EntertainmentTrending

Publication 463 (2019), Travel, Gift, and Car Expenses

  • Publication 463 – Introductory Material
    • Future Developments
    • What’s New
    • Reminder
    • Introduction
      • Who should use this publication.
      • Users of employer-provided vehicles.
      • Who doesn’t need to use this publication.
      • Volunteers.
      • Comments and suggestions.
      • Ordering forms and publications.
      • Tax questions.
    • Useful Items – You may want to see:
  • Travel
    • Travel expenses defined.
    • Traveling Away From Home
      • Members of the Armed Forces.
      • Tax Home
        • Main place of business or work.
        • No main place of business or work.
        • Factors used to determine tax home.
      • Tax Home Different From Family Home
    • Temporary Assignment or Job
      • Temporary assignment vs. indefinite assignment.
      • Exception for federal crime investigations or prosecutions.
      • Determining temporary or indefinite.
      • Going home on days off.
      • Probationary work period.
    • What Travel Expenses Are Deductible?
      • Separating costs.
      • Travel expenses for another individual.
      • Employee.
      • Business associate.
      • Bona fide business purpose.
      • Meals
        • Lavish or extravagant.
        • 50% limit on meals.
        • Actual Cost
        • Standard Meal Allowance
          • Incidental expenses.
          • Incidental-expenses-only method.
          • 50% limit may apply.
          • Who can use the standard meal allowance.
          • Use of the standard meal allowance for other travel.
          • Amount of standard meal allowance.
          • Federal government’s fiscal year.
          • Standard meal allowance for areas outside the continental United States.
          • Special rate for transportation workers.
          • Travel for days you depart and return.
      • Travel in the United States
        • Trip Primarily for Business
        • Trip Primarily for Personal Reasons
        • Part of Trip Outside the United States
          • Public transportation.
          • Private car.
      • Travel Outside the United States
        • Travel Entirely for Business or Considered Entirely for Business
          • Travel entirely for business.
          • Travel considered entirely for business.
          • Exception 1—No substantial control.
          • Exception 2—Outside United States no more than a week.
          • Exception 3—Less than 25% of time on personal activities.
          • Exception 4—Vacation not a major consideration.
        • Travel Primarily for Business
          • Travel allocation rules.
          • Counting business days.
          • Transportation day.
          • Presence required.
          • Day spent on business.
          • Certain weekends and holidays.
          • Nonbusiness activity on the way to or from your business destination.
          • Nonbusiness activity at, near, or beyond business destination.
          • Other methods.
        • Travel Primarily for Personal Reasons
      • Luxury Water Travel
        • Daily limit on luxury water travel.
        • Meals and entertainment.
        • Not separately stated.
        • Exceptions
      • Conventions
        • Convention agenda.
        • Conventions Held Outside the North American Area
          • North American area.
          • Reasonableness test.
        • Cruise Ships
  • Meals and Entertainment
    • Entertainment
      • Entertainment—Defined
        • Deduction may depend on your type of business.
        • Separating costs.
        • Exceptions to the Rules
        • Examples of Nondeductible Entertainment
          • Entertainment events.
          • Entertainment facilities.
          • Club dues and membership fees.
          • Gift or entertainment.
    • Meals
      • Other rules for meals and entertainment expenses.
      • Examples.
      • Example 1.
      • Example 2.
      • Example 3.
    • 50% Limit
      • Costs to include or exclude.
      • Application of 50% limit.
      • When to apply the 50% limit.
      • Taking turns paying for meals.
      • Exception to the 50% Limit for Meals
        • 1—Expenses treated as compensation.
        • 2—Employee’s reimbursed expenses.
        • 3—Self-employed reimbursed expenses.
        • 4—Recreational expenses for employees.
        • 5—Advertising expenses.
        • 6—Sale of meals.
        • Individuals subject to “hours of service” limits.
  • Gifts
    • $25 limit.
    • Incidental costs.
    • Exceptions.
    • Gift or entertainment.
  • Transportation
    • Illustration of transportation expenses.
    • Temporary work location.
    • No regular place of work.
    • Two places of work.
    • Armed Forces reservists.
    • Commuting expenses.
    • Parking fees.
    • Advertising display on car.
    • Car pools.
    • Hauling tools or instruments.
    • Union members’ trips from a union hall.
    • Office in the home.
    • Examples of deductible transportation.
    • Car Expenses
      • Standard Mileage Rate
        • Choosing the standard mileage rate.
        • Standard mileage rate not allowed.
        • Five or more cars.
        • Interest.
        • Personal property taxes.
        • Parking fees and tolls.
        • Sale, trade-in, or other disposition.
      • Actual Car Expenses
        • Business and personal use.
        • Employer-provided vehicle.
        • Interest on car loans.
        • Taxes paid on your car.
        • Sales taxes.
        • Fines and collateral.
        • Casualty and theft losses.
        • Depreciation and section 179 deductions.
        • Car defined.
        • Qualified nonpersonal use vehicles.
        • More information.
        • Section 179 Deduction
          • More than 50% business use requirement.
          • Limits.
          • Limit on the amount of the section 179 deduction.
          • Limit for sport utility and certain other vehicles.
          • Limit on total section 179 deduction, special depreciation allowance, and depreciation deduction.
          • Cost of car.
          • Basis of car for depreciation.
          • When to elect.
          • How to elect.
          • Revoking an election.
          • Recapture of section 179 deduction.
          • Dispositions.
        • Special Depreciation Allowance
          • Combined depreciation.
          • Qualified car.
          • Election not to claim the special depreciation allowance.
        • Depreciation Deduction
          • Basis.
          • Placed in service.
          • Car placed in service and disposed of in the same year.
          • Methods of depreciation.
          • Exception.
          • More-than-50%-use test.
          • Qualified business use.
          • Use of your car by another person.
          • Business use changes.
          • Use for more than one purpose.
          • Change from personal to business use.
          • Limits.
          • Unadjusted basis.
          • Improvements.
          • Car trade-in.
          • Effect of trade-in on basis.
          • Traded car used only for business.
          • Traded car used partly in business.
          • Modified Accelerated Cost Recovery System (MACRS).
          • Recovery period.
          • Depreciation methods.
          • MACRS depreciation chart.
          • Depreciation in future years.
          • Disposition of car during recovery period.
          • How to use the 2019 chart.
        • Depreciation Limits
          • Trucks and vans.
          • Car used less than full year.
          • Reduction for personal use.
          • Section 179 deduction.
          • Deductions in years after the recovery period.
          • Unrecovered basis.
          • The recovery period.
          • How to treat unrecovered basis.
          • Table 4-1. 2019 MACRS Depreciation Chart      (Use To Figure Depreciation for 2019.)
        • Car Used 50% or Less for Business
          • Qualified business use 50% or less in year placed in service.
          • Qualified business use 50% or less in a later year.
          • Excess depreciation.
      • Leasing a Car
        • Deductible payments.
        • Inclusion Amounts
          • Fair market value.
          • Figuring the inclusion amount.
          • Leased car changed from business to personal use.
          • Leased car changed from personal to business use.
          • Reporting inclusion amounts.
    • Disposition of a Car
      • Casualty or theft.
      • Trade-in.
      • Depreciation adjustment when you used the standard mileage rate.
      • Depreciation deduction for the year of disposition.
  • Recordkeeping
    • How To Prove Expenses
      • What Are Adequate Records?
        • Documentary evidence.
        • Exception.
        • Adequate evidence.
        • Canceled check.
        • Duplicate information.
        • Timely kept records.
        • Proving business purpose.
        • Confidential information.
      • What if I Have Incomplete Records?
        • Sampling.
        • Exceptional circumstances.
        • Destroyed records.
      • Separating and Combining Expenses
        • Separating expenses.
        • Combining items.
        • Car expenses.
        • Gift expenses.
        • Allocating total cost.
        • If your return is examined.
      • How Long To Keep Records and Receipts
        • Reimbursed for expenses.
      • Examples of Records
  • How To Report
    • Where To Report
      • Self-employed.
      • Both self-employed and an employee.
      • Employees.
      • Gifts.
      • Statutory employees.
      • Reimbursement for personal expenses.
      • Income-producing property.
      • Vehicle Provided by Your Employer
        • Value reported on Form W-2.
        • Full value included in your income.
        • Less than full value included in your income.
    • Reimbursements
      • No reimbursement.
      • Reimbursement, allowance, or advance.
      • Employers.
      • Accountable Plans
        • Reasonable period of time.
        • Employee meets accountable plan rules.
        • Accountable plan rules not met.
        • Failure to return excess reimbursements.
        • Reimbursement of nondeductible expenses.
        • Adequate Accounting
        • Per Diem and Car Allowances
          • Related to employer.
          • The federal rate.
          • Regular federal per diem rate.
          • The standard meal allowance.
          • High-low rate.
          • Prorating the standard meal allowance on partial days of travel.
          • The standard mileage rate.
          • Fixed and variable rate (FAVR).
          • Reporting your expenses with a per diem or car allowance.
          • Allowance less than or equal to the federal rate.
          • Allowance more than the federal rate.
        • Returning Excess Reimbursements
          • Travel advance.
          • Unproven amounts.
          • Per diem allowance more than federal rate.
      • Nonaccountable Plans
        • Reporting your expenses under a nonaccountable plan.
      • Rules for Independent Contractors and Clients
        • Accounting to Your Client
          • Adequate accounting.
          • How to report.
        • Required Records for Clients or Customers
          • Contractor adequately accounts.
          • Contractor doesn’t adequately account.
    • How To Use Per Diem Rate Tables
      • The Two Substantiation Methods
        • High-low method.
        • Regular federal per diem rate method.
      • Transition Rules
        • High-low method.
        • Federal per diem rate method.
    • Completing Form 2106
      • Car expenses.
      • Information on use of cars.
      • Standard mileage rate.
      • Actual expenses.
      • Car rentals.
      • Transportation expenses.
      • Employee business expenses other than nonentertainment meals.
      • Non-entertainment-related meal expenses.
      • “Hours of service” limits.
      • Reimbursements.
      • Allocating your reimbursement.
      • After you complete the form.
      • Limits on employee business expenses.
      • 1. Limit on meals and entertainment.
      • 2. Limit on total itemized deductions.
      • Special Rules
        • Armed Forces Reservists Traveling More Than 100 Miles From Home
          • Member of a reserve component.
          • How to report.
        • Officials Paid on a Fee Basis
        • Expenses of Certain Performing Artists
          • Special rules for married persons.
          • Where to report.
        • Impairment-Related Work Expenses of Disabled Employees
  • How To Get Tax Help
    • Preparing and filing your tax return.
    • Employers can register to use Business Services Online.
    • Tax reform.
    • IRS social media.
    • Watching IRS videos.
    • Getting tax information in other languages.
    • Getting tax forms and publications.
    • Access your online account (individual taxpayers only).
    • Using direct deposit.
    • Getting a transcript or copy of a return.
    • Using online tools to help prepare your return.
    • Resolving tax-related identity theft issues.
    • Checking on the status of your refund.
    • Making a tax payment.
    • What if I can’t pay now?
    • Checking the status of an amended return.
    • Understanding an IRS notice or letter.
    • Contacting your local IRS office.
    • The Taxpayer Advocate Service (TAS) Is Here To Help You
      • What Is TAS?
      • How Can You Learn About Your Taxpayer Rights?
      • What Can TAS Do For You?
      • How Can You Reach TAS?
      • How Else Does TAS Help Taxpayers?
      • TAS for Tax Professionals
    • Low Income Taxpayer Clinics (LITCs)
  • Publication 463 – Additional Material
    • Appendices
      • Appendix B-1. Inclusion Amounts for Trucks and Vans First Leased in 2015
      • Appendix B-2. Inclusion Amounts for Trucks and Vans First Leased in 2016
      • Appendix B-3. Inclusion Amounts for Trucks and Vans First Leased in 2017
      • Appendix C-1. Inclusion Amounts for Passenger Automobiles First Leased in 2018
      • Appendix C-2. Inclusion Amounts for Passenger Automobiles First Leased in 2019

Future Developments

For the latest information about developments related to Pub. 463, such as legislation enacted after it was published, go to IRS.gov/Pub463.

