PDF document

- 1 -

                Userid: CPM                 Schema: tipx         Leadpct: 100% Pt. size: 8   Draft                   Ok to Print
AH XSL/XML      Fileid: … tions/p463/2022/a/xml/cycle02/source                             (Init. & Date) _______

Page 1 of 42                                                                               14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

           Publication 463
           Cat. No. 11081L                                                     Contents
                                                                               Future Developments        . . . . . . . . . . . . 2
Department 
of the     Travel,                                                             What's New   . . . . . . . . . . . . . . . . . . 2
Treasury
Internal                                                                       Reminder . . . . . . . . . . . . . . . . . . . . 2
Revenue    Gift, and Car
Service                                                                        Introduction . . . . . . . . . . . . . . . . . . 2
           Expenses                                                            Chapter  1.  Travel    . . . . . . . . . . . . . . 3
                                                                               Traveling Away From Home             . . . . . . . 3
                                                                                           Tax Home . . . . . . . . . . . . . . 3
                                                                                           Tax Home Different From 
           For use in preparing                                                            Family Home        . . . . . . . . . . 4
                                                                               Temporary Assignment or Job               . . . . . 4
                                                                               What Travel Expenses Are 
           2022 Returns                                                                    Deductible? . . . . . . . . . . . . . . 4
                                                                                           Meals  . . . . . . . . . . . . . . . . 5
                                                                                           Travel in the United States    . . . . 6
                                                                                           Travel Outside the United 
                                                                                           States     . . . . . . . . . . . . . . 7
                                                                                           Luxury Water Travel    . . . . . . . . 9
                                                                                           Conventions    . . . . . . . . . . . . 9
                                                                               Chapter  2.  Meals and 
                                                                               Entertainment . . . . . . . . . . . . .            10
                                                                               50% Limit    . . . . . . . . . . . . . . . .       11
                                                                                           Exception to the 50% Limit 
                                                                                           for Meals      . . . . . . . . . . .   12
                                                                               Chapter  3.  Gifts   . . . . . . . . . . . . . .   13
                                                                               Chapter  4.  Transportation . . . . . . . .        13
                                                                               Car Expenses         . . . . . . . . . . . . . .   14
                                                                                           Standard Mileage Rate      . . . . .   14
                                                                                           Actual Car Expenses    . . . . . . .   15
                                                                                           Leasing a Car . . . . . . . . . . .    22
                                                                               Disposition of a Car         . . . . . . . . . .   23
                                                                               Chapter  5.  Recordkeeping       . . . . . . . .   24
                                                                               How To Prove Expenses              . . . . . . .   24
                                                                                           What Are Adequate 
                                                                                           Records?       . . . . . . . . . . .   24
                                                                                           What if I Have Incomplete 
                                                                                           Records?       . . . . . . . . . . .   25
                                                                                           Separating and Combining 
                                                                                           Expenses . . . . . . . . . . .         25
                                                                                           How Long To Keep 
                                                                                           Records and Receipts . . . .           26
                                                                                           Examples of Records      . . . . . .   28
                                                                               Chapter  6.  How To Report . . . . . . . .         28
                                                                               Where To Report . . . . . . . . . . . .            28
                                                                                           Vehicle Provided by Your 
                                                                                           Employer       . . . . . . . . . . .   28
                                                                               Reimbursements . . . . . . . . . . . .             29
                                                                                           Accountable Plans . . . . . . . .      29
                                                                                           Nonaccountable Plans     . . . . . .   32
                                                                                           Rules for Independent 
                                                                                           Contractors and Clients        . . .   32
                                                                               How To Use Per Diem Rate 
                                                                                           Tables . . . . . . . . . . . . . . . . 33
                                                                                           The Two Substantiation 
                                                                                           Methods . . . . . . . . . . . .        33
                                                                                           Transition Rules   . . . . . . . . .   33
                                                                               Completing Form 2106             . . . . . . . .   33
              Get forms and other information faster and easier at:                        Special Rules . . . . . . . . . . .    34
              • IRS.gov (English)         • IRS.gov/Korean (한국어) 
              • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский)          How To Get Tax Help        . . . . . . . . . . .   35
              • IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) 
                                                                               Appendices   . . . . . . . . . . . . . . . . .     38

