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Unemployed And Taxes

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Unemployed And Taxes

Unemployed and taxes Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. Unemployed and taxes Proc. Unemployed and taxes 2011-21 Table of Contents SECTION 1. Unemployed and taxes PURPOSE SECTION 2. Unemployed and taxes BACKGROUND SECTION 3. Unemployed and taxes SCOPE SECTION 4. Unemployed and taxes APPLICATION SECTION 5. Unemployed and taxes EFFECTIVE DATE SECTION 6. Unemployed and taxes EFFECT ON OTHER DOCUMENTS SECTION 7. Unemployed and taxes DRAFTING INFORMATION SECTION 1. Unemployed and taxes PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. Unemployed and taxes The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). Unemployed and taxes SECTION 2. Unemployed and taxes BACKGROUND . Unemployed and taxes 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Unemployed and taxes For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Unemployed and taxes The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Unemployed and taxes This change reflects the higher rate of price inflation for trucks and vans since 1988. Unemployed and taxes . Unemployed and taxes 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. Unemployed and taxes L. Unemployed and taxes No. Unemployed and taxes 111-240, 124 Stat. Unemployed and taxes 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. Unemployed and taxes Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Unemployed and taxes L. Unemployed and taxes No. Unemployed and taxes 111-312, 124 Stat. Unemployed and taxes 3296 (Dec. Unemployed and taxes 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Unemployed and taxes Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). Unemployed and taxes It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. Unemployed and taxes Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Unemployed and taxes . Unemployed and taxes 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Unemployed and taxes Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Unemployed and taxes Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). Unemployed and taxes Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Unemployed and taxes This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Unemployed and taxes . Unemployed and taxes 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Unemployed and taxes The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Unemployed and taxes Under § 1. Unemployed and taxes 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Unemployed and taxes One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Unemployed and taxes Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Unemployed and taxes SECTION 3. Unemployed and taxes SCOPE . Unemployed and taxes 01 The limitations on depreciation deductions in section 4. Unemployed and taxes 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. Unemployed and taxes . Unemployed and taxes 02 The tables in section 4. Unemployed and taxes 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. Unemployed and taxes Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Unemployed and taxes See Rev. Unemployed and taxes Proc. Unemployed and taxes 2006-18, 2006-1 C. Unemployed and taxes B. Unemployed and taxes 645, for passenger automobiles first leased during calendar year 2006; Rev. Unemployed and taxes Proc. Unemployed and taxes 2007-30, 2007-1 C. Unemployed and taxes B. Unemployed and taxes 1104, for passenger automobiles first leased during calendar year 2007; Rev. Unemployed and taxes Proc. Unemployed and taxes 2008-22, 2008-1 C. Unemployed and taxes B. Unemployed and taxes 658, for passenger automobiles first leased during calendar year 2008; Rev. Unemployed and taxes Proc. Unemployed and taxes 2009-24, 2009-1 C. Unemployed and taxes B. Unemployed and taxes 885, for passenger automobiles first leased during calendar year 2009; and Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18, 2010-1 C. Unemployed and taxes B. Unemployed and taxes 427, as amplified and modified by section 4. Unemployed and taxes 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. Unemployed and taxes SECTION 4. Unemployed and taxes APPLICATION . Unemployed and taxes 01 Limitations on Depreciation Deductions for Certain Automobiles. Unemployed and taxes (1) Amount of the inflation adjustment. Unemployed and taxes (a) Passenger automobiles (other than trucks or vans). Unemployed and taxes Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Unemployed and taxes Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Unemployed and taxes The new car component of the CPI was 115. Unemployed and taxes 2 for October 1987 and 137. Unemployed and taxes 880 for October 2010. Unemployed and taxes The October 2010 index exceeded the October 1987 index by 22. Unemployed and taxes 680. Unemployed and taxes Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. Unemployed and taxes 69 percent (22. Unemployed and taxes 680/115. Unemployed and taxes 2 x 100%). Unemployed and taxes The dollar limitations in § 280F(a) are multiplied by a factor of 0. Unemployed and taxes 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. Unemployed and taxes This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. Unemployed