 

What’s New

Standard mileage rate. For 2019, the standard mileage rate for the cost of operating your car for business use is 58 cents (0.58) per mile. Car expenses and use of the standard mileage rate are explained in chapter 4.

Depreciation limits on cars, trucks, and vans. For 2019, the first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2019 is $14,900. The first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired after September 27, 2017, and placed in service during 2019 is $18,100. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2019, the amount is $10,100. Depreciation limits are explained in chapter 4.

Section 179 deduction. The maximum amount you can elect to deduct for most section 179 property (including cars, trucks, and vans) you placed in service in tax years beginning in 2019 is $1,020,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,550,000. Section 179 deduction is explained in chapter 4.

Special depreciation allowance. For 2019, the first year special (“bonus”) depreciation allowance on qualified property (including cars, trucks, and vans) is 100% for qualified property acquired and placed in service after September 27, 2017, and placed in service before January 2023, and is reduced 20% each year after for property placed in service before January 2027. Special depreciation allowance is explained in chapter 4.

 

Reminder

Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Per diem rates. Current and prior per diem rates may be found on the U.S. General Services Administration (GSA) website at GSA.gov/Perdiem.

 

Introduction

You may be able to deduct the ordinary and necessary business-related expenses you have for:

  • Travel,

  • Non-entertainment-related meals,

  • Gifts, or

  • Transportation.

An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary.

This publication explains:

  • What expenses are deductible,

  • How to report them on your return,

  • What records you need to prove your expenses, and

  • How to treat any expense reimbursements you may receive.

 

 

Useful Items – You may want to see:

Publication

  • 535 Business Expenses

  • 946 How To Depreciate Property

Form (and Instructions)

  • Schedule A (Form 1040 or 1040-SR) Itemized Deductions

  • Schedule C (Form 1040 or 1040-SR) Profit or Loss From Business

  • Schedule F (Form 1040 or 1040-SR) Profit or Loss From Farming

  • 2106 Employee Business Expenses

  • 4562 Depreciation and Amortization

See How To Get Tax Help for information about getting these publications and forms.

1. Travel

If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses.

This chapter discusses:

  • Traveling away from home,

  • Temporary assignment or job, and

  • What travel expenses are deductible.

It also discusses the standard meal allowance, rules for travel inside and outside the United States, luxury water travel, and deductible convention expenses.

 

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.

This rest requirement isn’t satisfied by merely napping in your car. You don’t 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.

Example 1.

You are a railroad conductor. You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. 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. You are considered to be away from home.

Example 2.

You are a truck driver. You leave your terminal and return to it later the same day. You get an hour off at your turnaround point to eat. Because you aren’t off to get necessary sleep and the brief time off isn’t an adequate rest period, you aren’t traveling away from home.

 

Tax Home

To determine whether you are traveling away from home, you must first determine the location of your tax home.

Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

If you have more than one regular place of business, your tax home is your main place of business. See Main place of business or work , later.

If you don’t 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. See No main place of business or work , later.

If you don’t 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. As an itinerant, you can’t claim a travel expense deduction because you are never considered to be traveling away from home.

Example 1.

You are single and live in Boston in an apartment you rent. You have worked for your employer in Boston for a number of years. Your employer enrolls you in a 12-month executive training program. You don’t expect to return to work in Boston after you complete your training.

During your training, you don’t do any work in Boston. Instead, you receive classroom and on-the-job training throughout the United States. You keep your apartment in Boston and return to it frequently. You use your apartment to conduct your personal business. You also keep up your community contacts in Boston. When you complete your training, you are transferred to Los Angeles.

You don’t satisfy factor (1) because you didn’t work in Boston. You satisfy factor (2) because you had duplicate living expenses. You also satisfy factor (3) because you didn’t abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Therefore, you have a tax home in Boston.

Example 2.

You are an outside salesperson with a sales territory covering several states. Your employer’s main office is in Newark, but you don’t conduct any business there. Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. You have a room in your married sister’s house in Dayton. You stay there for one or two weekends a year, but you do no work in the area. You don’t pay your sister for the use of the room.

You don’t satisfy any of the three factors listed earlier. You are an itinerant and have no tax home.

 

Tax Home Different From Family Home

If you (and your family) don’t live at your tax home (defined earlier), you can’t deduct the cost of traveling between your tax home and your family home. You also can’t deduct the cost of meals and lodging while at your tax home. See Example 1 , later.

If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. See Example 2 , later.

Example 1.

You are a truck driver and you and your family live in Tucson. You are employed by a trucking firm that has its terminal in Phoenix. At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. You can’t deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. This is because Phoenix is your tax home.

Example 2.

Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same employer in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is the same whether you are in Pittsburgh or Baltimore.

Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. You can’t deduct any expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family’s living expenses for non-entertainment-related meals and lodging while you are living and working in Pittsburgh.

 

Temporary Assignment or Job

You may regularly work at your tax home and also work at another location. It may not be practical to return to your tax home from this other location at the end of each workday.

This is an Image: caution.gif

 

For tax years beginning after December 2017 and before January 2026, the deduction of certain moving expenses is suspended for nonmilitary taxpayers. In order to deduct certain moving expenses, you must be an active member of the military and moving due to a permanent change of duty station.

 

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.

You can deduct ordinary and necessary expenses you have when you travel away from home on business. The type of expense you can deduct depends on the facts and your circumstances.

Table 1-1 summarizes travel expenses you may be able to deduct. You may have other deductible travel expenses that aren’t covered there, depending on the facts and your circumstances.

This is an Image: files.gif

 

When you travel away from home on business, you must keep records of all the expenses you have and any advances you receive from your employer. You can use a log, diary, notebook, or any other written record to keep track of your expenses. The types of expenses you need to record, along with supporting documentation, are described in Table 5-1 (see chapter 5).

Example.

Jerry drives to Chicago on business and takes his wife, Linda, with him. Linda isn’t Jerry’s employee. Linda occasionally types notes, performs similar services, and accompanies Jerry to luncheons and dinners. The performance of these services doesn’t establish that her presence on the trip is necessary to the conduct of Jerry’s business. Her expenses aren’t deductible.

Jerry pays $199 a day for a double room. A single room costs $149 a day. He can deduct the total cost of driving his car to and from Chicago, but only $149 a day for his hotel room. If both Jerry and Linda use public transportation, Jerry can deduct only his fare.

 

Meals

You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Meal and entertainment expenses are discussed in chapter 2.

 

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. If you use this method, you must keep records of your actual cost.

 

Standard Meal Allowance

Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. 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. The set amount varies depending on where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. See the recordkeeping rules for travel in chapter 5.

Note.

The incidental-expenses-only method isn’t subject to the 50% limit discussed below.

This is an Image: caution.gif

 

Federal employees should refer to the Federal Travel Regulations at GSA.gov for changes affecting claims for reimbursement.

This is an Image: caution.gif

 

There is no optional standard lodging amount similar to the standard meal allowance. Your allowable lodging expense deduction is your actual cost.

Example.

Jen is employed in New Orleans as a convention planner. In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. She left her home in New Orleans at 10 a.m. on Wednesday and arrived in Washington, DC, at 5:30 p.m. After spending 2 nights there, she flew back to New Orleans on Friday and arrived back home at 8 p.m. Jen’s employer gave her a flat amount to cover her expenses and included it with her wages.

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.

Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. 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.

 

Travel in the United States

The following discussion applies to travel in the United States. For this purpose, the United States includes the 50 states and the District of Columbia. 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. See Part of Trip Outside the United States , later.

 

Trip Primarily for Business

You can deduct all of your travel expenses if your trip was entirely business related. 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. These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination.

Example.

You work in Atlanta and take a business trip to New Orleans in May. Your business travel totals 900 miles round trip. On your way home, you stop in Mobile to visit your parents. You spend $2,165 for the 9 days you are away from home for travel, non-entertainment-related meals, lodging, and other travel expenses. If you hadn’t stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,633.50. You can deduct $1,633.50 for your trip, including the cost of round-trip transportation to and from New Orleans. The deduction for your non-entertainment-related meals is subject to the 50% limit on meals mentioned earlier.

 

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. However, you can deduct any expenses you have while at your destination that are directly related to your business.

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. The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, won’t change what is really a vacation into a business trip.

 

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. For the part of your trip that is inside the United States, use the rules for travel in the United States. Travel outside the United States doesn’t include travel from one point in the United States to another point in the United States. The following discussion can help you determine whether your trip was entirely within the United States.

 

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. For this purpose, the United States includes the 50 states and the District of Columbia.

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.

 

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.

 

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 can’t deduct all of your travel expenses. You can only deduct the business portion of your cost of getting to and from your destination. You must allocate the costs between your business and other activities to determine your deductible amount. See Travel allocation rules , later.

This is an Image: taxtip.gif

 

You don’t have to allocate your travel expenses if you meet one of the four exceptions listed earlier under Travel considered entirely for business. In those cases, you can deduct the total cost of getting to and from your destination.

 

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. 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.

Example.

The university from which you graduated has a continuing education program for members of its alumni association. 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. However, none of the conferences are directed toward specific occupations or professions. It is up to each participant to seek out specialists and organizational settings appropriate to his or her occupational interests.

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. These sessions are composed of a variety of activities including workshops, mini-lectures, role playing, skill development, and exercises. Professional conference directors schedule and conduct the sessions. Participants can choose those sessions they wish to attend.

You can participate in this program because you are a member of the alumni association. You and your family take one of the trips. You spend about 2 hours at each of the planned sessions. The rest of the time you go touring and sightseeing with your family. The trip lasts less than 1 week.

Your travel expenses for the trip aren’t deductible since the trip was primarily a vacation. 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. These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses.

 

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. The limit is twice the highest federal per diem rate allowable at the time of your travel. (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home within the United States for business purposes.)

Example.

Caroline, a travel agent, traveled by ocean liner from New York to London, England, on business in May. Her expense for the 6-day cruise was $6,200. Caroline’s deduction for the cruise can’t exceed $4,152 (6 days × $692 daily limit).