Feb 1, 2023

- 2 -

Page 2 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Index . . . . . . . . . . . . . . . . . . . . . 40 2023. A special rule allows this 100% deduction • Your employer required you to return any
for the full meal portion of a per diem rate or al- excess reimbursement and you did so.
lowance. See Exception to the 50% Limit for • There is no amount shown with a code L in
Meals in chapter 2 for more information. box 12 of your Form W-2, Wage and Tax
Future Developments Statement.
For the latest information about developments Introduction If you meet all of these conditions, there is no
related to Pub. 463, such as legislation enacted need to show the expenses or the reimburse-
after it was published, go to IRS.gov/Pub463. You may be able to deduct the ordinary and ments on your return. If you would like more in-
necessary business-related expenses you have formation on reimbursements and accounting to
for: your employer, see chapter 6.
• Travel,
What's New • Non-entertainment-related meals, If you meet these conditions and your
• Gifts, or TIP employer included reimbursements on
Standard mileage rate. For 2022, the stand- • Transportation. your Form W-2 in error, ask your em-
ployer for a corrected Form W-2.
ard mileage rate for the cost of operating your An ordinary expense is one that is common and
car for business use is 58.5 cents (0.585) per accepted in your trade or business. A neces- Volunteers. If you perform services as a
mile from January 1–June 30 and 62.5 cents sary expense is one that is helpful and appropri- volunteer worker for a qualified charity, you may
(0.625) per mile from July 1–December 31. Car ate for your business. An expense doesn’t have be able to deduct some of your costs as a chari-
expenses and use of the standard mileage rate to be required to be considered necessary. table contribution. See Out-of-Pocket Expenses
are explained in chapter 4. This publication explains: in Giving Services in Pub. 526, Charitable Con-
Depreciation limits on cars, trucks, and • What expenses are deductible, tributions, for information on the expenses you
vans. The first-year limit on the depreciation • How to report them on your return, can deduct.
deduction, special depreciation allowance, and • What records you need to prove your ex-
section 179 deduction for vehicles acquired be- penses, and Comments and suggestions. We welcome
fore September 28, 2017, and placed in service • How to treat any expense reimbursements your comments about this publication and sug-
during 2022, is $11,200. The first-year limit on you may receive. gestions for future editions.
depreciation, special depreciation allowance, You can send us comments through
and section 179 deduction for vehicles acquired Who should use this publication. You IRS.gov/FormComments. Or, you can write to:
after September 27, 2017, and placed in serv- should read this publication if you are an em-
ice during 2022 increases to $19,200. If you ployee or a sole proprietor who has busi- Internal Revenue Service
elect not to claim a special depreciation allow- ness-related travel, non-entertainment-related Tax Forms and Publications
ance for a vehicle placed in service in 2022, the meals, gift, or transportation expenses. 1111 Constitution Ave. NW, IR-6526
amount increases to $11,200. Depreciation lim- Washington, DC 20224
its are explained in chapter 4. Users of employer-provided vehicles. If
an employer-provided vehicle was available for
Section 179 deduction. The maximum your use, you received a fringe benefit. Gener- Although we can’t respond individually to
amount you can elect to deduct for most section ally, your employer must include the value of each comment received, we do appreciate your
179 property (including cars, trucks, and vans) the use or availability of the vehicle in your in- feedback and will consider your comments as
