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File taxes online free 2. File taxes online free   Source of Income Table of Contents Introduction Topics - This chapter discusses: Resident Aliens Nonresident AliensInterest Income Dividends Guarantee of Indebtedness Personal Services Transportation Income Scholarships, Grants, Prizes, and Awards Pensions and Annuities Rents or Royalties Real Property Personal Property Community Income Introduction After you have determined your alien status, you must determine the source of your income. File taxes online free This chapter will help you determine the source of different types of income you may receive during the tax year. File taxes online free This chapter also discusses special rules for married individuals who are domiciled in a country with community property laws. File taxes online free Topics - This chapter discusses: Income source rules, and Community income. File taxes online free Resident Aliens A resident alien's income is generally subject to tax in the same manner as a U. File taxes online free S. File taxes online free citizen. File taxes online free If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U. File taxes online free S. File taxes online free tax return. File taxes online free You must report these amounts from sources within and outside the United States. File taxes online free Nonresident Aliens A nonresident alien usually is subject to U. File taxes online free S. File taxes online free income tax only on U. File taxes online free S. File taxes online free source income. File taxes online free Under limited circumstances, certain foreign source income is subject to U. File taxes online free S. File taxes online free tax. File taxes online free See Foreign Income in chapter 4. File taxes online free The general rules for determining U. File taxes online free S. File taxes online free source income that apply to most nonresident aliens are shown in Table 2-1. File taxes online free The following discussions cover the general rules as well as the exceptions to these rules. File taxes online free Not all items of U. File taxes online free S. File taxes online free source income are taxable. File taxes online free See chapter 3. File taxes online free Interest Income Generally, U. File taxes online free S. File taxes online free source interest income includes the following items. File taxes online free Interest on bonds, notes, or other interest-bearing obligations of U. File taxes online free S. File taxes online free residents or domestic corporations. File taxes online free Interest paid by a domestic or foreign partnership or foreign corporation engaged in a U. File taxes online free S. File taxes online free trade or business at any time during the tax year. File taxes online free Original issue discount. File taxes online free Interest from a state, the District of Columbia, or the U. File taxes online free S. File taxes online free Government. File taxes online free The place or manner of payment is immaterial in determining the source of the income. File taxes online free A substitute interest payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as the interest on the transferred security. File taxes online free Exceptions. File taxes online free   U. File taxes online free S. File taxes online free source interest income does not include the following items. File taxes online free Interest paid by a resident alien or a domestic corporation on obligations issued before August 10, 2010, if for the 3-year period ending with the close of the payer's tax year preceding the interest payment, at least 80% of the payer's total gross income: Is from sources outside the United States, and Is attributable to the active conduct of a trade or business by the individual or corporation in a foreign country or a U. File taxes online free S. File taxes online free possession. File taxes online free However, the interest will be considered U. File taxes online free S. File taxes online free source interest income if either of the following apply. File taxes online free The recipient of the interest is related to the resident alien or domestic corporation. File taxes online free See section 954(d)(3) for the definition of related person. File taxes online free The terms of the obligation are significantly modified after August 9, 2010. File taxes online free Any extension of the term of the obligation is considered a significant modification. File taxes online free Interest paid by a foreign branch of a domestic corporation or a domestic partnership on deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law if the interest paid or credited can be deducted by the association. File taxes online free Interest on deposits with a foreign branch of a domestic corporation or domestic partnership, but only if the branch is in the commercial banking business. File taxes online free Dividends In most cases, dividend income received from domestic corporations is U. File taxes online free S. File taxes online free source income. File taxes online free Dividend income from foreign corporations is usually foreign source income. File taxes online free Exceptions to both of these rules are discussed below. File taxes online free A substitute dividend payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as a distribution on the transferred security. File taxes online free Dividend equivalent payments. File taxes online free   U. File taxes online free S. File taxes online free source dividends also include all dividend equivalent payments. File taxes online free Dividend equivalent payments include substitute dividends, payments made pursuant to a specified notional principal contract, and all similar payments that, directly or indirectly, are contingent on or determined by reference to, the payment of a dividend from U. File taxes online free S. File taxes online free sources. File taxes online free    The Internal Revenue Service has issued final regulations that would affect the treatment of dividend equivalent payments and specified notional principal contracts. File taxes online free You can view this regulation at www. File taxes online free irs. File taxes online free gov/irb/2013-52_IRB/ar08. File taxes online free html. File taxes online free First exception. File taxes online free   Dividends received from a domestic corporation are not U. File taxes online free S. File taxes online free source income if the corporation elects to take the American Samoa economic development credit. File taxes online free Second exception. File taxes online free   Part of the dividends received from a foreign corporation is U. File taxes online free S. File taxes online free source income if 25% or more of its total gross income for the 3-year period ending with the close of its tax year preceding the declaration of dividends was effectively connected with a trade or business in the United States. File taxes online free If the corporation was formed less than 3 years before the declaration, use its total gross income from the time it was formed. File taxes online free Determine the part that is U. File taxes online free S. File taxes online free source income by multiplying the dividend by the following fraction. File taxes online free   Foreign corporation's gross income connected with a U. File taxes online free S. File taxes online free trade or business for the 3-year period     Foreign corporation's gross income from all sources for that period   Guarantee of Indebtedness Certain amounts received directly or indirectly, for the provision of a guarantee of indebtedness issued after September 27, 2010, are U. File taxes online free S. File taxes online free source income. File taxes online free They must be paid by a noncorporate resident or U. File taxes online free S. File taxes online free corporation or by any foreign person if the amounts are effectively connected with the conduct of a U. File taxes online free S. File taxes online free trade or business. File taxes online free For more information, see Internal Revenue Code sections 861(a)(9) and 862(a)(9). File taxes online free Personal Services All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. File taxes online free The only exceptions to this rule are discussed in chapter 3 under Employees of foreign persons, organizations, or offices, and under Crew members. File taxes online free If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. File taxes online free Compensation (other than certain fringe benefits) is sourced on a time basis. File taxes online free Certain fringe benefits (such as housing and education) are sourced on a geographical basis. File taxes online free Or, you may be permitted to use an alternative basis to determine the source of compensation. File taxes online free See Alternative Basis , later. File taxes online free Multi-level marketing. File taxes online free   Certain companies sell products through a multi-level marketing arrangement, such that an upper-tier distributor, who has sponsored a lower-tier distributor, is entitled to a payment from the company based on certain activities of that lower-tier distributor. File taxes online free Generally, depending on the facts, payments from such multi-level marketing companies to independent (non-employee) distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have sponsored (lower-tier distributors) constitute income for the performance of personal services in recruiting, training, and supporting the lower-tier distributors. File taxes online free The source of such income is generally based on where the services of the upper-tier distributor are performed, and may, depending on the facts, be considered multi-year compensation, with the source of income determined over the period to which such compensation is attributable. File taxes online free Self-employed individuals. File taxes online free   If you are self-employed, you determine the source of compensation for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. File taxes online free In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. File taxes online free Time Basis Use a time basis to figure your U. File taxes online free S. File taxes online free source compensation (other than the fringe benefits discussed later). File taxes online free Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed services in the United States during the year     Total number of days you performed services during the year   You can use a unit of time less than a day in the above fraction, if appropriate. File taxes online free The time period for which the compensation is made does not have to be a year. File taxes online free Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. File taxes online free Example 1. File taxes online free Christina Brooks, a resident of the Netherlands, worked 240 days for a U. File taxes online free S. File taxes online free company during the tax year. File taxes online free She received $80,000 in compensation. File taxes online free None of it was for fringe benefits. File taxes online free