo tax filing H Help (see Tax help) I Installment obligation Defined, Installment obligation. Turbo tax filing Disposition, Disposition of an Installment Obligation Used as security, Installment Obligation Used as Security (Pledge Rule) Installment Sale, What Is an Installment Sale? Interest Escrow account, Escrow Account Income, Interest Income Reporting, Seller-financed mortgage. Turbo tax filing Unstated, Installment income after 2013. Turbo tax filing Interest on deferred tax, Interest on Deferred Tax Exceptions, Exceptions. Turbo tax filing L Like-kind exchange, Like-Kind Exchange N Note Buyer's, Buyer's note. Turbo tax filing Third-party, Third-party note. Turbo tax filing O Original issue discount, Installment income after 2013. Turbo tax filing P Payments considered received, Payments Received or Considered Received Buyer assumes debts, Buyer Assumes Other Debts Buyer pays seller's expenses, Buyer Pays Seller's Expenses Mortgage assumed, Buyer Assumes Mortgage Pledge rule, Installment Obligation Used as Security (Pledge Rule) Payments received, Payments Received or Considered Received Pledge rule, Installment Obligation Used as Security (Pledge Rule) Publications (see Tax help) R Related person Land sale, Land transfers between related persons. Turbo tax filing Reporting sale to, Related person. Turbo tax filing Sale to, Sale to a Related Person Reporting installment sale, Reporting Installment Sale Income, Reporting an Installment Sale Repossession, Repossession Holding period for resale, Holding period for resales. Turbo tax filing Personal property, Personal Property Real property, Real Property S Sale at a loss, Sale at a loss. Turbo tax filing Sale of Business, Sale of a Business Home, Sale of Your Home Land between related persons, Land transfers between related persons. Turbo tax filing Partnership interest, Sale of Partnership Interest Several assets, Single Sale of Several Assets, Several assets. Turbo tax filing Stock or securities, Stock or securities. Turbo tax filing Sales by dealers, Dealer sales. Turbo tax filing Section 1274, Section 1274 Exceptions, Exceptions to Sections 1274 and 483 Section 483, Section 483 Exceptions, Exceptions to Sections 1274 and 483 Selling expenses, Selling expenses. Turbo tax filing Selling price Defined, Selling price. Turbo tax filing Reduced, Selling Price Reduced Single sale of several assets, Single Sale of Several Assets, Several assets. Turbo tax filing T Tax help, How To Get Tax Help Third-party note, Third-party note. Turbo tax filing TTY/TDD information, How To Get Tax Help U Unstated interest, Installment income after 2013. Turbo tax filing Prev  Up     Home   More Online Publications
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The Turbo Tax Filing

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