you placed in service in tax years beginning in come. However, there are exceptions if the use we revise our tax forms, instructions, and publi-
2022 is $1,080,000. This limit is reduced by the of the vehicle qualifies as a working condition cations. Don’t send tax questions, tax returns,
amount by which the cost of section 179 prop- fringe benefit (such as the use of a qualified or payments to the above address.
erty placed in service during the tax year ex- nonpersonal use vehicle).
ceeds $2,700,000. Section 179 deduction is ex- A working condition fringe benefit is any Getting answers to your tax questions.
plained in chapter 4. property or service provided to you by your em- If you have a tax question not answered by this
Also, the maximum section 179 expense de- ployer, the cost of which would be allowable as publication or the How To Get Tax Help section
duction for sport utility vehicles placed in serv- an employee business expense deduction if at the end of this publication, go to the IRS In-
ice in tax years beginning in 2022 is $27,000. you had paid for it. teractive Tax Assistant page at IRS.gov/
A qualified nonpersonal use vehicle is one Help/ITA where you can find topics by using the
that isn’t likely to be used more than minimally search feature or viewing the categories listed.
for personal purposes because of its design. Getting tax forms, instructions, and pub-
Reminder See Qualified nonpersonal use vehicles under lications. Go to IRS.gov/Forms to download
Photographs of missing children. The IRS is Actual Car Expenses in chapter 4. current and prior-year forms, instructions, and
a proud partner with the National Center for For information on how to report your car ex- publications.
Missing & Exploited Children® (NCMEC). Pho- penses that your employer didn’t provide or re-
tographs of missing children selected by the imburse you for (such as when you pay for gas Ordering tax forms, instructions, and
Center may appear in this publication on pages and maintenance for a car your employer pro- publications. Go to IRS.gov/OrderForms to
that would otherwise be blank. You can help vides), see Vehicle Provided by Your Employer order current forms, instructions, and publica-
bring these children home by looking at the in chapter 6. tions; call 800-829-3676 to order prior-year
photographs and calling 800-THE-LOST forms and instructions. The IRS will process
(800-843-5678) if you recognize a child. Who doesn’t need to use this publication. your order for forms and publications as soon
Partnerships, corporations, trusts, and employ- as possible. Don’t resubmit requests you’ve al-
Per diem rates. Current and prior per diem ers who reimburse their employees for business ready sent us. You can get forms and publica-
rates may be found on the U.S. General Serv- expenses should refer to the instructions for tions faster online.
ices Administration (GSA) website at GSA.gov/ their required tax forms and chapter 11 of Pub.
travel/plan-book/per-diem-rates. 535, Business Expenses, for information on de- Useful Items
Temporary deduction of 100% business ducting travel, meals, and entertainment expen- You may want to see:
meals. A 100% deduction is allowed for certain ses.
business meals paid or incurred after 2020 and If you are an employee, you won’t need to Publication
before 2023. See 50% Limit in chapter 2 for read this publication if all of the following are
more information. true. 535 535 Business Expenses
Temporary 100% deduction of the full meal • You fully accounted to your employer for 946 946 How To Depreciate Property
portion of a per diem rate or allowance. A your work-related expenses.
100% deduction is allowed for certain business • You received full reimbursement for your
meals paid or incurred after 2020 and before expenses.
Page 2 Publication 463 (2022)