Christina performed services in the United States for 60 days and performed services in the Netherlands for 180 days. File taxes online free Using the time basis for determining the source of compensation, $20,000 ($80,000 × 60/240) is her U. File taxes online free S. File taxes online free source income. File taxes online free Example 2. File taxes online free Rob Waters, a resident of South Africa, is employed by a corporation. File taxes online free His annual salary is $100,000. File taxes online free None of it is for fringe benefits. File taxes online free During the first quarter of the year he worked entirely within the United States. File taxes online free On April 1, Rob was transferred to Singapore for the remainder of the year. File taxes online free Rob is able to establish that the first quarter of the year and the last 3 quarters of the year are two separate, distinct, and continuous periods of time. File taxes online free Accordingly, $25,000 of Rob's annual salary is attributable to the first quarter of the year (. File taxes online free 25 × $100,000). File taxes online free All of it is U. File taxes online free S. File taxes online free source income because he worked entirely within the United States during that quarter. File taxes online free The remaining $75,000 is attributable to the last three quarters of the year. File taxes online free During those quarters, he worked 150 days in Singapore and 30 days in the United States. File taxes online free His periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. File taxes online free Of this $75,000, $12,500 ($75,000 × 30/180) is U. File taxes online free S. File taxes online free source income. File taxes online free Multi-year compensation. File taxes online free   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. File taxes online free Multi-year compensation is compensation that is included in your income in one tax year but that is attributable to a period that includes two or more tax years. File taxes online free   You determine the period to which the compensation is attributable based on the facts and circumstances of your case. File taxes online free For example, an amount of compensation that specifically relates to a period of time that includes several calendar years is attributable to the entire multi-year period. File taxes online free   The amount of compensation treated as from U. File taxes online free S. File taxes online free sources is figured by multiplying the total multi-year compensation by a fraction. File taxes online free The numerator of the fraction is the number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in the United States in connection with the project. File taxes online free The denominator of the fraction is the total number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in connection with the project. File taxes online free Geographical Basis Compensation you receive as an employee in the form of the following fringe benefits is sourced on a geographical basis. File taxes online free Housing. File taxes online free Education. File taxes online free Local transportation. File taxes online free Tax reimbursement. File taxes online free Hazardous or hardship duty pay as defined in Regulations section 1. File taxes online free 861-4(b)(2)(ii)(D)(5). File taxes online free Moving expense reimbursement. File taxes online free The amount of fringe benefits must be reasonable and you must substantiate them by adequate records or by sufficient evidence. File taxes online free Principal place of work. File taxes online free   The above fringe benefits, except for tax reimbursement and hazardous or hardship duty pay, are sourced based on your principal place of work. File taxes online free Your principal place of work is usually the place where you spend most of your working time. File taxes online free This could be your office, plant, store, shop, or other location. File taxes online free If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. File taxes online free   If you have more than one job at any time, your main job location depends on the facts in each case. File taxes online free The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. File taxes online free Housing. File taxes online free   The source of a housing fringe benefit is determined based on the location of your principal place of work. File taxes online free A housing fringe benefit includes payments to you or on your behalf (and your family's if your family resides with you) only for the following. File taxes online free Rent. File taxes online free Utilities (except telephone charges). File taxes online free Real and personal property insurance. File taxes online free Occupancy taxes not deductible under section 164 or 216(a). File taxes online free Nonrefundable fees for securing a leasehold. File taxes online free Rental of furniture and accessories. File taxes online free Household repairs. File taxes online free Residential parking. File taxes online free Fair rental value of housing provided in kind by your employer. File taxes online free   A housing fringe benefit does not include: Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation), The cost of buying property, including principal payments on a mortgage, The cost of domestic labor (maids, gardeners, etc. File taxes online free ), Pay television subscriptions, Improvements and other expenses that increase the value or appreciably prolong the life of property, Purchased furniture or accessories, Depreciation or amortization of property or improvements, The value of meals or lodging that you exclude from gross income, or The value of meals or lodging that you deduct as moving expenses. File taxes online free Education. File taxes online free   The source of an education fringe benefit for the education expenses of your dependents is determined based on the location of your principal place of work. File taxes online free An education fringe benefit includes payments only for the following expenses for education at an elementary or secondary school. File taxes online free Tuition, fees, academic tutoring, special needs services for a special needs student, books, supplies, and other equipment. File taxes online free Room and board and uniforms that are required or provided by the school in connection with enrollment or attendance. File taxes online free Local transportation. File taxes online free   The source of a local transportation fringe benefit is determined based on the location of your principal place of work. File taxes online free Your local transportation fringe benefit is the amount that you receive as compensation for local transportation for you or your spouse or dependents at the location of your principal place of work. File taxes online free The amount treated as a local transportation fringe benefit is limited to actual expenses incurred for local transportation and the fair rental value of any employer-provided vehicle used predominantly by you, your spouse, or your dependents for local transportation. File taxes online free Actual expenses do not include the cost (including interest) of any vehicle purchased by you or on your behalf. File taxes online free Tax reimbursement. File taxes online free   The source of a tax reimbursement fringe benefit is determined based on the location of the jurisdiction that imposed the tax for which you are reimbursed. File taxes online free Moving expense reimbursement. File taxes online free   The source of a moving expense reimbursement is generally based on the location of your new principal place of work. File taxes online free However, the source is determined based on the location of your former principal place of work if you provide sufficient evidence that such determination of source is more appropriate under the facts and circumstances of your case. File taxes online free Sufficient evidence generally requires an agreement between you and your employer, or a written statement of company policy, which is reduced to writing before the move and which is entered into or established to induce you or other employees to move to another country. File taxes online free The written statement or agreement must state that your employer will reimburse you for moving expenses that you incur to return to your former principal place of work regardless of whether you continue to work for your employer after returning to that location. File taxes online free It may contain certain conditions upon which the right to reimbursement is determined as long as those conditions set forth standards that are definitely ascertainable and can only be fulfilled prior to, or through completion of, your return move to your former principal place of work. File taxes online free Alternative Basis If you are an employee, you can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your compensation than the time or geographical basis. File taxes online free If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your compensation. File taxes online free Also, if your total compensation from all sources is $250,000 or more, check “Yes” to both questions on line K on page 5 of Form 1040NR, and attach a written statement to your tax return that sets forth all of the following. File taxes online free Your name and social security number (written across the top of the statement). File taxes online free The specific compensation income, or the specific fringe benefit, for which you are using the alternative basis. File taxes online free For each item in (2), the alternative basis of allocation of source used. File taxes online free For each item in (2), a computation showing how the alternative allocation was computed. File taxes online free A comparison of the dollar amount of the U. File taxes online free S. File taxes online free compensation and foreign compensation sourced under both the alternative basis and the time or geographical basis discussed earlier. File taxes online free Transportation Income Transportation income is income from the use of a vessel or aircraft or for the performance of services directly related to the use of any vessel or aircraft. File taxes online free This is true whether the vessel or aircraft is owned, hired, or leased. File taxes online free The term “vessel or aircraft” includes any container used in connection with a vessel or aircraft. File taxes online free All income from transportation that begins and ends in the United States is treated as derived from sources in the United States. File taxes online free If the transportation begins or ends in the United States, 50% of the transportation income is treated as derived from sources in the United States. File taxes online free For transportation income from personal services, 50% of the income is U. File taxes online free S. File taxes online free source income if the transportation is between the United States and a U. File taxes online free S. File taxes online free possession. File taxes online free For nonresident aliens, this only applies to income derived from, or in connection with, an aircraft. File