and taxes (b) Trucks and vans. Unemployed and taxes To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. Unemployed and taxes The new truck component of the CPI was 112. Unemployed and taxes 4 for October 1987 and 142. Unemployed and taxes 556 for October 2010. Unemployed and taxes The October 2010 index exceeded the October 1987 index by 30. Unemployed and taxes 156. Unemployed and taxes Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. Unemployed and taxes 83 percent (30. Unemployed and taxes 156/112. Unemployed and taxes 4 x 100%). Unemployed and taxes The dollar limitations in § 280F(a) are multiplied by a factor of 0. Unemployed and taxes 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Unemployed and taxes This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. Unemployed and taxes (2) Amount of the limitation. Unemployed and taxes Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. Unemployed and taxes Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. Unemployed and taxes Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. Unemployed and taxes The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. Unemployed and taxes REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Unemployed and taxes 02 Inclusions in Income of Lessees of Passenger Automobiles. Unemployed and taxes A taxpayer must follow the procedures in § 1. Unemployed and taxes 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. Unemployed and taxes In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Unemployed and taxes REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . Unemployed and taxes 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. Unemployed and taxes (1) Calculation of the Revised Amount. Unemployed and taxes The revised depreciation limits provided in this section 4. Unemployed and taxes 03 were calculated by increasing the existing limitations on the first year allowance in Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). Unemployed and taxes (2) Amount of the Revised Limitation. Unemployed and taxes For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Unemployed and taxes For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Unemployed and taxes If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 apply. Unemployed and taxes REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Unemployed and taxes PROC. Unemployed and taxes 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. Unemployed and taxes The lease inclusion amounts in Tables 3 and 4 of Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. Unemployed and taxes Consequently, Table 3 of Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. Unemployed and taxes SECTION 5. Unemployed and taxes EFFECTIVE DATE This revenue procedure, with the exception of section 4. Unemployed and taxes 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. Unemployed and taxes Section 4. Unemployed and taxes 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Unemployed and taxes SECTION 6. Unemployed and taxes EFFECT ON OTHER DOCUMENTS Rev. Unemployed and taxes Proc. Unemployed and taxes 2010-18 is amplified and modified. Unemployed and taxes SECTION 7. Unemployed and taxes DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Unemployed and taxes Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Unemployed and taxes For further information regarding this revenue procedure, contact Mr. Unemployed and taxes Harvey at (202) 622-4930 (not a toll-free call). Unemployed and taxes Prev  Up  Next   Home   More Internal Revenue Bulletins
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The Unemployed And Taxes

Unemployed and taxes 27. Unemployed and taxes   Tax Benefits for Work-Related Education Table of Contents What's New Introduction Useful Items - You may want to see: 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. Unemployed and taxes Transportation Expenses Travel Expenses No Double Benefit Allowed Reimbursements Deducting Business ExpensesSelf-Employed Persons Employees Performing Artists and Fee-Basis Officials Impairment-Related Work Expenses Recordkeeping What's New Standard mileage rate. Unemployed and taxes  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 56½ cents per mile. Unemployed and taxes For more information, see Transportation Expenses under What Expenses Can Be Deducted. Unemployed and taxes Introduction This chapter discusses work-related education expenses that you may be able to deduct as business expenses. Unemployed and taxes To claim such a deduction, you must: Itemize your deductions on Schedule A (Form 1040) if you are an employee, File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed, and Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education . Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes See chapter 28. Unemployed and taxes If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. Unemployed and taxes Your work-related education expenses may also qualify you for other tax benefits, such as the American opportunity and lifetime learning credits (see chapter 35). Unemployed and taxes You may qualify for these other benefits even if you do not meet the requirements listed earlier. Unemployed and taxes Also, keep in mind that your work-related education expenses may qualify you to claim more than one tax benefit. Unemployed and taxes Generally, you may claim any number of benefits as long as you use different expenses to figure each one. Unemployed and taxes When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that give you the lowest tax liability. Unemployed and taxes Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 970 Tax Benefits for Education Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses Schedule A (Form 1040) Itemized Deductions Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. Unemployed and taxes This is education that meets at least one of the following two tests. Unemployed and taxes The education is required by your employer or the law to keep your present salary, status, or job. Unemployed and taxes The required education must serve a bona fide business purpose of your employer. Unemployed and taxes The education maintains or improves skills needed in your present work. Unemployed and taxes 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. Unemployed and taxes You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Unemployed and taxes Use Figure 27-A, later, as a quick check to see if your education qualifies. Unemployed and taxes 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. Unemployed and taxes This additional education is qualifying work-related education if all three of the following requirements are met. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes See Education To Maintain or Improve Skills , later. Unemployed and taxes Example. Unemployed and taxes You are a teacher who has satisfied the minimum requirements for teaching. Unemployed and taxes Your employer requires you to take an additional college course each year to keep your teaching job. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes This could include refresher courses, courses on current developments, and academic or vocational courses. Unemployed and taxes Example. Unemployed and taxes You repair televisions, radios, and stereo systems for XYZ Store. Unemployed and taxes To keep up with the latest changes, you take special courses in radio and stereo service. Unemployed and taxes These courses maintain and improve skills required in your work. Unemployed and taxes Maintaining skills vs. Unemployed and taxes qualifying for new job. Unemployed and taxes   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. Unemployed and taxes Education during temporary absence. Unemployed and taxes   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. Unemployed and taxes Education that you get during a temporary absence is qualifying work-related education if it maintains or improves skills needed in your present work. Unemployed and taxes Example. Unemployed and taxes You quit your biology research job to become a full-time biology graduate student for one year. Unemployed and taxes 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. Unemployed and taxes Education during indefinite absence. Unemployed and taxes   If you stop work for more than a year, your absence from your job is considered indefinite. Unemployed and taxes 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. Unemployed and taxes Therefore, it is not qualifying work-related education. Unemployed and taxes 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. Unemployed and taxes The minimum educational requirements are determined by: Laws and regulations, Standards of your profession, trade, or business, and Your employer. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes You have not necessarily met the minimum educational requirements of your trade or business simply because you are already doing the work. Unemployed and taxes Example 1. Unemployed and taxes You are a full-time engineering student. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes The education is not qualifying work-related education. Unemployed and taxes Example 2. Unemployed and taxes You are an accountant and you have met the minimum educational requirements of your employer. Unemployed and taxes Your employer later changes the minimum educational requirements and requires you to take college courses to keep your job. Unemployed and taxes 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. Unemployed and taxes Requirements for Teachers States or school districts usually set the minimum educational requirements for teachers. Unemployed and taxes The requirement is the college degree or the minimum number of college hours usually required of a person hired for that position. Unemployed and taxes If there are no requirements, you will have met the minimum educational requirements when you become a faculty member. Unemployed and taxes 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. Unemployed and taxes You generally will be considered a faculty member when one or more of the following occurs. Unemployed and taxes You have tenure. Unemployed and taxes Your years of service count toward obtaining tenure. Unemployed and taxes You have a vote in faculty decisions. Unemployed and taxes Your school makes contributions for you to a retirement plan other than social security or a similar program. Unemployed and taxes Example 1. Unemployed and taxes The law in your state requires beginning secondary school teachers to have a bachelor's degree, including 10 professional education