 

Entertainment$1,000 
0% limit× 0.00 
Allowable entertainment $0.00
Non-entertainment-related meals$3,700 
50% limit× 0.50 
Allowable non-entertainment meals & entertainment$1,850 
Other travel expenses+ 1,500 
Allowable cost before the daily limit$3,350
Daily limit for May 2019$ 692 
Times number of days× 6 
Maximum luxury water travel  
deduction$4,152
Amount of allowable deduction$3,350

Caroline’s deduction for her cruise is limited to $3,350, even though the limit on luxury water travel is higher.

 

Exceptions

The daily limit on luxury water travel (discussed earlier) doesn’t apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. See Cruise Ships , later, under Conventions.

 

Conventions

You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. You can’t deduct the travel expenses for your family.

If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you can’t deduct the expenses.

This is an Image: caution.gif

 

Your appointment or election as a delegate doesn’t, in itself, determine whether you can deduct travel expenses. You can deduct your travel expenses only if your attendance is connected to your own trade or business.

 

Conventions Held Outside the North American Area

You can’t deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless:

  • The meeting is directly related to the active conduct of your trade or business, and

  • It is as reasonable to hold the meeting outside the North American area as within the North American area. See Reasonableness test , later.

If the meeting meets these requirements, you must also satisfy the rules for deducting expenses for business trips in general, discussed earlier under Travel Outside the United States .

 

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. All ships that sail are considered cruise ships.

You can deduct these expenses only if all of the following requirements are met.

  1. The convention, seminar, or meeting is directly related to the active conduct of your trade or business.

  2. The cruise ship is a vessel registered in the United States.

  3. All of the cruise ship’s ports of call are in the United States or in possessions of the United States.

  4. You attach to your return a written statement signed by you that includes information about:

    1. The total days of the trip (not including the days of transportation to and from the cruise ship port),

    2. The number of hours each day that you devoted to scheduled business activities, and

    3. A program of the scheduled business activities of the meeting.

  5. You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes:

    1. A schedule of the business activities of each day of the meeting, and

    2. The number of hours you attended the scheduled business activities.

 

2. Meals and Entertainment

You can no longer take a deduction for any expense related to activities generally considered entertainment, amusement, or recreation. You can continue to deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren’t considered lavish or extravagant.

This is an Image: taxtip.gif

 

If food or beverages are provided during or at an entertainment event, and the food and beverages were purchased separately from the entertainment or the cost of the food and beverages was stated separately from the cost of the entertainment on one or more bills, invoices, or receipts, you may be able to deduct the separately stated costs as a meal expense. For more information, see Notice 2018-76, available at IRS.gov/irb/ 2018-42_IRB#NOT-2018-76.

 

Entertainment

 

Entertainment—Defined

Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Entertainment may also include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families.

 

Exceptions to the Rules

In general, entertainment expenses are nondeductible. However, there are a few exceptions to the general rule including:

  • Entertainment treated as compensation on your originally filed tax returns (and treated as wages to your employees);

  • Recreational expenses for employees such as a holiday party or a summer picnic;

  • Expenses related to attending business meetings or conventions of certain exempt organizations such as business leagues, chambers of commerce, professional associations, etc.; and

  • Entertainment sold to customers. For example, if you run a nightclub, your expenses for the entertainment you furnish to your customers, such as a floor show, aren’t subject to the nondeductible rules.

 

 

Examples of Nondeductible Entertainment

 

Meals

As discussed above, entertainment expenses are generally nondeductible. However, you may continue to deduct 50% of the cost of business meals if you (or an employee) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.

Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

 

50% Limit

In general, you can deduct only 50% of your business-related meal expenses, unless an exception applies. (If you are subject to the Department of Transportation’s “hours of service” limits, you can deduct 80% of your business-related meal expenses. See Individuals subject to “hours of service” limits , later.)

The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.

Examples of meals might include:

  • Meals while traveling away from home (whether eating alone or with others) on business, or

  • Meal at a business convention or business league meeting.

 

 

Figure A. Does the 50% Limit Apply to Your Expenses?

There are exceptions to these rules. See Exceptions to the 50% Limit for Meals , later.

 

This is an Image: 11081l01.gif

 

Figure A. Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions

Figure A. Does the 50% Limit Apply to Your Expenses?

Figure A. Does the 50% Limit Apply to Your Expenses?

Summary: This is a flowchart used to determine if employees and self-employed persons need to put a 50% limit on their business expense deductions.

Start

This is the starting of the flowchart.

Decision (1)

Were your meal and entertainment expenses reimbursed? (Count only reimbursements your employer didn’t include in box 1 of your Form W-2. If self-employed, count only reimbursements from clients or customers that aren’t included on Form 1099-MISC, Miscellaneous Income.)

IF Yes Continue To Decision (2)
IF No Continue To Process (a)

Decision (2)

If an employee, did you adequately account to your employer under an accountable plan? If self-employed, did you provide the payer with adequate records? (See Chapter 6.)

IF Yes Continue To Decision (3)
IF No Continue To Process (a)

Decision (3)

Did your expenses exceed the reimbursement?

IF Yes Continue To Decision (4)
IF No Continue To Process (b)

Decision (4)

FOR the amount reimbursed… Continue To Process (b)
FOR the excess amount… Continue To Process (a)

Process (a)

Your meal and entertainment expenses are NOT subject to the limitations. However, since the reimbursement wasn’t treated as wages or as other taxable income, you can’t deduct the expenses.

Continue To End

Process (b)

Your nonentertainment meal expenses ARE subject to the 50% limit. Your entertainment expenses are nondeductible.

Continue To End

End

This is the ending of the flowchart.

Please click here for the text description of the image.

 

 

Exception to the 50% Limit for Meals

Your meal expense isn’t subject to the 50% limit if the expense meets one of the following exceptions.

3. Gifts

If you give gifts in the course of your trade or business, you may be able to deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.

This is an Image: caution.gif

 

If you are entitled to a reimbursement from your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies. This type of deduction is considered a miscellaneous deduction which is no longer allowable due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a).

4. Transportation

This chapter discusses expenses you can deduct for business transportation when you aren’t traveling away from home, as defined in chapter 1. These expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost of driving and maintaining your car.

Transportation expenses include the ordinary and necessary costs of all of the following.

  • Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Tax home is defined in chapter 1.

  • Visiting clients or customers.

  • Going to a business meeting away from your regular workplace.

  • Getting from your home to a temporary workplace when you have one or more regular places of work. These temporary workplaces can be either within the area of your tax home or outside that area.

Transportation expenses don’t include expenses you have while traveling away from home overnight. Those expenses are travel expenses discussed in chapter 1. However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. See Car Expenses , later.

Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. However, there may be exceptions to this general rule. You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Also, daily transportation expenses can be deducted if (1) you have one or more regular work locations away from your residence; or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance.

This is an Image: caution.gif

 

If you are entitled to a reimbursement from your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies. This type of deduction is considered a miscellaneous deduction which is no longer allowable due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a).

 

Car Expenses

If you use your car for business purposes, you may be able to deduct car expenses. You generally can use one of the two following methods to figure your deductible expenses.

  • Standard mileage rate.

  • Actual car expenses.

 

The cost of using your car as an employee, whether measured using actual expenses or the standard mileage rate, will no longer be allowed to be claimed as an unreimbursed employee travel expense as a miscellaneous itemized deduction due to the suspension of miscellaneous itemized deductions that are subject to the 2% floor under section 67(a). The suspension applies to tax years beginning after December 2017 and before January 2026. Deductions for expenses that are deductible in determining adjusted gross income are not suspended. For example, Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials are allowed to deduct unreimbursed employee travel expenses as an adjustment to total income on Schedule 1 (Form 1040 or 1040-SR), line 11.

If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. See Leasing a Car , later.

In this publication, “car” includes a van, pickup, or panel truck. For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later.

 

Standard Mileage Rate

For 2019, the standard mileage rate for the cost of operating your car for business use is 58 cents (0.58) per mile.

This is an Image: caution.gif

 

If you use the standard mileage rate for a year, you can’t deduct your actual car expenses for that year. You can’t deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. See Choosing the standard mileage rate and Standard mileage rate not allowed, later.

You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. See chapter 6 for more information on reimbursements .

 

Actual Car Expenses

If you don’t use the standard mileage rate, you may be able to deduct your actual car expenses.

This is an Image: taxtip.gif

 

If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction.

Actual car expenses include:

Depreciation
Licenses
Lease
payments
Registration
fees
GasInsuranceRepairs
OilGarage rentTires
TollsParking fees 

 

If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Continue to keep records, as explained later in chapter 5.

 

Section 179 Deduction

You can elect to recover all or part of the cost of a car that is qualifying section 179 property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. If you elect the section 179 deduction, you must reduce your depreciable basis in the car by the amount of the section 179 deduction.

This is an Image: taxtip.gif

 

There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. See Depreciation Limits, later.

You can claim the section 179 deduction only in the year you place the car in service. For this purpose, a car is placed in service when it is ready and available for a specifically assigned use in a trade or business. Even if you aren’t using the property, it is in service when it is ready and available for its specifically assigned use.

A car first used for personal purposes can’t qualify for the deduction in a later year when its use changes to business.

Example.

In 2018, you bought a new car and used it for personal purposes. In 2019, you began to use it for business. Changing its use to business use doesn’t qualify the cost of your car for a section 179 deduction in 2019. However, you can claim a depreciation deduction for the business use of the car starting in 2019. See Depreciation Deduction , later.

 

Special Depreciation Allowance

You may be able to claim the special depreciation allowance for your car, truck, or van if it is qualified property and was placed in service in 2019. The allowance for 2019 is an additional depreciation deduction for 40% of the car’s depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). This allowance is increased to 100% if the vehicle was acquired after September 27, 2017, and placed in service during 2019. The special depreciation allowance applies only for the first year the car is placed in service. Further, while it applies to a new vehicle regardless of the date in 2019 when it was placed in service, it applies to a used vehicle only if the vehicle was acquired after September 27, 2017, placed in service during 2019, and meets the used property requirements. For more information on the used property requirements, see section 168(k)(2)(E)(ii). To qualify for the allowance, more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later).

 

Depreciation Deduction

If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car.

You generally need to know the following things about the car you intend to depreciate.

  • Your basis in the car.

  • The date you place the car in service.

  • The method of depreciation and recovery period you will use.

 

This is an Image: caution.gif

 

If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. See Car Used 50% or Less for Business, later, for more information.

If you acquired the car by gift or inheritance, see Pub. 551, Basis of Assets, for information on your basis in the car.

For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Pub. 946.

 

Depreciation Limits

There are limits on the amount you can deduct for depreciation of your car, truck, or van. The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. The maximum amount you can deduct each year depends on the date you acquired the passenger automobile and the year you place the passenger automobile in service. These limits are shown in the following tables for 2019.