taxes online free For information on how U. File taxes online free S. File taxes online free source transportation income is taxed, see chapter 4. File taxes online free Scholarships, Grants, Prizes, and Awards Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. File taxes online free However, see Activities to be performed outside the United States , later. File taxes online free For example, payments for research or study in the United States made by the United States, a noncorporate U. File taxes online free S. File taxes online free resident, or a domestic corporation, are from U. File taxes online free S. File taxes online free sources. File taxes online free Similar payments from a foreign government or foreign corporation are foreign source payments even though the funds may be disbursed through a U. File taxes online free S. File taxes online free agent. File taxes online free Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources. File taxes online free Activities to be performed outside the United States. File taxes online free   Scholarships, fellowship grants, targeted grants, and achievement awards received by nonresident aliens for activities performed, or to be performed, outside the United States are not U. File taxes online free S. File taxes online free source income. File taxes online free    These rules do not apply to amounts paid as salary or other compensation for services. File taxes online free See Personal Services, earlier, for the source rules that apply. File taxes online free Pensions and Annuities If you receive a pension from a domestic trust for services performed both in and outside the United States, part of the pension payment is from U. File taxes online free S. File taxes online free sources. File taxes online free That part is the amount attributable to earnings of the pension plan and the employer contributions made for services performed in the United States. File taxes online free This applies whether the distribution is made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded). File taxes online free If you performed services as an employee of the United States, you may receive a distribution from the U. File taxes online free S. File taxes online free Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan. File taxes online free Your U. File taxes online free S. File taxes online free source income is the otherwise taxable amount of the distribution that is attributable to your total U. File taxes online free S. File taxes online free Government basic pay other than tax-exempt pay for services performed outside the United States. File taxes online free Rents or Royalties Your U. File taxes online free S. File taxes online free source income includes rent and royalty income received during the tax year from property located in the United States or from any interest in that property. File taxes online free U. File taxes online free S. File taxes online free source income also includes rents or royalties for the use of, or for the privilege of using, in the United States, intangible property such as patents, copyrights, secret processes and formulas, goodwill, trademarks, franchises, and similar property. File taxes online free Real Property Real property is land and buildings and generally anything built on, growing on, or attached to land. File taxes online free Gross income from sources in the United States includes gains, profits, and income from the sale or other disposition of real property located in the United States. File taxes online free Natural resources. File taxes online free   The income from the sale of products of any farm, mine, oil or gas well, other natural deposit, or timber located in the United States and sold in a foreign country, or located in a foreign country and sold in the United States, is partly from sources in the United States. File taxes online free For information on determining that part, see section 1. File taxes online free 863-1(b) of the regulations. File taxes online free Table 2-1. File taxes online free Summary of Source Rules for Income of Nonresident Aliens Item of income Factor determining source Salaries, wages, other compensation Where services performed Business income:   Personal services Where services performed Sale of inventory—purchased Where sold Sale of inventory—produced Allocation Interest Residence of payer Dividends Whether a U. File taxes online free S. File taxes online free or foreign corporation* Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. File taxes online free Where property is used Sale of real property Location of property Sale of personal property Seller's tax home (but see Personal Property , later, for exceptions) Pension distributions attributable to contributions Where services were performed that earned the pension Investment earnings on pension contributions Location of pension trust Sale of natural resources Allocation based on fair market value of product at export terminal. File taxes online free For more information, see section 1. File taxes online free 863-1(b) of the regulations. File taxes online free *Exceptions include: a) Dividends paid by a U. File taxes online free S. File taxes online free corporation are foreign source if the corporation elects the  American Samoa economic development credit. File taxes online free  b) Part of a dividend paid by a foreign corporation is U. File taxes online free S. File taxes online free source if at least 25% of the  corporation's gross income is effectively connected with a U. File taxes online free S. File taxes online free trade or business for the  3 tax years before the year in which the dividends are declared. File taxes online free Personal Property Personal property is property, such as machinery, equipment, or furniture, that is not real property. File taxes online free Gain or loss from the sale or exchange of personal property generally has its source in the United States if you have a tax home in the United States. File taxes online free If you do not have a tax home in the United States, the gain or loss generally is considered to be from sources outside the United States. File taxes online free Tax home. File taxes online free   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. File taxes online free Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. File taxes online free If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. File taxes online free If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. File taxes online free Inventory property. File taxes online free   Inventory property is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. File taxes online free Income from the sale of inventory that you purchased is sourced where the property is sold. File taxes online free Generally, this is where title to the property passes to the buyer. File taxes online free For example, income from the sale of inventory in the United States is U. File taxes online free S. File taxes online free source income, whether you purchased it in the United States or in a foreign country. File taxes online free   Income from the sale of inventory property that you produced in the United States and sold outside the United States (or vice versa) is partly from sources in the United States and partly from sources outside the United States. File taxes online free For information on making this allocation, see section 1. File taxes online free 863-3 of the regulations. File taxes online free   These rules apply even if your tax home is not in the United States. File taxes online free Depreciable property. File taxes online free   To determine the source of any gain from the sale of depreciable personal property, you must first figure the part of the gain that is not more than the total depreciation adjustments on the property. File taxes online free You allocate this part of the gain to sources in the United States based on the ratio of U. File taxes online free S. File taxes online free depreciation adjustments to total depreciation adjustments. File taxes online free The rest of this part of the gain is considered to be from sources outside the United States. File taxes online free   For this purpose, “U. File taxes online free S. File taxes online free depreciation adjustments” are the depreciation adjustments to the basis of the property that are allowable in figuring taxable income from U. File taxes online free S. File taxes online free sources. File taxes online free However, if the property is used predominantly in the United States during a tax year, all depreciation deductions allowable for that year are treated as U. File taxes online free S. File taxes online free depreciation adjustments. File taxes online free But there are some exceptions for certain transportation, communications, and other property used internationally. File taxes online free   Gain from the sale of depreciable property that is more than the total depreciation adjustments on the property is sourced as if the property were inventory property, as discussed above. File taxes online free   A loss is sourced in the same way as the depreciation deductions were sourced. File taxes online free However, if the property was used predominantly in the United States, the entire loss reduces U. File taxes online free S. File taxes online free source income. File taxes online free   The basis of property usually means the cost (money plus the fair market value of other property or services) of property you acquire. File taxes online free Depreciation is an amount deducted to recover the cost or other basis of a trade or business asset. File taxes online free The amount you can deduct depends on the property's cost, when you began using the property, how long it will take to recover your cost, and which depreciation method you use. File taxes online free A depreciation deduction is any deduction for depreciation or amortization or any other allowable deduction that treats a capital expenditure as a deductible expense. File taxes online free Intangible property. File taxes online free   Intangible property includes patents, copyrights, secret processes or formulas, goodwill, trademarks, trade names, or other like property. File taxes online free The gain from the sale of amortizable or depreciable intangible property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the original deductions were sourced. File taxes online free This is the same as the source rule for gain from the sale of depreciable property. File taxes online free See Depreciable property , earlier, for details on how to apply this rule. File taxes online free   Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is used if the income from the sale is contingent on the productivity, use, or disposition of that property. File taxes online free If the income is not contingent on the productivity, use, or disposition of the property, the income is sourced according to your tax home as discussed earlier. File taxes online free If payments for goodwill do not depend on its productivity, use, or disposition, their source is the country in which the