- 3 -

Page 3 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Form (and Instructions) scheduled round-trip run between two cities Example. You live in Cincinnati where you
and return home 16 hours later. During the run, have a seasonal job for 8 months each year and
Schedule A (Form 1040) Schedule A (Form 1040) Itemized you have 6 hours off at your turnaround point earn $40,000. You work the other 4 months in
Deductions where you eat two meals and rent a hotel room Miami, also at a seasonal job, and earn
Schedule C (Form 1040) Schedule C (Form 1040) Profit or Loss to get necessary sleep before starting the return $15,000. Cincinnati is your main place of work
From Business trip. You are considered to be away from home. because you spend most of your time there and
earn most of your income there.
Schedule F (Form 1040) Schedule F (Form 1040) Profit or Loss Example 2. You are a truck driver. You
From Farming leave your terminal and return to it later the No main place of business or work. You
2106 2106 Employee Business Expenses same day. You get an hour off at your turn- may have a tax home even if you don’t have a
around point to eat. Because you aren’t off to regular or main place of work. Your tax home
4562 4562 Depreciation and Amortization get necessary sleep and the brief time off isn’t may be the home where you regularly live.
an adequate rest period, you aren’t traveling
See How To Get Tax Help for information about away from home. Factors used to determine tax home. If
getting these publications and forms. you don’t have a regular or main place of busi-
Members of the Armed Forces. If you are a ness or work, use the following three factors to
member of the U.S. Armed Forces on a perma- determine where your tax home is.
nent duty assignment overseas, you aren’t trav- 1. You perform part of your business in the
eling away from home. You can’t deduct your area of your main home and use that
expenses for meals and lodging. You can’t de- home for lodging while doing business in
duct these expenses even if you have to main- the area.
1. tain a home in the United States for your family
members who aren’t allowed to accompany you 2. You have living expenses at your main
overseas. If you are transferred from one per- home that you duplicate because your
manent duty station to another, you may have business requires you to be away from
Travel deductible moving expenses, which are ex- that home.
plained in Pub. 521, Moving Expenses. 3. You haven’t abandoned the area in which
If you temporarily travel away from your tax A naval officer assigned to permanent duty both your historical place of lodging and
home, you can use this chapter to determine if aboard a ship that has regular eating and living your claimed main home are located; you
you have deductible travel expenses. facilities has a tax home (explained next) have a member or members of your family
This chapter discusses: aboard the ship for travel expense purposes. living at your main home; or you often use
• Traveling away from home, that home for lodging.
• Temporary assignment or job, and Tax Home If you satisfy all three factors, your tax home
• What travel expenses are deductible. is the home where you regularly live. If you sat-
It also discusses the standard meal allowance, To determine whether you are traveling away isfy only two factors, you may have a tax home
rules for travel inside and outside the United from home, you must first determine the loca- depending on all the facts and circumstances. If
States, luxury water travel, and deductible con- tion of your tax home. you satisfy only one factor, you are an itinerant;
vention expenses. your tax home is wherever you work and you
Generally, your tax home is your regular can’t deduct travel expenses.
Travel expenses defined. For tax purposes, place of business or post of duty, regardless of
travel expenses are the ordinary and necessary where you maintain your family home. It in- Example 1. You are single and live in Bos-
expenses of traveling away from home for your cludes the entire city or general area in which ton in an apartment you rent. You have worked
business, profession, or job. your business or work is located. for your employer in Boston for a number of
An ordinary expense is one that is common years. Your employer enrolls you in a 12-month
and accepted in your trade or business. A nec- If you have more than one regular place of executive training program. You don’t expect to
essary expense is one that is helpful and appro- business, your tax home is your main place of return to work in Boston after you complete your
priate for your business. An expense doesn’t business. See Main place of business or work, training.
have to be required to be considered neces- later. During your training, you don’t do any work
sary. in Boston. Instead, you receive classroom and
If you don’t have a regular or a main place of on-the-job training throughout the United
You will find examples of deductible travel business because of the nature of your work, States. You keep your apartment in Boston and
expenses in Table 1-1. then your tax home may be the place where you return to it frequently. You use your apartment
regularly live. See No main place of business or to conduct your personal business. You also
work, later. keep up your community contacts in Boston.
Traveling Away From When you complete your training, you are
If you don’t have a regular or main place of transferred to Los Angeles.
Home business or post of duty and there is no place You don’t satisfy factor (1) because you
where you regularly live, you are considered an didn’t work in Boston. You satisfy factor (2) be-
You are traveling away from home if: itinerant (a transient) and your tax home is cause you had duplicate living expenses. You
• Your duties require you to be away from wherever you work. As an itinerant, you can’t also satisfy factor (3) because you didn’t aban-
the general area of your tax home (defined claim a travel expense deduction because you don your apartment in Boston as your main
later) substantially longer than an ordinary are never considered to be traveling away from home, you kept your community contacts, and
day's work, and home. you frequently returned to live in your apart-
• You need to sleep or rest to meet the de-
ment. Therefore, you have a tax home in Bos-
mands of your work while away from Main place of business or work. If you have ton.
home. more than one place of work, consider the fol-
This rest requirement isn’t satisfied by merely lowing when determining which one is your Example 2. You are an outside salesper-
napping in your car. You don’t have to be away main place of business or work. son with a sales territory covering several
from your tax home for a whole day or from • The total time you ordinarily spend in each states. Your employer's main office is in New-
dusk to dawn as long as your relief from duty is place. ark, but you don’t conduct any business there.
long enough to get necessary sleep or rest. • The level of your business activity in each Your work assignments are temporary, and you
place. have no way of knowing where your future as-
Example 1. You are a railroad conductor. • Whether your income from each place is signments will be located. You have a room in
You leave your home terminal on a regularly significant or insignificant.
Chapter 1 Travel Page 3