 

Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later

Date   4th &
Placed In1st2nd3rdLater
ServiceYearYearYearYears
2019$14,9001$16,100$9,700$5,760
201816,400216,0009,6005,760
1 $10,100 if the passenger automobile isn’t qualified property or if you elect not to claim the special depreciation allowance.
2 $10,000 if the passenger automobile isn’t qualified property or if you elect not to claim the special depreciation allowance.

 

 

Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired after September 27, 2017, and placed in service during 2018 or later

Date   4th &
Placed In1st2nd3rdLater
ServiceYearYearYearYears
2019$18,1001$16,100$9,700$5,760
201818,000216,0009,6005,760
1 $10,100 if the passenger automobile isn’t qualified property or if you elect not to claim the special depreciation allowance.
2 $10,000 if the passenger automobile isn’t qualified property or if you elect not to claim the special depreciation allowance.

The maximum amount you can deduct each year depends on the year you place the car in service. These limits are shown in the following tables for prior years.

 

Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018

Date   4th &
Placed1st2nd3rdLater
In ServiceYearYearYearYears
2012–2017$11,1601$5,100$3,050$1,875
2010–201111,06024,9002,9501,775
2008–200910,96034,8002,8501,775
20073,0604,9002,8501,775
20062,9604,8002,8501,775
20052,9604,7002,8501,675
200410,61034,8002,8501,675
5/06/2003–
12/31/2003
10,71044,9002,9501,775
1/01/2003–
5/05/2003
7,66054,9002,9501,775
1 $3,160 if the car isn’t qualified property or if you elect not to claim the special depreciation allowance.
2 $3,060 if the car isn’t qualified property or if you elect not to claim the special depreciation allowance.
3 $2,960 if the car isn’t qualified property or if you elect not to claim the special depreciation allowance.
4 $7,660 if you acquired the car before 5/06/2003. $3,060 if the car isn’t qualified property or if you elect not to claim any special depreciation allowance.
5 $3,060 if you acquired the car before 9/11/2001, the car isn’t qualified property, or you elect not to claim the special depreciation allowance.

 

How to treat unrecovered basis.

If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. For example, no deduction is allowed for a year you use your car 100% for personal purposes.

Example.

In April 2013, Bob bought and placed in service a car he used exclusively in his business. The car cost $31,500. Bob didn’t claim a section 179 deduction or the special depreciation allowance for the car. He continued to use the car 100% in his business throughout the recovery period (2013 through 2018). For those years, Bob used the MACRS Depreciation Chart (200% DB method), the Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 table and the Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later table, earlier, for the applicable tax year to figure his depreciation deductions during the recovery period. Bob’s depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table.

 

 MACRS  Deprec.
Year%AmountLimitAllowed
201320.00$6,300$11,160$6,300
201432.0010,0805,1005,100
201519.206,0483,0503,050
201611.523,6291,8751,875
201711.523,6291,8751,875
20185.761,8141,8751,814
Total$31,500 $20,014

For the correct limit, see the Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 table and the Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later table under Depreciation Limits, earlier, for the maximum amount of depreciation allowed each year.

At the end of 2018, Bob had an unrecovered basis in the car of $11,486 ($31,500 – $20,014). If Bob continued to use the car 100% for business in 2019 and later years, he can claim a depreciation deduction equal to the lesser of $1,875 or his remaining unrecovered basis.

If Bob’s business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $12,008 ($20,014 × 60% (0.60)), but he still would have to reduce his basis by $20,014 to determine his unrecovered basis.

 

Table 4-1. 2019 MACRS Depreciation Chart (Use To Figure Depreciation for 2019.)

 

Car Used 50% or Less for Business

If you use your car 50% or less for qualified business use (defined earlier under Depreciation Deduction) either in the year the car is placed in service or in a later year, special rules apply. The rules that apply in these two situations are explained in the following paragraphs. (For this purpose, “car” was defined earlier under Actual Car Expenses and includes certain trucks and vans.)

Example.

In June 2016, you purchased a car for exclusive use in your business. You met the more-than-50%-use test for the first 3 years of the recovery period (2016 through 2018) but failed to meet it in the fourth year (2019). You determine your depreciation for 2019 using 20% (from column (c) of Table 4-1). You will also have to determine and include in your gross income any excess depreciation, discussed next.

Excess depreciation.

You must include any excess depreciation in your gross income and add it to your car’s adjusted basis for the first tax year in which you don’t use the car more than 50% in qualified business use. Use Form 4797, Sales of Business Property, to figure and report the excess depreciation in your gross income.

Excess depreciation is:

  1. The amount of the depreciation deductions allowable for the car (including any section 179 deduction claimed and any special depreciation allowance claimed) for tax years in which you used the car more than 50% in qualified business use, minus

  2. The amount of the depreciation deductions that would have been allowable for those years if you hadn’t used the car more than 50% in qualified business use for the year you placed it in service. This means the amount of depreciation figured using the straight line method.

 

Example.

In September 2015, you bought a car for $20,500 and placed it in service. You didn’t claim the section 179 deduction or the special depreciation allowance. You used the car exclusively in qualified business use for 2015, 2016, 2017, and 2018. For those years, you used the appropriate MACRS Depreciation Chart to figure depreciation deductions totaling $13,185 ($3,160 for 2015, $5,100 for 2016, $3,050 for 2017, and $1,875 for 2018) under the 200% DB method.

During 2019, you used the car 30% for business and 70% for personal purposes. Since you didn’t meet the more-than-50%-use test, you must switch from the 200% DB depreciation method to the straight line depreciation method for 2019, and include in gross income for 2019 your excess depreciation determined as follows.

 

Total depreciation claimed:
(MACRS 200% DB method)
$13,185
Minus total depreciation allowable:
(Straight line method)
 
2015—10% of $20,500$2,050 
(Limit: $3,160)  
2016—20% of $20,5004,100 
(Limit: $5,100)  
2017—20% of $20,5003,050 
(Limit: $3,050)  
2018—20% of $20,5001,875-11,075
(Limit: $1,875)  
Excess depreciation $2,110
   

For the correct limit, see the Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 table and the Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later table under Depreciation Limits, earlier, for the maximum amount of depreciation allowed each year.

In 2019, using Form 4797, you figure and report the $2,110 excess depreciation you must include in your gross income. Your adjusted basis in the car is also increased by $2,110. Your 2019 depreciation is $1,230 ($20,500 (unadjusted basis) × 30% (0.30) (business-use percentage) × 20% (0.20) (from column (c) of Table 4-1 on the line for Jan. 1–Sept. 30, 2015)). However, your depreciation deduction is limited to $563 ($1,875 x 30% (0.30) business use).

 

Leasing a Car

If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. This section explains how to figure actual expenses for a leased car, truck, or van.

 

Inclusion Amounts

If you lease a car, truck, or van that you use in your business for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the vehicle. To do this, you don’t add an amount to income. Instead, you reduce your deduction for your lease payment. (This reduction has an effect similar to the limit on the depreciation deduction you would have on the vehicle if you owned it.)

The inclusion amount is a percentage of part of the fair market value of the leased vehicle multiplied by the percentage of business and investment use of the vehicle for the tax year. It is prorated for the number of days of the lease term in the tax year.

The inclusion amount applies to each tax year that you lease the vehicle if the fair market value (defined next) when the lease began was more than the amounts shown in the following tables.

For tax years beginning 2019, all vehicles are subject to a single inclusion amount threshold for passenger automobiles leased and put into service in 2019. You may have an inclusion amount for a passenger automobile if:

Passenger Automobiles (Including Trucks and Vans)

 Year Lease BeganFair Market Value 
 2018–2019$50,000 
 If the lease term began before 2018, see tables below to find out if you have an inclusion amount. 

 

For years prior to 2018, see the inclusion tables below. You may have an inclusion amount for a passenger automobile if:

Cars (Except for Trucks and Vans)

 Year Lease BeganFair Market Value 
 2013–2017$19,000 
 2010–201218,500 

 

 

Trucks and Vans

 Year Lease BeganFair Market Value 
 2014–2017$19,500 
 2010–201319,000 

 

Example.

On August 16, 2018, Will leased a car with a fair market value of $54,500 for 3 years. He used the car exclusively in his own data processing business. On November 5, 2019, Will closed his business and went to work for a company where he isn’t required to use a car for business. Using Appendix C-1, Will figured his inclusion amount for 2018 and 2019 as shown in the following table and reduced his deductions for lease payments by those amounts.

Tax yearDollar amountProrationBusiness useInclusion amount
2018$12138/365100%$5
201912309/365100%10

 

Example.

In March 2017, Janice leased a truck for 4 years for personal use. On June 1, 2019, she started working as a self-employed advertising consultant and started using the leased truck for business purposes. Her records show that her business use for June 1 through December 31 was 60%. To figure her inclusion amount for 2019, Janice obtained an appraisal from an independent car leasing company that showed the fair market value of her 2017 truck on June 1, 2019, was $53,650. Using Appendix C-2, Janice figured her inclusion amount for 2019 as shown in the following table.

Tax yearDollar amountProrationBusiness useInclusion amount
2019$13214/36560%$5

 

 

Disposition of a Car

If you dispose of your car, you may have a taxable gain or a deductible loss. The portion of any gain that is due to depreciation (including any section 179 deduction, clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), and special depreciation allowance) that you claimed on the car will be treated as ordinary income. However, you may not have to recognize a gain or loss if you dispose of the car because of a casualty or theft.

This section gives some general information about dispositions of cars. For information on how to report the disposition of your car, see Pub. 544.

Note.

Like‐kind exchanges completed after December 31, 2017, generally are limited to exchanges of real property not held primarily for sale.

Depreciation adjustment when you used the standard mileage rate.

If you used the standard mileage rate for the business use of your car, depreciation was included in that rate. The rate of depreciation that was allowed in the standard mileage rate is shown in the Rate of Depreciation Allowed in Standard Mileage Rate table, later. You must reduce your basis in your car (but not below zero) by the amount of this depreciation.

If your basis is reduced to zero (but not below zero) through the use of the standard mileage rate, and you continue to use your car for business, no adjustment (reduction) to the standard mileage rate is necessary. Use the full standard mileage rate (58 cents (0.58) per mile for 2019) for business miles driven.

This is an Image: taxtip.gif

 

These rates don’t apply for any year in which the actual expenses method was used.

 

Rate of Depreciation Allowed in Standard Mileage Rate

 Year(s)Depreciation 
  Rate per Mile 
 2019$0.26 
 2017–20180.25 
 2015–20160.24 
 20140.22 
 2012–20130.23 
 20110.22 
 20100.23 
 2008–20090.21 
 20070.19 
 2005–20060.17 
 2003–20040.16 
 2001–20020.15 
 20000.14 

 

Example.

In 2014, you bought and placed in service a car for exclusive use in your business. The car cost $25,500. From 2014 through 2019, you used the standard mileage rate to figure your car expense deduction. You drove your car 14,100 miles in 2014, 16,300 miles in 2015, 15,600 miles in 2016, 16,700 miles in 2016, 15,100 miles in 2018, and 14,900 miles in 2019. The depreciation portion of your car expense deduction is figured as follows.