goodwill was generated. File taxes online free Sales through offices or fixed places of business. File taxes online free   Despite any of the earlier rules, if you do not have a tax home in the United States, but you maintain an office or other fixed place of business in the United States, treat the income from any sale of personal property (including inventory property) that is attributable to that office or place of business as U. File taxes online free S. File taxes online free source income. File taxes online free However, this rule does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your office or other fixed place of business outside the United States materially participated in the sale. File taxes online free   If you have a tax home in the United States but maintain an office or other fixed place of business outside the United States, income from sales of personal property, other than inventory, depreciable property, or intangibles, that is attributable to that foreign office or place of business may be treated as U. File taxes online free S. File taxes online free source income. File taxes online free The income is treated as U. File taxes online free S. File taxes online free source income if an income tax of less than 10% of the income from the sale is paid to a foreign country. File taxes online free This rule also applies to losses if the foreign country would have imposed an income tax of less than 10% had the sale resulted in a gain. File taxes online free Community Income If you are married and you or your spouse is subject to the community property laws of a foreign country, a U. File taxes online free S. File taxes online free state, or a U. File taxes online free S. File taxes online free possession, you generally must follow those laws to determine the income of yourself and your spouse for U. File taxes online free S. File taxes online free tax purposes. File taxes online free But you must disregard certain community property laws if: Both you and your spouse are nonresident aliens, or One of you is a nonresident alien and the other is a U. File taxes online free S. File taxes online free citizen or resident and you do not both choose to be treated as U. File taxes online free S. File taxes online free residents as explained in chapter 1. File taxes online free In these cases, you and your spouse must report community income as explained later. File taxes online free Earned income. File taxes online free   Earned income of a spouse, other than trade or business income and a partner's distributive share of partnership income, is treated as the income of the spouse whose services produced the income. File taxes online free That spouse must report all of it on his or her separate return. File taxes online free Trade or business income. File taxes online free   Trade or business income, other than a partner's distributive share of partnership income, is treated as the income of the spouse carrying on the trade or business. File taxes online free That spouse must report all of it on his or her separate return. File taxes online free Partnership income (or loss). File taxes online free   A partner's distributive share of partnership income (or loss) is treated as the income (or loss) of the partner. File taxes online free The partner must report all of it on his or her separate return. File taxes online free Separate property income. File taxes online free   Income derived from the separate property of one spouse (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that spouse. File taxes online free That spouse must report all of it on his or her separate return. File taxes online free Use the appropriate community property law to determine what is separate property. File taxes online free Other community income. File taxes online free   All other community income is treated as provided by the applicable community property laws. File taxes online free Prev  Up  Next   Home   More Online Publications
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File taxes online free 1. File taxes online free   Travel Table of Contents Traveling Away From HomeTax Home Tax Home Different From Family Home Temporary Assignment or Job What Travel Expenses Are Deductible?Employee. File taxes online free Business associate. File taxes online free Bona fide business purpose. File taxes online free Meals Travel in the United States Travel Outside the United States Luxury Water Travel Conventions If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses. File taxes online free This chapter discusses: Traveling away from home, Temporary assignment or job, and What travel expenses are deductible. File taxes online free It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses. File taxes online free Travel expenses defined. File taxes online free   For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. File taxes online free   An ordinary expense is one that is common and accepted in your trade or business. File taxes online free A necessary expense is one that is helpful and appropriate for your business. File taxes online free An expense does not have to be required to be considered necessary. File taxes online free   You will find examples of deductible travel expenses in Table 1-1 , later. File taxes online free Traveling Away From Home You are traveling away from home if: Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and You need to sleep or rest to meet the demands of your work while away from home. File taxes online free This rest requirement is not satisfied by merely napping in your car. File taxes online free You do not have to be away from your tax home for a whole day or from dusk to dawn as long as your relief from duty is long enough to get necessary sleep or rest. File taxes online free Example 1. File taxes online free You are a railroad conductor. File taxes online free You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. File taxes online free During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. File taxes online free You are considered to be away from home. File taxes online free Example 2. File taxes online free You are a truck driver. File taxes online free You leave your terminal and return to it later the same day. File taxes online free You get an hour off at your turnaround point to eat. File taxes online free Because you are not off to get necessary sleep and the brief time off is not an adequate rest period, you are not traveling away from home. File taxes online free Members of the Armed Forces. File taxes online free   If you are a member of the U. File taxes online free S. File taxes online free Armed Forces on a permanent duty assignment overseas, you are not traveling away from home. File taxes online free You cannot deduct your expenses for meals and lodging. File taxes online free You cannot deduct these expenses even if you have to maintain a home in the United States for your family members who are not allowed to accompany you overseas. File taxes online free If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Publication 521, Moving Expenses. File taxes online free   A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes. File taxes online free Tax Home To determine whether you are traveling away from home, you must first determine the location of your tax home. File taxes online free Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. File taxes online free It includes the entire city or general area in which your business or work is located. File taxes online free If you have more than one regular place of business, your tax home is your main place of business. File taxes online free See Main place of business or work , later. File taxes online free If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. File taxes online free See No main place of business or work , later. File taxes online free If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. File taxes online free As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home. File taxes online free Main place of business or work. File taxes online free   If you have more than one place of work, consider the following when determining which one is your main place of business or work. File taxes online free The total time you ordinarily spend in each place. File taxes online free The level of your business activity in each place. File taxes online free Whether your income from each place is significant or insignificant. File taxes online free Example. File taxes online free You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. File taxes online free You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. File taxes online free Cincinnati is your main place of work because you spend most of your time there and earn most of your income there. File taxes online free No main place of business or work. File taxes online free   You may have a tax home even if you do not have a regular or main place of work. File taxes online free Your tax home may be the home where you regularly live. File taxes online free Factors used to determine tax home. File taxes online free   If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is. File taxes online free You perform part of your business in the area of your main home and use that home for lodging while doing business in the area. File taxes online free You have living expenses at your main home that you duplicate because your business requires you to be away from that home. File taxes online free You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. File taxes online free   If you satisfy all three factors, your tax home is the home where you regularly live. File taxes online free If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. File taxes online free If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses. File taxes online free Example 1. File taxes online free You are single and live in Boston in an apartment you rent. File taxes online free You have worked for your employer in Boston for a number of years. File taxes online free Your employer enrolls you in a 12-month executive training program. File taxes online free You do not expect to return to work in Boston after you complete your training. File taxes online free During your training, you do not do any work in Boston. File taxes online free Instead, you receive classroom and on-the-job training throughout the United States. File taxes online free You keep your apartment in Boston and return to it frequently. File taxes online free You use your apartment to conduct your personal business. File taxes online free You also keep up your community contacts in Boston. File taxes online free When you complete your training, you are transferred to Los Angeles. File taxes online free You do not satisfy factor (1) because you did not work in Boston. File taxes online free You satisfy factor (2) because you had duplicate living expenses. File taxes online free You also satisfy factor (3) because you did not abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. File taxes online free Therefore, you have a tax home in Boston. File