courses. Unemployed and taxes In addition, to keep the job a teacher must complete a fifth year of training within 10 years from the date of hire. Unemployed and taxes 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. Unemployed and taxes However, to keep their jobs, these teachers must get a bachelor's degree and the required professional education courses within 3 years. Unemployed and taxes 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. Unemployed and taxes If you have all the required education except the fifth year, you have met the minimum educational requirements. Unemployed and taxes 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. Unemployed and taxes Figure 27-A Does Your Work-Related Education Qualify? Please click here for the text description of the image. Unemployed and taxes Figure 27-A. Unemployed and taxes Does Your Work-Related Education Qualify?" Example 2. Unemployed and taxes Assume the same facts as in Example 1 except that you have a bachelor's degree and only six professional education courses. Unemployed and taxes The additional four education courses can be qualifying work-related education. Unemployed and taxes Although you do not have all the required courses, you have already met the minimum educational requirements. Unemployed and taxes Example 3. Unemployed and taxes Assume the same facts as in Example 1 except that you are hired with only 3 years of college. Unemployed and taxes The courses you take that lead to a bachelor's degree (including those in education) are not qualifying work-related education. Unemployed and taxes They are needed to meet the minimum educational requirements for employment as a teacher. Unemployed and taxes Example 4. Unemployed and taxes You have a bachelor's degree and you work as a temporary instructor at a university. Unemployed and taxes At the same time, you take graduate courses toward an advanced degree. Unemployed and taxes The rules of the university state that you can become a faculty member only if you get a graduate degree. Unemployed and taxes Also, you can keep your job as an instructor only as long as you show satisfactory progress toward getting this degree. Unemployed and taxes You have not met the minimum educational requirements to qualify you as a faculty member. Unemployed and taxes The graduate courses are not qualifying work-related education. Unemployed and taxes Certification in a new state. Unemployed and taxes   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. Unemployed and taxes This is true even if you must get additional education to be certified in another state. Unemployed and taxes Any additional education you need is qualifying work-related education. Unemployed and taxes You have already met the minimum requirements for teaching. Unemployed and taxes Teaching in another state is not a new trade or business. Unemployed and taxes Example. Unemployed and taxes You hold a permanent teaching certificate in State A and are employed as a teacher in that state for several years. Unemployed and taxes You move to State B and are promptly hired as a teacher. Unemployed and taxes You are required, however, to complete certain prescribed courses to get a permanent teaching certificate in State B. Unemployed and taxes 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. Unemployed and taxes 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. Unemployed and taxes This is true even if you do not plan to enter that trade or business. Unemployed and taxes If you are an employee, a change of duties that involves the same general kind of work is not a new trade or business. Unemployed and taxes Example 1. Unemployed and taxes You are an accountant. Unemployed and taxes Your employer requires you to get a law degree at your own expense. Unemployed and taxes You register at a law school for the regular curriculum that leads to a law degree. Unemployed and taxes 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. Unemployed and taxes Example 2. Unemployed and taxes You are a general practitioner of medicine. Unemployed and taxes You take a 2-week course to review developments in several specialized fields of medicine. Unemployed and taxes The course does not qualify you for a new profession. Unemployed and taxes It is qualifying work-related education because it maintains or improves skills required in your present profession. Unemployed and taxes Example 3. Unemployed and taxes While working in the private practice of psychiatry, you enter a program to study and train at an accredited psychoanalytic institute. Unemployed and taxes The program will lead to qualifying you to practice psychoanalysis. Unemployed and taxes The psychoanalytic training does not qualify you for a new profession. Unemployed and taxes It is qualifying work-related education because it maintains or improves skills required in your present profession. Unemployed and taxes 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. Unemployed and taxes They are part of a program of study that can qualify you for a new profession. Unemployed and taxes Teaching and Related Duties All teaching and related duties are considered the same general kind of work. Unemployed and taxes A change in duties in any of the following ways is not considered a change to a new business. Unemployed and