YearMiles x Rate Depreciation
201414,100 × $0.22 $3,102
201516,300 × 0.24 3,912
201615,600 × 0.24 3,744
201716,700 × 0.25 4,175
201815,100 × 0.25 3,775
201914,900 × 0.26 3,874
Total depreciation $22,582

At the end of 2019, your adjusted basis in the car is $2,918 ($25,500 − $22,582).

Depreciation deduction for the year of disposition.

If you deduct actual car expenses and you dispose of your car before the end of its recovery period, you are allowed a reduced depreciation deduction for the year of disposition.

To figure the reduced depreciation deduction for a car disposed of in 2019, first determine the depreciation deduction for the full year using Table 4-1.

If you used a Date Placed in Service line for Jan. 1–Sept. 30, you can deduct one-half of the depreciation amount figured for the full year. Figure your depreciation deduction for the full year using the rules explained in this chapter and deduct 50% of that amount with your other actual car expenses.

If you used a Date Placed in Service line for Oct. 1–Dec. 31, you can deduct a percentage of the depreciation amount figured for the full year. The percentage you use is determined by the month you disposed of the car. Figure your depreciation deduction for the full year using the rules explained in this chapter and multiply the result by the percentage from the following table for the month that you disposed of the car.

MonthPercentage
Jan., Feb., March12.5%
April, May, June37.5%
July, Aug., Sept.62.5%
Oct., Nov., Dec.87.5%

 

This is an Image: caution.gif

 

Don’t use this table if you are a fiscal year filer. See Sale or Other Disposition Before the Recovery Period Ends in chapter 4 of Pub. 946.

5. Recordkeeping

If you deduct travel, gift, or transportation expenses, you must be able to prove (substantiate) certain elements of expense. This chapter discusses the records you need to keep to prove these expenses.

This is an Image: files.gif

 

If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. These plans are discussed in chapter 6 under Reimbursements .

 

How To Prove Expenses

Table 5-1 is a summary of records you need to prove each expense discussed in this publication. You must be able to prove the elements listed across the top portion of the chart. You prove them by having the information and receipts (where needed) for the expenses listed in the first column.

This is an Image: caution.gif

 

You can’t deduct amounts that you approximate or estimate.

You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You must generally prepare a written record for it to be considered adequate. This is because written evidence is more reliable than oral evidence alone. However, if you prepare a record on a computer, it is considered an adequate record.

 

What Are Adequate Records?

You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.

 

What if I Have Incomplete Records?

If you don’t have complete records to prove an element of an expense, then you must prove the element with:

  • Your own written or oral statement containing specific information about the element, and

  • Other supporting evidence that is sufficient to establish the element.

 

If the element is the description of a gift, or the cost, time, place, or date of an expense, the supporting evidence must be either direct evidence or documentary evidence. Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. Documentary evidence can be receipts, paid bills, or similar evidence.

If the element is either the business relationship of your guests or the business purpose of the amount spent, the supporting evidence can be circumstantial rather than direct. For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. Invoices of deliveries establish when you used the car for business.

 

Table 5-1. How To Prove Certain Business Expenses

 

 

Separating and Combining Expenses

This section explains when expenses must be kept separate and when expenses can be combined.

 

How Long To Keep Records and Receipts

You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date. For a more complete explanation of how long to keep records, see Pub. 583, Starting a Business and Keeping Records.

You must keep records of the business use of your car for each year of the recovery period. See More-than-50%-use test in chapter 4 under Depreciation Deduction.

 

Examples of Records

Table 5-2 and Table 5-3 are examples of worksheets that can be used for tracking business expenses.

6. How To Report

This chapter explains where and how to report the expenses discussed in this publication. It discusses reimbursements and how to treat them under accountable and nonaccountable plans. It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. The chapter ends with illustrations of how to report travel, gift, and car expenses on Forms 2106.

 

Where To Report

This section provides general information on where to report the expenses discussed in this publication.

This is an Image: caution.gif

 

If you are entitled to a reimbursement from your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies.

 

Vehicle Provided by Your Employer

If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. You can’t use the standard mileage rate.

This is an Image: caution.gif

 

Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

 

Reimbursements

This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication.

If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan.

This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. It also covers rules for independent contractors.

 

Accountable Plans

To be an accountable plan, your employer’s reimbursement or allowance arrangement must include all of the following rules.

  1. Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.

  2. You must adequately account to your employer for these expenses within a reasonable period of time.

  3. You must return any excess reimbursement or allowance within a reasonable period of time.

 

Adequate accounting and returning excess reimbursements are discussed later.

An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer.

This is an Image: taxtip.gif

 

The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. If you are an employee who receives payments under a nonaccountable plan, you can’t convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer.

 

Adequate Accounting

One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses.) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. See Per Diem and Car Allowances , later.

You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. This includes amounts you charged to your employer by credit card or other method. You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. You must pay back the amount of any reimbursement or other expense allowance for which you don’t adequately account or that is more than the amount for which you accounted.

 

Per Diem and Car Allowances

If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply.

  • Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.

  • The allowance is similar in form to and not more than the federal rate (defined later).

  • You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1) within a reasonable period of time.

  • You aren’t related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.

If the IRS finds that an employer’s travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you won’t be considered to have accounted to your employer. In this case, you must be able to prove your expenses to the IRS.

Allowance less than or equal to the federal rate.

If your allowance is less than or equal to the federal rate, the allowance won’t be included in box 1 of your Form W-2. You don’t need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.

However, if your actual expenses are more than your allowance, you can complete Form 2106. If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you don’t have to prove that amount.

This is an Image: caution.gif

 

Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

Example 1.

In April, Jeremy, a member of a reserve component of the Armed Forces, takes a 2-day business trip to Denver. The federal rate for Denver is $257 ($181 lodging + $76 M&IE) per day. As required by his employer’s accountable plan, he accounts for the time (dates), place, and business purpose of the trip. His employer reimburses him $257 a day ($514 total) for living expenses. Jeremy’s living expenses in Denver aren’t more than $257 a day.

Jeremy’s employer doesn’t include any of the reimbursement on his Form W-2 and Jeremy doesn’t deduct the expenses on his return.

Example 2.

In June, Matt, a fee-basis local government official, takes a 2-day business trip to Boston. Matt’s employer uses the high-low method to reimburse employees. Since Boston is a high-cost area, Matt is given an advance of $358 ($287 lodging + $71 M&IE) a day ($716 total) for his lodging and M&IE. Matt’s actual expenses totaled $800.

Since Matt’s $800 of expenses are more than his $716 advance, he includes the excess expenses when he itemizes his deductions. Matt completes Form 2106 (showing all of his expenses and reimbursements). He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Form 2106 .

Example 3.

Nicole, a fee-basis state government official, drives 10,000 miles in 2019 for business. Under her employer’s accountable plan, she accounts for the time (dates), place, and business purpose of each trip. Her employer pays her a mileage allowance of 40 cents (0.40) a mile.

Since Nicole’s $5,800 expense figured under the standard mileage rate (10,000 miles x 58 cents (0.58)) is more than her $4,000 reimbursement (10,000 miles × 40 cents (0.40)), she itemizes her deductions to claim the excess expense. Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,800 ($5,800 − $4,000) as an itemized deduction.

Allowance more than the federal rate.

If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate under code L in box 12 of your Form W-2. This amount isn’t taxable. However, the excess allowance will be included in box 1 of your Form W-2. You must report this part of your allowance as if it were wage income.

If your actual expenses are less than or equal to the federal rate, you don’t complete Form 2106 or claim any of your expenses on your return.

However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. You must report on Form 2106 your reimbursements up to the federal rate (as shown under code L in box 12 of your Form W-2) and all your expenses. You should be able to prove these amounts to the IRS.

This is an Image: caution.gif

 

Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

Example 1.

Laura, a performing artist, lives and works in Austin. In July, her employer sent her to Albuquerque for 4 days on business. Laura’s employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for M&IE. Laura’s actual meal expenses weren’t more than the federal rate for Albuquerque, which is $55 per day.

 

 

Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, and Car Expenses and Reimbursements

IF the type of reimbursement (or
other expense allowance)
arrangement is under:
THEN the employer reports on Form W-2:AND the employee
reports on
Form 2106:
An accountable plan with:
Actual expense reimbursement: Adequate accounting made and excess returned.No amount.No amount.
Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned.The excess amount as wages in box 1.No amount.
Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned.No amount.All expenses and reimbursements only if excess expenses are claimed. Otherwise, form is not filed.
Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned.The excess amount as wages in box 1. The amount up to the federal rate is reported only under code L in box 12 of Form W-2—it isn’t reported in box 1.No amount.
Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned.The excess amount as wages in box 1. The amount up to the federal rate is reported only under code L in box 12 of Form W-2—it isn’t reported in box 1.All expenses (and reimbursements reported under code L in box 12 of Form W-2) only if expenses in excess of the federal rate are claimed. Otherwise, form isn’t filed.
A nonaccountable plan with:
Either adequate accounting or return of excess, or both, not required by plan.The entire amount as wages in box 1.All expenses.
No reimbursement plan:The entire amount as wages in box 1.All expenses.

 

Her employer included the $40 that was more than the federal rate (($65 − $55) × 4) in box 1 of Laura’s Form W-2. Her employer shows $220 ($55 a day × 4) under code L in box 12 of her Form W-2. This amount isn’t included in Laura’s income. Laura doesn’t have to complete Form 2106; however, she must include the $40 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2).

Example 2.

Joe, a performing artist, also lives in Austin and works for the same employer as Laura. In May, the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe’s hotel bill. The employer reimbursed Joe $75 a day for his M&IE. The federal rate for San Diego is $71 a day.

Joe can prove that his actual non-entertainment-related meal expenses totaled $380. His employer’s accountable plan won’t pay more than $75 a day for travel to San Diego, so Joe doesn’t give his employer the records that prove that he actually spent $380. However, he does account for the time (dates), place, and business purpose of the trip. This is Joe’s only business trip this year.

Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). The employer includes the $16 as income on Joe’s Form W-2 in box 1. The employer also enters $284 under code L in box 12 of Joe’s Form W-2.

Joe completes Form 2106 to figure his deductible expenses. He enters the total of his actual expenses for the year ($380) on Form 2106. He also enters the reimbursements that weren’t included in his income ($284). His total deductible expense, before the 50% limit, is $96. After he figures the 50% limit on his unreimbursed non-entertainment-related meals, he will include the balance, $48, as an itemized deduction.

Example 3.

Debbie, a fee-basis state government official, drives 10,000 miles in 2019 for business. Under her employer’s accountable plan, she gets reimbursed 60 cents (0.60) a mile, which is more than the standard mileage rate. Her total reimbursement is $6,000.

Debbie’s employer must include the reimbursement amount up to the standard mileage rate, $5,800 (10,000 × 58 cents (0.58)), under code L in box 12 of her Form W-2. That amount isn’t taxable. Her employer must also include $200 ($6,000 − $5,800) in box 1 of her Form W-2. This is the reimbursement that is more than the standard mileage rate.