taxes online free Example 2. File taxes online free You are an outside salesperson with a sales territory covering several states. File taxes online free Your employer's main office is in Newark, but you do not conduct any business there. File taxes online free Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. File taxes online free You have a room in your married sister's house in Dayton. File taxes online free You stay there for one or two weekends a year, but you do no work in the area. File taxes online free You do not pay your sister for the use of the room. File taxes online free You do not satisfy any of the three factors listed earlier. File taxes online free You are an itinerant and have no tax home. File taxes online free Tax Home Different From Family Home If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. File taxes online free You also cannot deduct the cost of meals and lodging while at your tax home. File taxes online free See Example 1 , later. File taxes online free If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. File taxes online free See Example 2 , later. File taxes online free Example 1. File taxes online free You are a truck driver and you and your family live in Tucson. File taxes online free You are employed by a trucking firm that has its terminal in Phoenix. File taxes online free At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. File taxes online free You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. File taxes online free This is because Phoenix is your tax home. File taxes online free Example 2. File taxes online free Your family home is in Pittsburgh, where you work 12 weeks a year. File taxes online free The rest of the year you work for the same employer in Baltimore. File taxes online free In Baltimore, you eat in restaurants and sleep in a rooming house. File taxes online free Your salary is the same whether you are in Pittsburgh or Baltimore. File taxes online free Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. File taxes online free You cannot deduct any expenses you have for meals and lodging there. File taxes online free However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. File taxes online free You can deduct the cost of your round trip between Baltimore and Pittsburgh. File taxes online free You can also deduct your part of your family's living expenses for meals and lodging while you are living and working in Pittsburgh. File taxes online free Temporary Assignment or Job You may regularly work at your tax home and also work at another location. File taxes online free It may not be practical to return to your tax home from this other location at the end of each work day. File taxes online free Temporary assignment vs. File taxes online free indefinite assignment. File taxes online free   If your assignment or job away from your main place of work is temporary, your tax home does not change. File taxes online free You are considered to be away from home for the whole period you are away from your main place of work. File taxes online free You can deduct your travel expenses if they otherwise qualify for deduction. File taxes online free Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less. File taxes online free    However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you cannot deduct your travel expenses while there. File taxes online free An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year. File taxes online free   If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called travel allowances and you account to your employer for them. File taxes online free You may be able to deduct the cost of relocating to your new tax home as a moving expense. File taxes online free See Publication 521 for more information. File taxes online free Exception for federal crime investigations or prosecutions. File taxes online free   If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-year rule. File taxes online free This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility. File taxes online free   For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling: For the federal government, In a temporary duty status, and To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime. File taxes online free Determining temporary or indefinite. File taxes online free   You must determine whether your assignment is temporary or indefinite when you start work. File taxes online free If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. File taxes online free An assignment or job that is initially temporary may become indefinite due to changed circumstances. File taxes online free A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment. File taxes online free   The following examples illustrate whether an assignment or job is temporary or indefinite. File taxes online free Example 1. File taxes online free You are a construction worker. File taxes online free You live and regularly work in Los Angeles. File taxes online free You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. File taxes online free Your tax home is Los Angeles. File taxes online free Because of a shortage of work, you took a job on a construction project in Fresno. File taxes online free Your job was scheduled to end in 8 months. File taxes online free The job actually lasted 10 months. File taxes online free You realistically expected the job in Fresno to last 8 months. File taxes online free The job actually did last less than 1 year. File taxes online free The job is temporary and your tax home is still in Los Angeles. File taxes online free Example 2. File taxes online free The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. File taxes online free The job actually was completed in 10 months. File taxes online free Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. File taxes online free You cannot deduct any travel expenses you had in Fresno because Fresno became your tax home. File taxes online free Example 3. File taxes online free The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. File taxes online free After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months). File taxes online free Initially, you realistically expected the job in Fresno to last for only 9 months. File taxes online free However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. File taxes online free You can only deduct your travel expenses for the first 8 months. File taxes online free You cannot deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite. File taxes online free Going home on days off. File taxes online free   If you go back to your tax home from a temporary assignment on your days off, you are not considered away from home while you are in your hometown. File taxes online free You cannot deduct the cost of your meals and lodging there. File taxes online free However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. File taxes online free You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work. File taxes online free   If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. File taxes online free In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work. File taxes online free Probationary work period. File taxes online free   If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. File taxes online free You cannot deduct any of your expenses for meals and lodging during the probationary period. File taxes online free What Travel Expenses Are Deductible? Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible. File taxes online free You can deduct ordinary and necessary expenses you have when you travel away from home on business. File taxes online free The type of expense you can deduct depends on the facts and your circumstances. File taxes online free Table 1-1 summarizes travel expenses you may be able to deduct. File taxes online free You may have other deductible travel expenses that are not covered there, depending on the facts and your circumstances. File taxes online free When you travel away from home on business, you should keep records of all the expenses you have and any advances you receive from your employer. File taxes online free You can use a log, diary, notebook, or any other written record to keep track of your expenses. File taxes online free The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5). File taxes online free Separating costs. File taxes online free   If you have one expense that includes the costs of meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of meals and entertainment and the cost of other services. File taxes online free You must have a reasonable basis for making this allocation. File taxes online free For example, you must allocate your expenses if a hotel includes one or more meals in its room charge. File taxes online free Travel expenses for another individual. File taxes online free    If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. File taxes online free Employee. File taxes online free   You can deduct the travel expenses of someone who goes with you if that person: Is your employee, Has a bona fide business purpose for the travel, and Would otherwise be allowed to deduct the travel expenses. File taxes online free Business associate. File taxes online free   If a business associate travels with you and meets the conditions in (2) and (3), earlier, you can deduct the travel expenses you have for that person. File taxes online free A business associate is someone with whom you could reasonably expect to actively conduct business. File taxes online free A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. File taxes online free Bona fide business purpose. File taxes online free   A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. File taxes online free Incidental services, such as typing notes or assisting in entertaining customers, are not enough to make the expenses deductible. File taxes online free Table 1-1. File taxes online free Travel Expenses You Can Deduct   This chart summarizes expenses you can deduct when you travel away from home for business purposes. File taxes online free IF you have expenses for. File taxes online free . File taxes online free . File taxes online free THEN you can deduct the cost of. File taxes online free . File taxes online free . File taxes online free transportation travel by airplane, train, bus, or car between your home and your business destination. File taxes online free If you were provided with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. File taxes online free If you travel by ship, see Luxury Water Travel and Cruise Ships (under Conventions) for additional rules and limits. File taxes online free taxi, commuter bus, and airport limousine fares for these and other types of transportation that take you between: The airport or station and your hotel, and The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location. File taxes online free baggage and shipping sending baggage and sample or display material between your regular and temporary work locations. File taxes online free car operating and maintaining your car when traveling away from home