- 4 -

Page 4 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

your married sister's house in Dayton. You stay is realistically expected to last (and does in fact Example 2. The facts are the same as in
there for one or two weekends a year, but you last) for 1 year or less. Example 1, except that you realistically expec-
do no work in the area. You don’t pay your sis- However, if your assignment or job is indefi- ted the work in Fresno to last 18 months. The
ter for the use of the room. nite, the location of the assignment or job be- job was actually completed in 10 months.
You don’t satisfy any of the three factors lis- comes your new tax home and you can’t deduct Your job in Fresno is indefinite because you
ted earlier. You are an itinerant and have no tax your travel expenses while there. An assign- realistically expected the work to last longer
home. ment or job in a single location is considered in- than 1 year, even though it actually lasted less
definite if it is realistically expected to last for than 1 year. You can’t deduct any travel expen-
Tax Home Different From more than 1 year, whether or not it actually lasts ses you had in Fresno because Fresno became
for more than 1 year. your tax home.
Family Home If your assignment is indefinite, you must in-
clude in your income any amounts you receive Example 3. The facts are the same as in
If you (and your family) don’t live at your tax from your employer for living expenses, even if Example 1, except that you realistically expec-
home (defined earlier), you can’t deduct the they are called “travel allowances” and you ac- ted the work in Fresno to last 9 months. After 8
cost of traveling between your tax home and count to your employer for them. You may be months, however, you were asked to remain for
your family home. You also can’t deduct the able to deduct the cost of relocating to your new 7 more months (for a total actual stay of 15
cost of meals and lodging while at your tax tax home as a moving expense. See Pub. 521 months).
home. See Example 1, later. for more information. Initially, you realistically expected the job in
Fresno to last for only 9 months. However, due
If you are working temporarily in the same For tax years beginning after Decem- to changed circumstances occurring after 8
city where you and your family live, you may be ! ber 2017 and before January 2026, the months, it was no longer realistic for you to ex-
considered as traveling away from home. See CAUTION deduction of certain moving expenses pect that the job in Fresno would last for 1 year
Example 2, later. is suspended for nonmilitary taxpayers. In order or less. You can deduct only your travel expen-
to deduct certain moving expenses, you must ses for the first 8 months. You can’t deduct any
Example 1. You are a truck driver and you be an active member of the military and moving travel expenses you had after that time because
and your family live in Tucson. You are em- due to a permanent change of duty station. Fresno became your tax home when the job be-
ployed by a trucking firm that has its terminal in came indefinite.
Phoenix. At the end of your long runs, you re- Exception for federal crime investigations
turn to your home terminal in Phoenix and or prosecutions. If you are a federal em- Going home on days off. If you go back to
spend one night there before returning home. ployee participating in a federal crime investiga- your tax home from a temporary assignment on
You can’t deduct any expenses you have for tion or prosecution, you aren’t subject to the your days off, you aren’t considered away from
meals and lodging in Phoenix or the cost of 1-year rule. This means you may be able to de- home while you are in your hometown. You
traveling from Phoenix to Tucson. This is be- duct travel expenses even if you are away from can’t deduct the cost of your meals and lodging
cause Phoenix is your tax home. your tax home for more than 1 year provided there. However, you can deduct your travel ex-
you meet the other requirements for deductibil- penses, including meals and lodging, while
Example 2. Your family home is in Pitts- ity. traveling between your temporary place of work
burgh, where you work 12 weeks a year. The For you to qualify, the Attorney General (or and your tax home. You can claim these expen-