If Debbie’s expenses are equal to or less than the standard mileage rate, she wouldn’t complete Form 2106. If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown under code L in box 12 of her Form W-2). She would then claim the excess expenses as an itemized deduction.

 

Returning Excess Reimbursements

Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Excess reimbursement means any amount for which you didn’t adequately account within a reasonable period of time. For example, if you received a travel advance and you didn’t spend all the money on business-related expenses or you don’t have proof of all your expenses, you have an excess reimbursement.

Adequate accounting and reasonable period of time were discussed earlier in this chapter.

 

Nonaccountable Plans

A nonaccountable plan is a reimbursement or expense allowance arrangement that doesn’t meet one or more of the three rules listed earlier under Accountable Plans.

In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan.

  • Excess reimbursements you fail to return to your employer.

  • Reimbursement of nondeductible expenses related to your employer’s business. See Reimbursement of nondeductible expenses , earlier, under Accountable Plans.

An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses.

If you aren’t sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer.

 

Rules for Independent Contractors and Clients

This section provides rules for independent contractors who incur expenses on behalf of a client or customer. The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers.

You are considered an independent contractor if you are self-employed and you perform services for a customer or client.

 

Accounting to Your Client

If you received a reimbursement or an allowance for travel, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. If you don’t account to your client for these expenses, you must include any reimbursements or allowances in income. You must keep adequate records of these expenses whether or not you account to your client for these expenses.

If you don’t separately account for and seek reimbursement for meal and entertainment expenses in connection with providing services for a client, you are subject to the 50% limit on those expenses. See 50% limit in chapter 2.

 

Required Records for Clients or Customers

If you are a client or customer, you generally don’t have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. However, you must keep records if:

  • You reimburse the contractor for entertainment expenses incurred on your behalf, and

  • The contractor adequately accounts to you for these expenses.

 

 

How To Use Per Diem Rate Tables

This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year.

 

The Two Substantiation Methods

 

Transition Rules

The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally, October 1) through December 31. During this period, you generally may change to the new rates or finish out the year with the rates you had been using.

This is an Image: caution.gif

 

Per diem rates for localities listed for FY2020 may change at any time. To be sure you have the most current rate, check GSA.gov/Perdiem.

 

Completing Form 2106

For tax years beginning after 2017, the Form 2106 will be used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

This section briefly describes how employees complete Forms 2106. Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. The instructions for the forms have more information on completing them.

This is an Image: caution.gif

 

If you are self-employed, don’t file Form 2106. Report your expenses on Schedule C (Form 1040 or 1040-SR), or Schedule F (Form 1040 or 1040-SR). See the instructions for the form that you must file.

 

Special Rules

This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. For tax years beginning after 2017, they are the only taxpayers who can use Form 2106.

 

Armed Forces Reservists Traveling More Than 100 Miles From Home

If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging and M&IE) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. See Per Diem and Car Allowances , earlier, for more information.

 

Officials Paid on a Fee Basis

Certain fee-basis officials can claim their employee business expenses on Form 2106.

Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction.

If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, in the total on Schedule 1 (Form 1040 or 1040-SR), line 11.

 

Expenses of Certain Performing Artists

If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income. To qualify, you must meet all of the following requirements.

  1. During the tax year, you perform services in the performing arts as an employee for at least two employers.

  2. You receive at least $200 each from any two of these employers.

  3. Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.

  4. Your adjusted gross income isn’t more than $16,000 before deducting these business expenses.

 

 

Impairment-Related Work Expenses of Disabled Employees

If you are an employee with a physical or mental disability, your impairment-related work expenses aren’t subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. After you complete Form 2106, enter your impairment-related work expenses from Form 2106, line 10, on Schedule A (Form 1040 or 1040-SR), line 16, and identify the type and amount of this expense on the line next to line 16.

Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work.

You are disabled if you have:

  • A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed; or

  • A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.

 

You can deduct impairment-related expenses as business expenses if they are:

  • Necessary for you to do your work satisfactorily;

  • For goods and services not required or used, other than incidentally, in your personal activities; and

  • Not specifically covered under other income tax laws.

 

Example 1.

You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader’s services are only for your work. You can deduct your expenses for the reader as business expenses.

Example 2.

You are deaf. You must use a sign language interpreter during meetings while you are at work. The interpreter’s services are used only for your work. You can deduct your expenses for the interpreter as business expenses.

 

How To Get Tax Help

If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.

This is an Image: compute.gif

 

Getting answers to your tax questions. On IRS.gov, get answers to your tax questions anytime, anywhere.

  • Go to IRS.gov/Help for a variety of tools that will help you get answers to some of the most common tax questions.

  • Go to IRS.gov/ITA for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response for your records.

  • Go to IRS.gov/Forms to search for our forms, instructions, and publications. You will find details on 2019 tax changes and hundreds of interactive links to help you find answers to your questions.

  • You may also be able to access tax law information in your electronic filing software.

 

Tax reform.

Tax reform legislation affects individuals, businesses, and tax-exempt and government entities. Go to IRS.gov/TaxReform for information and updates on how this legislation affects your taxes.

Watching IRS videos.

The IRS Video portal (IRSVideos.gov) contains video and audio presentations for individuals, small businesses, and tax professionals.

Getting tax information in other languages.

For taxpayers whose native language isn’t English, we have the following resources available. Taxpayers can find information on IRS.gov in the following languages.

 

The IRS Taxpayer Assistance Centers (TACs) provide over-the-phone interpreter service in over 170 languages, and the service is available free to taxpayers.

 

The Taxpayer Advocate Service (TAS) Is Here To Help You

 

What Is TAS?

TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.

 

How Can You Learn About Your Taxpayer Rights?

The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.

 

What Can TAS Do For You?

TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:

  • Your problem is causing financial difficulty for you, your family, or your business;

  • You face (or your business is facing) an immediate threat of adverse action; or

  • You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.

 

 

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to them at IRS.gov/SAMS.

TAS also has a website, Tax Reform Changes, which shows you how the new tax law may change your future tax filings and helps you plan for these changes. The information is categorized by tax topic in the order of the IRS Form 1040 or 1040-SR. Go to TaxChanges.us for more information.

 

TAS for Tax Professionals

TAS can provide a variety of information for tax professionals, including tax law updates and guidance, TAS programs, and ways to let TAS know about systemic problems you’ve seen in your practice.

 

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. In addition, clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. To find a clinic near you, visit IRS.gov/LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List.

 

Appendices

Appendices A-1 through A-3 show the lease inclusion amounts that you may need to report if you first leased a car (other than a truck or van) in years prior to 2018 for 30 days or more. The tables are numbered.

Appendices B-1 through B-3 show the lease inclusion amounts that you may need to report if you first leased a truck or van in years prior to 2018.

Appendices C-1 through C-2 show the lease inclusion amounts that you may need to report if you first leased a passenger automobile (including a truck and van) in 2018 or 2019 for 30 days or more.

If any of these apply to you, use the appendix for the year you first leased the car. (See Leasing a Car in chapter 4.)

 

 

Appendix A-1. Inclusion Amounts for Cars (Other Than Trucks and Vans) First Leased in 2015

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,000$19,500$5$11$15$19$21
19,50020,000612182224
20,00020,500614202527
20,50021,000715232731
21,00021,500817253034
21,50022,000918283238
22,00023,0001021313742
23,00024,0001124364249
24,00025,0001227414855
25,00026,0001430455462
26,00027,0001534496068
27,00028,0001737546575
28,00029,0001840597181
29,00030,0002043647687
30,00031,0002146698195
31,00032,00023497388100
32,00033,00024527893107
33,00034,00025568299114
34,00035,000275987104120
35,00036,000286292110126
36,00037,000306596116133
37,00038,0003168102121139
38,00039,0003371106127146
39,00040,0003475110132153
40,00041,0003578115138159
41,00042,0003781120143166
42,00043,0003884125149172
43,00044,0004087129155179
44,00045,0004190134161185
45,00046,0004393139166191
46,00047,0004497143172198
47,00048,00045100148177205
48,00049,00047103153183210
49,00050,00048106158188218
50,00051,00050109162194224
51,00052,00051112167200230
52,00053,00053115172205237
53,00054,00054119176211243
54,00055,00056122180217250
55,00056,00057125186222256
56,00057,00058128191227263
57,00058,00060131195234269
58,00059,00061135199239276
59,00060,00063137205244283
60,00062,00065142212253292
62,00064,00068149220265304
64,00066,00071155230275318
66,00068,00073162239287331
68,00070,00076168249298343
70,00072,00079174258309357
72,00074,00082180268320370
74,00076,00085186277332383
76,00078,00088193286343396
78,00080,00091199296354408
80,00085,00096210312374431
85,00090,000103226335402464
90,00095,000110242359430496
95,000100,0002117258382458529
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2015-19 (2015-8 I.R.B. 656), available at IRS.gov/irb/2015-08_IRB#RP-2015-19.

 

 

Appendix A-2. Inclusion Amounts for Cars (Other Than Trucks and Vans) First Leased in 2016

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,000$19,500$6$13$20$23$27
19,50020,000715232730
20,00020,500817263035
20,50021,000819293339
21,00021,5001021313842
21,50022,0001123344147
22,00023,0001226394653
23,00024,0001430445460
24,00025,0001634506069
25,00026,0001738566778
26,00027,0001942627485
27,00028,0002146688193
28,00029,00023507389101
29,00030,00025538095110
30,00031,000265885102118
31,00032,000286291109126
32,00033,000306598116134
33,00034,0003269103123142
34,00035,0003473109130150
35,00036,0003577115137158
36,00037,0003781121144166
37,00038,0003985127151174
38,00039,0004189132158183
39,00040,0004293138166190
40,00041,0004497144172199
41,00042,00046101150179207
42,00043,00048105155187215
43,00044,00050109161193223
44,00045,00051113167201231
45,00046,00053117173207239
46,00047,00055121179214247
47,00048,00057124185222255
48,00049,00059128191228264
49,00050,00060133196236271
50,00051,00062136203242280
51,00052,00064140209249288
52,00053,00066144214257295
53,00054,00068148220263304
54,00055,00069152226271312
55,00056,00071156232277320
56,00057,00073160238284328
57,00058,00075164243292336
58,00059,00077168249298345
59,00060,00078172255306352
60,00062,00081178264316364
62,00064,00085185276330381
64,00066,00088194287344397
66,00068,00092201299358413
68,00070,00095209311372430
70,00072,00099217322387445
72,00074,000102225334400462
74,00076,000106233346414478
76,00078,000110241357428494
78,00080,000113249369442510
80,00085,000120262390467538
85,00090,000128282419502579
90,00095,000137302448537620
95,000100,0002146322477572660
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2016-23 (2016-16 I.R.B. 581) available at IRS.gov/irb/2016-16_IRB#RP-2016-23.