on business. File taxes online free You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking. File taxes online free If you rent a car while away from home on business, you can deduct only the business-use portion of the expenses. File taxes online free lodging and meals your lodging and meals if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. File taxes online free Meals include amounts spent for food, beverages, taxes, and related tips. File taxes online free See Meals for additional rules and limits. File taxes online free cleaning dry cleaning and laundry. File taxes online free telephone business calls while on your business trip. File taxes online free This includes business communication by fax machine or other communication devices. File taxes online free tips tips you pay for any expenses in this chart. File taxes online free other other similar ordinary and necessary expenses related to your business travel. File taxes online free These expenses might include transportation to or from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer. File taxes online free Example. File taxes online free Jerry drives to Chicago on business and takes his wife, Linda, with him. File taxes online free Linda is not Jerry's employee. File taxes online free Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. File taxes online free The performance of these services does not establish that her presence on the trip is necessary to the conduct of Jerry's business. File taxes online free Her expenses are not deductible. File taxes online free Jerry pays $199 a day for a double room. File taxes online free A single room costs $149 a day. File taxes online free He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. File taxes online free If he uses public transportation, he can deduct only his fare. File taxes online free Meals You can deduct the cost of meals in either of the following situations. File taxes online free It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. File taxes online free The meal is business-related entertainment. File taxes online free Business-related entertainment is discussed in chapter 2 . File taxes online free The following discussion deals only with meals that are not business-related entertainment. File taxes online free Lavish or extravagant. File taxes online free   You cannot deduct expenses for meals that are lavish or extravagant. File taxes online free An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. File taxes online free Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. File taxes online free 50% limit on meals. File taxes online free   You can figure your meals expense using either of the following methods. File taxes online free Actual cost. File taxes online free The standard meal allowance. File taxes online free Both of these methods are explained below. File taxes online free But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals. File taxes online free   If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. File taxes online free If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. File taxes online free Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans. File taxes online free Actual Cost You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. File taxes online free If you use this method, you must keep records of your actual cost. File taxes online free Standard Meal Allowance Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. File taxes online free It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. File taxes online free The set amount varies depending on where and when you travel. File taxes online free In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . File taxes online free If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. File taxes online free See the recordkeeping rules for travel in chapter 5 . File taxes online free Incidental expenses. File taxes online free   The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. File taxes online free   Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings. File taxes online free Incidental-expenses-only method. File taxes online free   You can use an optional method (instead of actual cost) for deducting incidental expenses only. File taxes online free The amount of the deduction is $5 a day. File taxes online free You can use this method only if you did not pay or incur any meal expenses. File taxes online free You cannot use this method on any day that you use the standard meal allowance. File taxes online free This method is subject to the proration rules for partial days. File taxes online free See Travel for days you depart and return , later in this chapter. File taxes online free Note. File taxes online free The incidental-expenses-only method is not subject to the 50% limit discussed below. File taxes online free Federal employees should refer to the Federal Travel Regulations at www. File taxes online free gsa. File taxes online free gov. File taxes online free Find the “Most Requested Links” on the upper left and click on “Regulations: FAR, FMR, FTR” for Federal Travel Regulation (FTR) for changes affecting claims for reimbursement. File taxes online free 50% limit may apply. File taxes online free   If you use the standard meal allowance method for meal expenses and you are not reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. File taxes online free If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. File taxes online free The 50% limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6. File taxes online free There is no optional standard lodging amount similar to the standard meal allowance. File taxes online free Your allowable lodging expense deduction is your actual cost. File taxes online free Who can use the standard meal allowance. File taxes online free   You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses. File taxes online free Use of the standard meal allowance for other travel. File taxes online free   You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. File taxes online free You can also use it to figure your meal expenses when you travel for qualifying educational purposes. File taxes online free You cannot use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes. File taxes online free Amount of standard meal allowance. File taxes online free   The standard meal allowance is the federal M&IE rate. File taxes online free For travel in 2013, the rate for most small localities in the United States is $46 a day. File taxes online free    Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances. File taxes online free    You can find this information (organized by state) on the Internet at www. File taxes online free gsa. File taxes online free gov/perdiem. File taxes online free Enter a zip code or select a city and state for the per diem rates for the current fiscal year. File taxes online free Per diem rates for prior fiscal years are available by using the drop down menu under “Search by State. File taxes online free ”   Per diem rates are listed by the Federal government's fiscal year which runs from October 1 to September 30. File taxes online free You can choose to use the rates from the 2013 fiscal year per diem tables or the rates from the 2014 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. File taxes online free   If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. File taxes online free If you work in the transportation industry, however, see Special rate for transportation workers , later. File taxes online free Standard meal allowance for areas outside the continental United States. File taxes online free   The standard meal allowance rates above do not apply to travel in Alaska, Hawaii, or any other location outside the continental United States. File taxes online free The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U. File taxes online free S. File taxes online free Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. File taxes online free The Department of State establishes per diem rates for all other foreign areas. File taxes online free    You can access per diem rates for non-foreign areas outside the continental United States at: www. File taxes online free defensetravel. File taxes online free dod. File taxes online free mil/site/perdiemCalc. File taxes online free cfm. File taxes online free You can access all other foreign per diem rates at: www. File taxes online free state. File taxes online free gov/travel/. File taxes online free Click on “Travel Per Diem Allowances for Foreign Areas,” under “Foreign Per Diem Rates” to obtain the latest foreign per diem rates. File taxes online free Special rate for transportation workers. File taxes online free   You can use a special standard meal allowance if you work in the transportation industry. File taxes online free You are in the transportation industry if your work: Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates. File taxes online free If this applies to you, you can claim a standard meal allowance of $59 a day ($65 for travel outside the continental United States). File taxes online free   Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. File taxes online free If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. File taxes online free Travel for days you depart and return. File taxes online free   For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). File taxes online free You can do so by one of two methods. File taxes online free Method 1: You can claim 3/4 of the standard meal allowance. File taxes online free Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice. File taxes online free Example. File taxes online free Jen is employed in New Orleans as a convention planner. File taxes online free In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. File taxes online free She left her home in New Orleans at 10 a. File taxes online free m. File taxes online free on Wednesday and arrived in Washington, DC, at 5:30 p. File taxes online free m. File taxes online free After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p. File taxes online free m. File taxes online free Jen's employer gave her a flat amount to cover her expenses and included it with her wages. File taxes online free Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. File taxes online free Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. File taxes online free For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days. File taxes online free Travel in the United States The following discussion applies to travel in the United States. File taxes online free For this purpose, the United States includes the 50 states and the District of Columbia. File taxes online free The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. File taxes online free See Part of Trip Outside the United States , later. File taxes online free Trip Primarily for Business You can deduct all of your travel expenses if your trip was entirely business related. File taxes online free If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. File taxes online free