taxes Elementary school teacher to secondary school teacher. Unemployed and taxes Teacher of one subject, such as biology, to teacher of another subject, such as art. Unemployed and taxes Classroom teacher to guidance counselor. Unemployed and taxes Classroom teacher to school administrator. Unemployed and taxes 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. Unemployed and taxes If you are not self-employed, you can deduct business expenses only if you itemize your deductions. Unemployed and taxes You cannot deduct expenses related to tax-exempt and excluded income. Unemployed and taxes Deductible expenses. Unemployed and taxes   The following education expenses can be deducted. Unemployed and taxes Tuition, books, supplies, lab fees, and similar items. Unemployed and taxes Certain transportation and travel costs. Unemployed and taxes Other education expenses, such as costs of research and typing when writing a paper as part of an educational program. Unemployed and taxes Nondeductible expenses. Unemployed and taxes   You cannot deduct personal or capital expenses. Unemployed and taxes For example, you cannot deduct the dollar value of vacation time or annual leave you take to attend classes. Unemployed and taxes This amount is a personal expense. Unemployed and taxes Unclaimed reimbursement. Unemployed and taxes   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. Unemployed and taxes Example. Unemployed and taxes Your employer agrees to pay your education expenses if you file a voucher showing your expenses. Unemployed and taxes You do not file a voucher, and you do not get reimbursed. Unemployed and taxes Because you did not file a voucher, you cannot deduct the expenses on your tax return. Unemployed and taxes Transportation Expenses If your education qualifies, you can deduct local transportation costs of going directly from work to school. Unemployed and taxes 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. Unemployed and taxes Temporary basis. Unemployed and taxes   You go to school on a temporary basis if either of the following situations applies to you. Unemployed and taxes Your attendance at school is realistically expected to last 1 year or less and does indeed last for 1 year or less. Unemployed and taxes 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. Unemployed and taxes Your attendance is temporary up to the date you determine it will last more than 1 year. Unemployed and taxes Note. Unemployed and taxes If you are in either situation (1) or (2), your attendance is not temporary if facts and circumstances indicate otherwise. Unemployed and taxes Attendance not on a temporary basis. Unemployed and taxes   You do not go to school on a temporary basis if either of the following situations apply to you. Unemployed and taxes Your attendance at school is realistically expected to last more than 1 year. Unemployed and taxes It does not matter how long you actually attend. Unemployed and taxes 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. Unemployed and taxes Your attendance is not temporary after the date you determine it will last more than 1 year. Unemployed and taxes 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. Unemployed and taxes This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days. Unemployed and taxes Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Unemployed and taxes Transportation expenses do not include amounts spent for travel, meals, or lodging while you are away from home overnight. Unemployed and taxes Example 1. Unemployed and taxes You regularly work in a nearby town, and go directly from work to home. Unemployed and taxes You also attend school every work night for 3 months to take a course that improves your job skills. Unemployed and taxes Since you are attending school on a temporary basis, you can deduct your daily round-trip transportation expenses in going between home and school. Unemployed and taxes This is true regardless of the distance traveled. Unemployed and taxes Example 2. Unemployed and taxes Assume the same facts as in Example 1 except that on certain nights you go directly from work to school and then home. Unemployed and taxes You can deduct your transportation expenses from your regular work site to school and then home. Unemployed and taxes Example 3. Unemployed and taxes Assume the same facts as in Example 1 except that you attend the school for 9 months on Saturdays, nonwork days. Unemployed and taxes Since you are attending school on a temporary basis, you can deduct your round-trip transportation expenses in going between home and school. Unemployed and taxes Example 4. Unemployed and taxes Assume the same facts as in Example 1 except that you attend classes twice a week for 15 months. Unemployed and taxes Since your attendance in school is not considered temporary, you cannot deduct your transportation expenses in going between home and school. Unemployed and taxes If you go directly from work to school, you can deduct the one-way transportation expenses of going from work to school. Unemployed and taxes 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. Unemployed and taxes Using your car. Unemployed and taxes   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. Unemployed and taxes The standard mileage rate for miles driven from January 1, 