 

 

Appendix A-3. Inclusion Amounts for Cars (Other Than Trucks and Vans) First Leased in 2017

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,000$19,500$6$14$20$23$27
19,50020,000716232731
20,00020,500818263035
20,50021,000920283539
21,00021,5001021323844
21,50022,0001123354247
22,00023,0001227394753
23,00024,0001431455462
24,00025,0001634526170
25,00026,0001838586878
26,00027,0001943637587
27,00028,0002147698295
28,00029,00023517589103
29,00030,00025558097112
30,00031,000275887104120
31,00032,000296293111128
32,00033,000306799118136
33,00034,0003271104126144
34,00035,0003475110133152
35,00036,0003679116140160
36,00037,0003882123147169
37,00038,0004086129154177
38,00039,0004191134161186
39,00040,0004395140168194
40,00041,0004599146175202
41,00042,00047103152182210
42,00043,00049106159189218
43,00044,00050111164197226
44,00045,00052115170204234
45,00046,00054119176211243
46,00047,00056123182218251
47,00048,00058127187225260
48,00049,00060130194232268
49,00050,00061135200239276
50,00051,00063139206246284
51,00052,00065143211254292
52,00053,00067147217261301
53,00054,00069151223268309
54,00055,00070155229275318
55,00056,00072159235282326
56,00057,00074163241289334
57,00058,00076167247296342
58,00059,00078171253303350
59,00060,00080174260310359
60,00062,00082181268321371
62,00064,00086189280335387
64,00066,00090197292349404
66,00068,00093205304364420
68,00070,00097213315379436
70,00072,000101221327393453
72,00074,000104229339407470
74,00076,000108237351421486
76,00078,000111245363436502
78,00080,000115253375450518
80,00085,000122267396474548
85,00090,000131287425511588
90,00095,000140307455546630
95,000100,0002149327485581671
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2017-29 (2017-14 I.R.B. 1065) available at IRS.gov/irb/2017-14_IRB#RP-2017-29.

 

 

Appendix B-1. Inclusion Amounts for Trucks and Vans First Leased in 2015

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,500$20,000$4$7$11$13$16
20,00020,50049131619
20,50021,000511151922
21,00021,500612182225
21,50022,000614202528
22,00023,000716242933
23,00024,000919293440
24,00025,0001023334046
25,00026,0001225384653
26,00027,0001329425160
27,00028,0001532475765
28,00029,0001635526273
29,00030,0001838566879
30,00031,0001941617485
31,00032,0002045667991
32,00033,0002248708598
33,00034,00023517591104
34,00035,00025548096111
35,00036,000265785101118
36,00037,000286089108124
37,00038,000296394113131
38,00039,000306798119137
39,00040,0003270103124144
40,00041,0003373108130150
41,00042,0003576113135157
42,00043,0003679118141163
43,00044,0003882122147169
44,00045,0003985127153176
45,00046,0004089131158183
46,00047,0004292136163189
47,00048,0004395141169195
48,00049,0004598145175202
49,00050,00046101151180208
50,00051,00048104155186215
51,00052,00049108159192221
52,00053,00051110165197228
53,00054,00052114169203234
54,00055,00053117174208241
55,00056,00055120178214248
56,00057,00056123183220254
57,00058,00058126188225261
58,00059,00059130192231267
59,00060,00061133197236273
60,00062,00063137204245283
62,00064,00066144213256296
64,00066,00068150223268308
66,00068,00071157232278322
68,00070,00074163241290335
70,00072,00077169251301348
72,00074,00080175261312361
74,00076,00083182269324374
76,00078,00086188279335386
78,00080,00089194288346400
80,00085,00094205305366422
85,00090,000101221328394455
90,00095,000108237351422488
95,000100,0002115253375450519
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2015-19 (2015-8 I.R.B. 656), available at IRS.gov/irb/2015-08_IRB#RP-2015-19.

 

Appendix B-2. Inclusion Amounts for Trucks and Vans First Leased in 2016

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,500$20,000$3$8$12$14$16
20,00020,500410151720
20,50021,000512172125
21,00021,500614202528
21,50022,000716232832
22,00023,000819283338
23,00024,0001023334146
24,00025,0001226404755
25,00026,0001430465463
26,00027,0001634516270
27,00028,0001738586879
28,00029,0001942637686
29,00030,0002146698295
30,00031,00023507589103
31,00032,00025548097111
32,00033,000265886104119
33,00034,000286292111127
34,00035,000306698117136
35,00036,0003270104124143
36,00037,0003473110132151
37,00038,0003578115139160
38,00039,0003782121146167
39,00040,0003985128152176
40,00041,0004189133160184
41,00042,0004294139166192
42,00043,0004497145174200
43,00044,00046101151181208
44,00045,00048105157187217
45,00046,00050109162195224
46,00047,00051113169201233
47,00048,00053117174209240
48,00049,00055121180216248
49,00050,00057125186222257
50,00051,00059129191230265
51,00052,00060133197237273
52,00053,00062137203244281
53,00054,00064141209250290
54,00055,00066144216257298
55,00056,00068148221265305
56,00057,00069153226272314
57,00058,00071156233279321
58,00059,00073160239285330
59,00060,00075164244293338
60,00062,00077170253304350
62,00064,00081178265317366
64,00066,00085186276331383
66,00068,00088194288345399
68,00070,00092202299360414
70,00072,00095210311374431
72,00074,00099217324387447
74,00076,000102226335401463
76,00078,000106233347415480
78,00080,000110241358430495
80,00085,000116255379454524
85,00090,000125274409489564
90,00095,000134284437525605
95,000100,0002156314466560645
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2016-23 (2016-16 I.R.B. 581), available at IRS.gov/irb/2016-16_IRB#RP-2016-23.

 

Appendix B-3. Inclusion Amounts for Trucks and Vans First Leased in 2017

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
$19,500$20,000$4$8$11$13$16
20,00020,500410141720
20,50021,000512172123
21,00021,500614202428
21,50022,000716232832
22,00023,000919273338
23,00024,0001023344046
24,00025,0001227394854
25,00026,0001431455562
26,00027,0001635516271
27,00028,0001839576979
28,00029,0001943637688
29,00030,0002147698396
30,00031,00023517590104
31,00032,00025558197112
32,00033,000275987104120
33,00034,000296393111129
34,00035,000306799119136
35,00036,0003271105126145
36,00037,0003475111133153
37,00038,0003679117140161
38,00039,0003883122148169
39,00040,0004087128155177
40,00041,0004191135161186
41,00042,0004395141168194
42,00043,0004599146176203
43,00044,00047103152183211
44,00045,00049107158190219
45,00046,00050111165196228
46,00047,00052115170204236
47,00048,00054119176211244
48,00049,00056123182218252
49,00050,00058127188225261
50,00051,00060131194232269
51,00052,00061135200240277
52,00053,00063139206247285
53,00054,00065143212254293
54,00055,00067147218261301
55,00056,00069151224268309
56,00057,00070155230275318
57,00058,00072159236282326
58,00059,00074163242289335
59,00060,00076167248296343
60,00062,00079173256308355
62,00064,00082181269321372
64,00066,00086189280336388
66,00068,00090197292350404
68,00070,00093205304365420
70,00072,00097213316379437
72,00074,000101221328393453
74,00076,000104229340407470
76,00078,000108237352421487
78,00080,000111245364436503
80,00085,000118259384461532
85,00090,000127279414497573
90,00095,000136299444532614
95,000100,0002145319474567656
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2017-29 (2017-14 I.R.B. 1065), available at IRS.gov/irb/2017-14_IRB#RP-2017-29.

 

Appendix C-1. Inclusion Amounts for Passenger Automobiles First Leased in 2018

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
50,00051,00013556
51,00052,00049131619
52,00053,000715222731
53,00054,0001021313744
54,00055,0001227404856
55,00056,0001533495968
56,00057,0001839586981
57,00058,0002045678093
58,00059,00023517691105
59,00060,000265785101117
60,00062,000306698118135
62,00064,0003678116139160
64,00066,0004190134160185
66,00068,00046102152181210
68,00070,00052114169203235
70,00072,00057126187225259
72,00074,00063138205246284
74,00076,00068150223267309
76,00078,00074162241288333
78,00080,00079174259310357
80,00085,00089195290347401
85,00090,000102225335400463
90,00095,000116255379454525
95,000100,0002130285423508586
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2018-25 (2018-18 I.R.B. 543), available at IRS.gov/irb/2018-18_IRB.

 

Appendix C-2. Inclusion Amounts for Passenger Automobiles First Leased in 2019

Fair Market ValueTax Year of Lease1
OverNot Over1st2nd3rd4th5th and Later
50,00051,00001133
51,00052,000411152023
52,00053,000920303643
53,00054,0001330445363
54,00055,0001740587083
55,00056,00022497288102
56,00057,000265986105122
57,00058,0003168101122142
58,00059,0003578115139161
59,00060,0003988129156181
60,00062,00046102151181211
62,00064,00055121179216250
64,00066,00063140208251289
66,00068,00072160236284329
68,00070,00081179265318369
70,00072,00090198293353408
72,00074,00098217322387448
74,00076,000107236351421487
76,00078,000116255379456526
78,00080,000125275407489567
80,00085,000140308458549635
85,00090,000162356529635734
90,00095,000184404600720833
95,000100,0002206452671806931
1 For the last tax year of the lease, use the dollar amount for the preceding year.
2 If the fair market value of the vehicle is more than $100,000, see Rev. Proc. 2019–26 (2019-24 I.R.B. 1323), available at IRS.gov/irb/2019-24_IRB#REV-PROC-2019-26.

Symbols

“Hours of service” limits, Individuals subject to “hours of service” limits. Form 2106, “Hours of service” limits. 50% limit on meals, 50% limit on meals.

A

Accountable plans, Accountable Plans, Per diem allowance more than federal rate. Accounting to employer, Accountable Plans Adequate accounting, Adequate Accounting Independent contractors, Adequate accounting. Adequate records, What Are Adequate Records? Advertising Car display, Advertising display on car. Expenses, 5—Advertising expenses. Signs, display racks, or other promotional material to be used on recipient’s business premises, Exceptions. Airline clubs, Club dues and membership fees. Allocating costs, Separating costs., Allocating total cost. Allowance (see Reimbursements) Armed forces Assigned overseas, Members of the Armed Forces. Assistance (see Tax help) Athletic clubs, Club dues and membership fees.

B

Basis of car, Basis. (see also Depreciation of car) Bona fide business purpose, Bona fide business purpose. Business travel, Trip Primarily for Business Outside U.S., Travel Entirely for Business or Considered Entirely for Business Business use of car, Business and personal use. More-than-50%-use test., More-than-50%-use test. Qualified business use, Qualified business use.