These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination. File taxes online free Example. File taxes online free You work in Atlanta and take a business trip to New Orleans in May. File taxes online free Your business travel totals 850 miles round trip. File taxes online free On your way, you stop in Mobile to visit your parents. File taxes online free You spend $2,120 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. File taxes online free If you had not stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,820. File taxes online free You can deduct $1,820 for your trip, including the cost of round-trip transportation to and from New Orleans. File taxes online free The deduction for your meals is subject to the 50% limit on meals mentioned earlier. File taxes online free Trip Primarily for Personal Reasons If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. File taxes online free However, you can deduct any expenses you have while at your destination that are directly related to your business. File taxes online free A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. File taxes online free The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip. File taxes online free Part of Trip Outside the United States If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. File taxes online free For the part of your trip that is inside the United States, use the rules for travel in the United States. File taxes online free Travel outside the United States does not include travel from one point in the United States to another point in the United States. File taxes online free The following discussion can help you determine whether your trip was entirely within the United States. File taxes online free Public transportation. File taxes online free   If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. File taxes online free Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States . File taxes online free Example. File taxes online free You fly from New York to Puerto Rico with a scheduled stop in Miami. File taxes online free You return to New York nonstop. File taxes online free The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. File taxes online free Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States. File taxes online free Private car. File taxes online free   Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States. File taxes online free Example. File taxes online free You travel by car from Denver to Mexico City and return. File taxes online free Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. File taxes online free The rules under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border. File taxes online free Travel Outside the United States If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. File taxes online free For this purpose, the United States includes the 50 states and the District of Columbia. File taxes online free How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related. File taxes online free Travel Entirely for Business or Considered Entirely for Business You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business. File taxes online free Travel entirely for business. File taxes online free   If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses. File taxes online free Travel considered entirely for business. File taxes online free   Even if you did not spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions. File taxes online free Exception 1 - No substantial control. File taxes online free   Your trip is considered entirely for business if you did not have substantial control over arranging the trip. File taxes online free The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. File taxes online free   You do not have substantial control over your trip if you: Are an employee who was reimbursed or paid a travel expense allowance, and Are not related to your employer, or Are not a managing executive. File taxes online free    “Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances . File taxes online free   A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel. File taxes online free   A self-employed person generally has substantial control over arranging business trips. File taxes online free Exception 2 - Outside United States no more than a week. File taxes online free   Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. File taxes online free One week means 7 consecutive days. File taxes online free In counting the days, do not count the day you leave the United States, but do count the day you return to the United States. File taxes online free Example. File taxes online free You traveled to Brussels primarily for business. File taxes online free You left Denver on Tuesday and flew to New York. File taxes online free On Wednesday, you flew from New York to Brussels, arriving the next morning. File taxes online free On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. File taxes online free You flew back to New York, arriving Wednesday afternoon. File taxes online free On Thursday, you flew back to Denver. File taxes online free Although you were away from your home in Denver for more than a week, you were not outside the United States for more than a week. File taxes online free This is because the day you depart does not count as a day outside the United States. File taxes online free You can deduct your cost of the round-trip flight between Denver and Brussels. File taxes online free You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. File taxes online free However, you cannot deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities. File taxes online free Exception 3 - Less than 25% of time on personal activities. File taxes online free   Your trip is considered entirely for business if: You were outside the United States for more than a week, and You spent less than 25% of the total time you were outside the United States on nonbusiness activities. File taxes online free For this purpose, count both the day your trip began and the day it ended. File taxes online free Example. File taxes online free You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. File taxes online free You then flew back to Seattle. File taxes online free You spent 1 day flying in each direction. File taxes online free Because only 5/21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you had not engaged in any nonbusiness activity. File taxes online free The amount you can deduct is the cost of the round-trip plane fare and 16 days of meals (subject to the 50% limit), lodging, and other related expenses. File taxes online free Exception 4 - Vacation not a major consideration. File taxes online free   Your trip is considered entirely for business if you can establish that a personal vacation was not a major consideration, even if you have substantial control over arranging the trip. File taxes online free Travel Primarily for Business If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. File taxes online free You can only deduct the business portion of your cost of getting to and from your destination. File taxes online free You must allocate the costs between your business and other activities to determine your deductible amount. File taxes online free See Travel allocation rules , later. File taxes online free You do not have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business . File taxes online free In those cases, you can deduct the total cost of getting to and from your destination. File taxes online free Travel allocation rules. File taxes online free   If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. File taxes online free The days you depart from and return to the United States are both counted as days outside the United States. File taxes online free   To figure the deductible amount of your round-trip travel expenses, use the following fraction. File taxes online free The numerator (top number) is the total number of business days outside the United States. File taxes online free The denominator (bottom number) is the total number of business and nonbusiness days of travel. File taxes online free Counting business days. File taxes online free   Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays. File taxes online free Transportation day. File taxes online free   Count as a business day any day you spend traveling to or from a business destination. File taxes online free However, if because of a nonbusiness activity you do not travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. File taxes online free Extra days for side trips or nonbusiness activities cannot be counted as business days. File taxes online free Presence required. File taxes online free   Count as a business day any day your presence is required at a particular place for a specific business purpose. File taxes online free Count it as a business day even if you spend most of the day on nonbusiness activities. File taxes online free Day spent on business. File taxes online free   If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. File taxes online free Also, count as a business day any day you are prevented from working because of circumstances beyond your control. File taxes online free Certain weekends and holidays. File taxes online free   Count weekends, holidays, and other necessary standby days as business days if they fall between business days. File taxes online free But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, do not count them as business days. File taxes online free Example 1. File taxes online free Your tax home is New York City. File taxes online free You travel to Quebec, where you have a business appointment on Friday. File taxes online free You have another appointment on the following Monday. File taxes online free Because your presence was required on both Friday and Monday, they are business days. File taxes online free Because the weekend is between business days, Saturday and Sunday are counted as business days. File taxes online free This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity. File taxes online free Example 2. File taxes online free If, in Example 1, you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days. File taxes online free Nonbusiness activity on the way to or from your business destination. File taxes online free   If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity. File taxes online free   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends. File taxes online free   You determine the nonbusiness portion of that expense by multiplying it by a fraction. File taxes online free The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. File taxes online free Example. File taxes online free You live in New York. File taxes online free On May 4 you flew to Paris to attend a business conference that began on May 5. File taxes online free The conference ended at noon on May 14. File taxes online free That evening you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. File taxes online free The primary purpose for the trip was to attend the conference. File taxes online free If you had not stopped in