2013, through December 31, 2013 is 56½ cents per mile. Unemployed and taxes Whichever method you use, you can also deduct parking fees and tolls. Unemployed and taxes See chapter 26 for information on deducting your actual expenses of using a car. Unemployed and taxes 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. Unemployed and taxes Travel expenses for qualifying work-related education are treated the same as travel expenses for other employee business purposes. Unemployed and taxes For more information, see chapter 26. Unemployed and taxes You cannot deduct expenses for personal activities, such as sightseeing, visiting, or entertaining. Unemployed and taxes Mainly personal travel. Unemployed and taxes   If your travel away from home is mainly personal, you cannot deduct all of your expenses for travel, meals, and lodging. Unemployed and taxes You can deduct only your expenses for lodging and 50% of your expenses for meals during the time you attend the qualified educational activities. Unemployed and taxes   Whether a trip's purpose is mainly personal or educational depends upon the facts and circumstances. Unemployed and taxes An important factor is the comparison of time spent on personal activities with time spent on educational activities. Unemployed and taxes 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. Unemployed and taxes Example 1. Unemployed and taxes John works in Newark, New Jersey. Unemployed and taxes He traveled to Chicago to take a deductible 1-week course at the request of his employer. Unemployed and taxes His main reason for going to Chicago was to take the course. Unemployed and taxes While there, he took a sight-seeing trip, entertained some friends, and took a side trip to Pleasantville for a day. Unemployed and taxes Since the trip was mainly for business, John can deduct his round-trip airfare to Chicago. Unemployed and taxes He cannot deduct his transportation expenses of going to Pleasantville. Unemployed and taxes He can deduct only the meals (subject to the 50% limit) and lodging connected with his educational activities. Unemployed and taxes Example 2. Unemployed and taxes Sue works in Boston. Unemployed and taxes She went to a university in Michigan to take a course for work. Unemployed and taxes The course is qualifying work-related education. Unemployed and taxes She took one course, which is one-fourth of a full course load of study. Unemployed and taxes She spent the rest of the time on personal activities. Unemployed and taxes Her reasons for taking the course in Michigan were all personal. Unemployed and taxes Sue's trip is mainly personal because three-fourths of her time is considered personal time. Unemployed and taxes She cannot deduct the cost of her round-trip train ticket to Michigan. Unemployed and taxes She can deduct one-fourth of the meals (subject to the 50% limit) and lodging costs for the time she attended the university. Unemployed and taxes Example 3. Unemployed and taxes Dave works in Nashville and recently traveled to California to take a 2-week seminar. Unemployed and taxes The seminar is qualifying work-related education. Unemployed and taxes While there, he spent an extra 8 weeks on personal activities. Unemployed and taxes The facts, including the extra 8-week stay, show that his main purpose was to take a vacation. Unemployed and taxes Dave cannot deduct his round-trip airfare or his meals and lodging for the 8 weeks. Unemployed and taxes He can deduct only his expenses for meals (subject to the 50% limit) and lodging for the 2 weeks he attended the seminar. Unemployed and taxes Cruises and conventions. Unemployed and taxes   Certain cruises and conventions offer seminars or courses as part of their itinerary. Unemployed and taxes Even if the seminars or courses are work-related, your deduction for travel may be limited. Unemployed and taxes This applies to: Travel by ocean liner, cruise ship, or other form of luxury water transportation, and Conventions outside the North American area. Unemployed and taxes   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. Unemployed and taxes 50% limit on meals. Unemployed and taxes   You can deduct only 50% of the cost of your meals while traveling away from home to obtain qualifying work-related education. Unemployed and taxes You cannot have been reimbursed for the meals. Unemployed and taxes   Employees must use Form 2106 or Form 2106-EZ to apply the 50% limit. Unemployed and taxes 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. Unemployed and taxes Example. Unemployed and taxes You are a French language teacher. Unemployed and taxes While on sabbatical leave granted for travel, you traveled through France to improve your knowledge of the French language. Unemployed and taxes You chose your itinerary and most of your activities to improve your French language skills. Unemployed and taxes You cannot deduct your travel expenses as education expenses. Unemployed and taxes 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. Unemployed and taxes No Double Benefit Allowed You cannot do either of the following. Unemployed and taxes Deduct work-related education expenses as business expenses if you benefit from these expenses under any other provision of the law, for example, the tuition and fees deduction (see chapter 35). Unemployed