C

Canceled checks As evidence of business expenses, Canceled check. Car expenses, Car Expenses, Reporting inclusion amounts. Actual expenses, Actual Car Expenses Allowances for, Per Diem and Car Allowances, Allowance more than the federal rate. Business and personal use, Business and personal use. Combining expenses, Car expenses. Disposition of car, Disposition of a Car Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). Form 2106, Car expenses. Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. Mileage rate (see Standard mileage rate) Taxes paid on car, Taxes paid on your car. Traffic tickets, Fines and collateral. Car pools, Car pools. Car rentals, Reporting inclusion amounts. Form 2106, Car rentals. Car, defined, Car defined. Car, truck, or van rentals, Leasing a Car, Reporting inclusion amounts. Casualty and theft losses Cars, Casualty and theft losses. Depreciation, Casualty or theft. Club dues, Club dues and membership fees. Commuting expenses, Commuting expenses. Conventions, Conventions Country clubs, Club dues and membership fees. Cruise ships, Cruise Ships

D

Daily business mileage and expense log (Table 6-2), Table 5-2. Daily Business Mileage and Expense Log Name: Depreciation of car, Depreciation and section 179 deductions. (see also Section 179 deductions) Adjustment for using standard mileage rate, Depreciation adjustment when you used the standard mileage rate. Basis, Basis. Sales taxes, Sales taxes. Unrecovered basis, How to treat unrecovered basis. Casualty or theft, effect, Casualty or theft. Deduction, Depreciation and section 179 deductions., Depreciation deduction for the year of disposition. Excess depreciation, Excess depreciation. Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). Trade-in, effect, Car trade-in., Trade-in. Trucks and vans, Trucks and vans. Depreciation of Car Section 179 deduction, Section 179 deduction. Disabled employees Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Documentary evidence, Documentary evidence.

E

Employer-provided vehicles, Employer-provided vehicle. Reporting requirements, Vehicle Provided by Your Employer Entertainment expenses, Gift or entertainment. 50% limit Determination of applicability (Figure A), 50% Limit Entertainment, defined, Entertainment—Defined Form 2106, Non-entertainment-related meal expenses. Estimates of expenses, How To Prove Expenses Exceptions to the 50% Limit, Exception to the 50% Limit for Meals Excess reimbursements (see Reimbursements)

F

Fair market value of car, Fair market value. Farmers Form 1040 or 1040-SR, Schedule F, Self-employed. Federal crime investigations or prosecutions Federal employees engaged in, Exception for federal crime investigations or prosecutions. Federal rate for per diem, Standard Meal Allowance, The federal rate. Fee-basis officials, Officials Paid on a Fee Basis Fees you pay, Parking fees. Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). Form 1040 or 1040-SR, Schedule C, Self-employed. Form 1040 or 1040-SR, Schedule F, Self-employed. Form 1040, Schedule F, Self-employed. Form 2106, How to elect., Employees., Full value included in your income., Reporting your expenses under a nonaccountable plan., Completing Form 2106 Form 4562, Self-employed. Form 4797, Excess depreciation. Form W-2 Employer-provided vehicles, Value reported on Form W-2. Reimbursement of personal expenses, Reimbursement for personal expenses. Statutory employees, Statutory employees.

G

Gifts, Gift or entertainment., Gifts $25 limit, $25 limit. Combining for recordkeeping purposes, Gift expenses. Reporting requirements, Gifts. Golf clubs, Club dues and membership fees.

H

Hauling tools, Hauling tools or instruments. High-low method Introduction, High-low method. Transition rules, High-low method. High-low rate method, High-low rate. Home office, Office in the home. Hotel clubs, Club dues and membership fees.

I

Identity theft, Resolving tax-related identity theft issues. Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Incidental expenses Defined, Incidental expenses. Gifts, Incidental costs. No meals, incidentals only, Incidental-expenses-only method. Income-producing property, Income-producing property. Incomplete records, What if I Have Incomplete Records? Indefinite job assignment, Temporary assignment vs. indefinite assignment. Independent contractors, Rules for Independent Contractors and Clients Interest on car loans, Interest on car loans. Itinerants, Tax Home

L

Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. Luxury water travel, Luxury Water Travel

M

MACRS (Modified Accelerated Cost Recovery System), Modified Accelerated Cost Recovery System (MACRS). 2019 chart (Table 4-1), Table 4-1. 2019 MACRS Depreciation Chart (Use To Figure Depreciation for 2019.) Main place of business or work, Main place of business or work. Married taxpayers Performing artists, Special rules for married persons. Meal expenses, Meals 50% limit, 50% Limit Determination of applicability (Figure A), 50% Limit Exceptions, Exception to the 50% Limit for Meals Actual cost method, Actual Cost Form 2106, Non-entertainment-related meal expenses. Major cities with higher allowances, Amount of standard meal allowance. Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance., The standard meal allowance. Meals and Entertainment expenses, Meals and Entertainment Mileage rate (see Standard mileage rate) Military (see Armed forces) Missing children, photographs of, Reminder Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). 2019 chart (Table 4-1), Table 4-1. 2019 MACRS Depreciation Chart (Use To Figure Depreciation for 2019.)

N

Nonaccountable plans, Nonaccountable Plans

O

Office in the home, Office in the home. Officials paid on fee basis, Officials Paid on a Fee Basis Overseas travel Conventions, Conventions Held Outside the North American Area Meal allowance, Standard meal allowance for areas outside the continental United States. Part of trip outside U.S., Part of Trip Outside the United States

P

Parking fees, Parking fees., Parking fees and tolls. Per diem allowances, Per Diem and Car Allowances, Allowance more than the federal rate. Defined, Reimbursement, allowance, or advance. Federal rate for, The federal rate. Per diem rates High-cost localities, High-low method. High-low method, High-low method. Regular federal method, Regular federal per diem rate method. Standard rate for unlisted localities, High-low method., Regular federal per diem rate method. Transition rules, High-low method., Federal per diem rate method. Performing artists, Expenses of Certain Performing Artists Personal property taxes, Personal property taxes., Taxes paid on your car. Personal trips, Trip Primarily for Personal Reasons Outside U.S., Travel Primarily for Personal Reasons Placed in service, cars, Placed in service. Probationary work period, Probationary work period. Proving business purpose, Proving business purpose. Public transportation Outside of U.S. travel, Public transportation. Publications (see Tax help)

R

Recordkeeping requirements, Recordkeeping, Examples of Records Adequate records, What Are Adequate Records? Daily business mileage and expense log (Table 6-2), Table 5-2. Daily Business Mileage and Expense Log Name: Destroyed records, Destroyed records. How to prove expenses (Table 5-1), Table 5-1. How To Prove Certain Business Expenses Incomplete records, What if I Have Incomplete Records? Reimbursed expenses, Reimbursed for expenses. Sampling to prove expenses, Sampling. Separating and combining expenses, Separating and Combining Expenses, If your return is examined. Three-year period of retention, How Long To Keep Records and Receipts Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Regular federal method Introduction, Regular federal per diem rate method. Transition rules, Federal per diem rate method. Reimbursements, Less than full value included in your income., Contractor doesn’t adequately account. Accountable plans, Accountable Plans Excess, Returning Excess Reimbursements, Nonaccountable Plans Form 2106, Reimbursements. Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Reimbursement of nondeductible expenses. Personal expenses, Reimbursement for personal expenses. Recordkeeping, Reimbursed for expenses. Reporting (Table 6-1), Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, and Car Expenses and Reimbursements Unclaimed, Where To Report Reporting requirements, How To Report Per diem or car allowance, Reporting your expenses with a per diem or car allowance. Reimbursements, Reimbursements, Contractor doesn’t adequately account. Reservists Transportation expenses, Armed Forces reservists. Traveling more than 100 miles from home, Armed Forces Reservists Traveling More Than 100 Miles From Home Returning excess reimbursements, Returning Excess Reimbursements

S

Section 179 deduction Amended return, How to elect. Deduction, Section 179 Deduction Limits, Limits. Self-employed persons, 3—Self-employed reimbursed expenses. Reporting requirements, Self-employed. Spouse, expenses for, Travel expenses for another individual. Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance., The standard meal allowance. Standard mileage rate, What’s New, Standard Mileage Rate, The standard mileage rate. Depreciation adjustment for using, Depreciation adjustment when you used the standard mileage rate. Form 2106, Standard mileage rate. Statutory employees, Statutory employees.

T

Tables and figures 50% limit determination (Figure A), 50% Limit Daily business mileage and expense log (Table 6-2), Table 5-2. Daily Business Mileage and Expense Log Name: Maximum depreciation deduction for cars placed in service prior to 2018 table, Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 Maximum depreciation deduction for Passenger Automobiles (Including Trucks and Vans) acquired after September 27, 2017, and placed in service during 2018 or later, Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired after September 27, 2017, and placed in service during 2018 or later Maximum depreciation deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later, Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) acquired before September 28, 2017, and placed in service during 2018 or later Modified Accelerated Cost Recovery System (MACRS) 2018 chart (Table 4-1), Table 4-1. 2019 MACRS Depreciation Chart (Use To Figure Depreciation for 2019.) Proving expenses (Table 5-1), Table 5-1. How To Prove Certain Business Expenses Reporting reimbursements (Table 6-1), Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, and Car Expenses and Reimbursements Transportation expenses, determination of deductibility (Figure B), Exceptions., Illustration of transportation expenses. Travel expenses, determination of deductibility (Table 1-1), Table 1-1. Travel Expenses You Can Deduct Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Tax help, How To Get Tax Help Tax home, determination of, Tax Home Temporary job assignments, Temporary Assignment or Job Temporary work location, Temporary work location. Tickets Traffic violations, Fines and collateral. Tools Hauling tools, Hauling tools or instruments. Trade-in of car, Car trade-in., Trade-in. Traffic tickets, Fines and collateral. Transients, Tax Home Transition rules, Transition Rules Example High-low method, High-low method. High-low method, High-low method. Regular federal method, Federal per diem rate method. Transportation expenses, Transportation, Depreciation deduction for the year of disposition. Car expenses, Car Expenses, Reporting inclusion amounts. Deductible (Figure B), Exceptions., Illustration of transportation expenses. five or more cars, Five or more cars. Form 2106, Transportation expenses. Transportation workers, Special rate for transportation workers., Individuals subject to “hours of service” limits. Travel advance, Reimbursement, allowance, or advance., Travel advance. (see also Reimbursements) Travel expenses, Travel, Cruise Ships Another individual accompanying taxpayer, Travel expenses for another individual. Away from home, Traveling Away From Home, Tax Home Deductible, What Travel Expenses Are Deductible?, Cruise Ships Summary of (Table 1-1), Table 1-1. Travel Expenses You Can Deduct Defined, Travel expenses defined. Going home on days off, Going home on days off. In U.S., Travel in the United States Lodging, Standard Meal Allowance Luxury water travel, Luxury Water Travel Outside U.S., Travel Outside the United States Travel to family home, Tax Home Different From Family Home Trucks and vans Depreciation, Trucks and vans. Transportation workers, Individuals subject to “hours of service” limits. Transportation workers’ expenses, Special rate for transportation workers. Two places of work, Two places of work.

U

Unclaimed reimbursements, Where To Report Unions Trips from union hall to place of work, Union members’ trips from a union hall. Unrecovered basis of car, How to treat unrecovered basis.

V

Volunteers, Volunteers.

W

Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM

Source

Kelechi Ofor

Am cool and calm to be with, I believe in Myself. Artist Manager, Digital Distributor and Services

    Kelechi Ofor has 10031 posts and counting. See all posts by Kelechi Ofor

    Leave a Reply