Dublin, you would have arrived home the evening of May 14. File taxes online free You do not meet any of the exceptions that would allow you to consider your travel entirely for business. File taxes online free May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days. File taxes online free You can deduct the cost of your meals (subject to the 50% limit), lodging, and other business-related travel expenses while in Paris. File taxes online free You cannot deduct your expenses while in Dublin. File taxes online free You also cannot deduct 7/18 of what it would have cost you to travel round-trip between New York and Dublin. File taxes online free You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. File taxes online free Round-trip airfare from New York to Dublin would have been $1,250. File taxes online free You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip fare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850). File taxes online free Your deductible air travel expense is $1,364 ($1,850 − $486). File taxes online free Nonbusiness activity at, near, or beyond business destination. File taxes online free   If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity. File taxes online free   The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends. File taxes online free   You determine the nonbusiness portion of that expense by multiplying it by a fraction. File taxes online free The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States and the denominator (bottom number) is the total number of days you spend outside the United States. File taxes online free   None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible. File taxes online free Example. File taxes online free Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation. File taxes online free You cannot deduct any part of the cost of your trip from Paris to Venice and return to Paris. File taxes online free In addition, you cannot deduct 7/18 of the airfare and other expenses from New York to Paris and back to New York. File taxes online free You can deduct 11/18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your meals (subject to the 50% limit), lodging, and any other business expenses you had in Paris. File taxes online free (Assume these expenses total $4,939. File taxes online free ) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 (11/18 × $1,750), plus the full $4,939 for the expenses you had in Paris. File taxes online free Other methods. File taxes online free   You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States. File taxes online free Travel Primarily for Personal Reasons If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. File taxes online free However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business. File taxes online free Example. File taxes online free The university from which you graduated has a continuing education program for members of its alumni association. File taxes online free This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. File taxes online free However, none of the conferences are directed toward specific occupations or professions. File taxes online free It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests. File taxes online free Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. File taxes online free These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. File taxes online free Professional conference directors schedule and conduct the sessions. File taxes online free Participants can choose those sessions they wish to attend. File taxes online free You can participate in this program since you are a member of the alumni association. File taxes online free You and your family take one of the trips. File taxes online free You spend about 2 hours at each of the planned sessions. File taxes online free The rest of the time you go touring and sightseeing with your family. File taxes online free The trip lasts less than 1 week. File taxes online free Your travel expenses for the trip are not deductible since the trip was primarily a vacation. File taxes online free However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. File taxes online free These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses. File taxes online free Luxury Water Travel If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. File taxes online free The limit is twice the highest federal per diem rate allowable at the time of your travel. File taxes online free (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home, but in the United States, for business purposes. File taxes online free ) Daily limit on luxury water travel. File taxes online free   The highest federal per diem rate allowed and the daily limit for luxury water travel in 2013 is shown in the following table. File taxes online free   2013 Dates Highest Federal Per Diem Daily Limit on Luxury Water Travel   Jan. File taxes online free 1 – Mar. File taxes online free 31 $367 $734   Apr. File taxes online free 1 – June 30 312 624   July 1 – Aug. File taxes online free 31 310 620   Sept. File taxes online free 1 – Sept. File taxes online free 30 366 732   Oct. File taxes online free 1 – Dec. File taxes online free 31 374 748 Example. File taxes online free Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. File taxes online free Her expense for the 6-day cruise was $5,200. File taxes online free Caroline's deduction for the cruise cannot exceed $3,744 (6 days × $624 daily limit). File taxes online free Meals and entertainment. File taxes online free   If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on meals and entertainment before you apply the daily limit. File taxes online free For a discussion of the 50% Limit , see chapter 2. File taxes online free Example. File taxes online free In the previous example, Caroline's luxury water travel had a total cost of $5,200. File taxes online free Of that amount, $3,700 was separately stated as meals and entertainment. File taxes online free Caroline, who is self-employed, is not reimbursed for any of her travel expenses. File taxes online free Caroline figures her deductible travel expenses as follows. File taxes online free Meals and entertainment $3,700   50% limit × . File taxes online free 50   Allowable meals &     entertainment $1,850   Other travel expenses + 1,800   Allowable cost before the daily limit $3,650 Daily limit for May 2013 $624   Times number of days × 6   Maximum luxury water travel     deduction $3,744 Amount of allowable deduction $3,650 Caroline's deduction for her cruise is limited to $3,650, even though the limit on luxury water travel is slightly higher. File taxes online free Not separately stated. File taxes online free   If your meal or entertainment charges are not separately stated or are not clearly identifiable, you do not have to allocate any portion of the total charge to meals or entertainment. File taxes online free Exceptions The daily limit on luxury water travel (discussed earlier) does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. File taxes online free See Cruise Ships under Conventions. File taxes online free Conventions You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. File taxes online free You cannot deduct the travel expenses for your family. File taxes online free If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you cannot deduct the expenses. File taxes online free Your appointment or election as a delegate does not, in itself, determine whether you can deduct travel expenses. File taxes online free You can deduct your travel expenses only if your attendance is connected to your own trade or business. File taxes online free Convention agenda. File taxes online free   The convention agenda or program generally shows the purpose of the convention. File taxes online free You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. File taxes online free The agenda does not have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes. File taxes online free Conventions Held Outside the North American Area You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless: The meeting is directly related to your trade or business, and It is reasonable to hold the meeting outside the North American area. File taxes online free See Reasonableness test , later. File taxes online free If the meeting meets these requirements, you also must satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States . File taxes online free North American area. File taxes online free   The North American area includes the following locations. File taxes online free American Samoa Johnston Island Antigua and Barbuda Kingman Reef Aruba Marshall Islands Bahamas Mexico Baker Island Micronesia Barbados Midway Islands Bermuda Netherlands Antilles Canada Northern Mariana Costa Rica Islands Dominica Palau Dominican Republic Palmyra Atoll Grenada Panama Guam Puerto Rico Guyana Trinidad and Tobago Honduras USA Howland Island U. File taxes online free S. File taxes online free Virgin Islands Jamaica Wake Island Jarvis Island   The North American area also includes U. File taxes online free S. File taxes online free islands, cays, and reefs that are possessions of the United States and not part of the fifty states or the District of Columbia. File taxes online free Reasonableness test. File taxes online free   The following factors are taken into account to determine if it was reasonable to hold the meeting outside the North American area. File taxes online free The purpose of the meeting and the activities taking place at the meeting. File taxes online free The purposes and activities of the sponsoring organizations or groups. File taxes online free The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held. File taxes online free Other relevant factors you may present. File taxes online free Cruise Ships You can deduct up to $2,000 per year of your expenses of attending conventions, seminars, or similar meetings held on cruise ships. File taxes online free All ships that sail are considered cruise ships. File taxes online free You can deduct these expenses only if all of the following requirements are met. File taxes online free The convention, seminar, or meeting is directly related to your trade or business. File taxes online free The cruise ship is a vessel registered in the United States. File taxes online free All of the cruise ship's ports of call are in the United States or in possessions of the United States. File taxes online free You attach to your return a written statement signed by you that includes information about: The total days of the trip (not including the days of transportation to and from the cruise ship port), The number of hours each day that you devoted to scheduled business activities, and A program of the scheduled business activities of the meeting. File taxes online free You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes: A schedule of the business activities of each day of the meeting, and The number of hours you attended the scheduled business activities. File taxes online free Prev  Up  Next   Home   More Online Publications