and taxes Deduct work-related education expenses paid with tax-free scholarship, grant, or employer-provided educational assistance. Unemployed and taxes See Adjustments to Qualifying Work-Related Education Expenses , next. Unemployed and taxes 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. Unemployed and taxes You must reduce the qualifying expenses by the amount of such expenses allocable to the tax-free educational assistance. Unemployed and taxes For more information, see chapter 12 of Publication 970. Unemployed and taxes Tax-free educational assistance includes: The tax-free part of scholarships and fellowships (see chapter 1 of Publication 970), The tax-free part of Pell grants (see chapter 1 of Publication 970), The tax-free part of employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received for education assistance. Unemployed and taxes Amounts that do not reduce qualifying work-related education expenses. Unemployed and taxes   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. Unemployed and taxes   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. Unemployed and taxes Reimbursements How you treat reimbursements depends on the arrangement you have with your employer. Unemployed and taxes There are two basic types of reimbursement arrangements—accountable plans and nonaccountable plans. Unemployed and taxes You can tell the type of plan you are reimbursed under by the way the reimbursement is reported on your Form W-2. Unemployed and taxes For information on how to treat reimbursements under both accountable and nonaccountable plans, see Reimbursements in chapter 26. Unemployed and taxes Deducting Business Expenses Self-employed persons and employees report business expenses differently. Unemployed and taxes The following information explains what forms you must use to deduct the cost of your qualifying work-related education as a business expense. Unemployed and taxes Self-Employed Persons If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). Unemployed and taxes If your educational 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. Unemployed and taxes See the instructions for the form you file for information on how to complete it. Unemployed and taxes 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. Unemployed and taxes If either (1) or (2) applies, you can deduct the total qualifying cost. Unemployed and taxes If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement. Unemployed and taxes 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. Unemployed and taxes (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Unemployed and taxes ) 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. Unemployed and taxes See chapter 28. Unemployed and taxes Form 2106 or 2106-EZ. Unemployed and taxes   To figure your deduction for employee business expenses, including qualifying work-related education, you generally must complete Form 2106 or Form 2106-EZ. Unemployed and taxes Form not required. Unemployed and taxes   Do not complete either Form 2106 or Form 2106-EZ if: If amounts included in box 1 of your Form W-2, are not considered reimbursements, and You are not claiming travel, transportation, meal, or entertainment expenses. Unemployed and taxes   If you meet both of these requirements, enter the expenses directly on Schedule A (Form 1040), line 21. Unemployed and taxes (Special rules for expenses of certain performing artists and fee-basis officials and for impairment-related work expenses are explained later. Unemployed and taxes ) Using Form 2106-EZ. Unemployed and taxes   This form is shorter and easier to use than Form 2106. Unemployed and taxes 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. Unemployed and taxes   If you do not meet both of these requirements, use Form 2106. Unemployed and taxes 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. Unemployed and taxes Include the cost of your qualifying work-related education with any other employee business expenses on Form 1040, line 24. Unemployed and taxes You do not have to itemize your deductions on Schedule A (Form 1040), and, therefore, the deduction is not subject to the 2%-of-adjusted-gross-income limit. Unemployed and taxes You must complete Form 2106 or 2106-EZ to figure your deduction, even if you meet the requirements described earlier under Form not required . Unemployed and taxes For more information on qualified performing artists, see chapter 6 of Publication 463. Unemployed and taxes 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. Unemployed and taxes They are not subject to the 2%-of-adjusted-gross-income limit. Unemployed and taxes To deduct these expenses, you must complete Form 2106 or 2106-EZ even if you meet the requirements described earlier under Form not required . Unemployed and taxes For more information on impairment-related work expenses, see chapter 6 of Publication 463. Unemployed and taxes Recordkeeping You must keep records as proof of any deduction claimed on your tax return. Unemployed and taxes Generally, you should keep your records for 3 years from the date of filing the tax return and claiming the deduction. Unemployed and taxes For specific information about keeping records of business expenses, see Recordkeeping in chapter 26. 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