rest of the year you work for the same employer their designee) must certify that you are travel- ses up to the amount it would have cost you to
in Baltimore. In Baltimore, you eat in restaurants ing: stay at your temporary place of work.
and sleep in a rooming house. Your salary is • For the federal government; If you keep your hotel room during your visit
the same whether you are in Pittsburgh or Balti- • In a temporary duty status; and home, you can deduct the cost of your hotel
more. • To investigate, prosecute, or provide sup- room. In addition, you can deduct your expen-
Because you spend most of your working port services for the investigation or prose- ses of returning home up to the amount you
time and earn most of your salary in Baltimore, cution of a federal crime. would have spent for meals had you stayed at
that city is your tax home. You can’t deduct any your temporary place of work.
expenses you have for meals and lodging Determining temporary or indefinite. You
there. However, when you return to work in must determine whether your assignment is Probationary work period. If you take a job
Pittsburgh, you are away from your tax home temporary or indefinite when you start work. If that requires you to move, with the understand-
even though you stay at your family home. You you expect an assignment or job to last for 1 ing that you will keep the job if your work is sat-
can deduct the cost of your round trip between year or less, it is temporary unless there are isfactory during a probationary period, the job is
Baltimore and Pittsburgh. You can also deduct facts and circumstances that indicate other- indefinite. You can’t deduct any of your expen-
your part of your family's living expenses for wise. An assignment or job that is initially tem- ses for meals and lodging during the probation-
non-entertainment-related meals and lodging porary may become indefinite due to changed ary period.
while you are living and working in Pittsburgh. circumstances. A series of assignments to the
same location, all for short periods but that to-
gether cover a long period, may be considered What Travel Expenses
Temporary an indefinite assignment.
The following examples illustrate whether an Are Deductible?
Assignment or Job assignment or job is temporary or indefinite.
Once you have determined that you are travel-
You may regularly work at your tax home and Example 1. You are a construction worker. ing away from your tax home, you can deter-
also work at another location. It may not be You live and regularly work in Los Angeles. You mine what travel expenses are deductible.
practical to return to your tax home from this are a member of a trade union in Los Angeles
other location at the end of each workday. that helps you get work in the Los Angeles area. You can deduct ordinary and necessary ex-
Your tax home is Los Angeles. Because of a penses you have when you travel away from
Temporary assignment vs. indefinite as- shortage of work, you took a job on a construc- home on business. The type of expense you
signment. If your assignment or job away from tion project in Fresno. Your job was scheduled can deduct depends on the facts and your cir-
your main place of work is temporary, your tax to end in 8 months. The job actually lasted 10 cumstances.
home doesn’t change. You are considered to months.
be away from home for the whole period you You realistically expected the job in Fresno Table 1-1 summarizes travel expenses you
are away from your main place of work. You to last 8 months. The job actually did last less may be able to deduct. You may have other de-
can deduct your travel expenses if they other- than 1 year. The job is temporary and your tax ductible travel expenses that aren’t covered
wise qualify for deduction. Generally, a tempo- home is still in Los Angeles. there, depending on the facts and your circum-
rary assignment in a single location is one that stances.

Page 4 Chapter 1 Travel

- 5 -

Page 5 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 1-1. Travel Expenses You Can Deduct on the trip is necessary to the conduct of your
business. Your spouse’s expenses aren’t de-
This chart summarizes expenses you can deduct when you travel away from ductible.
home for business purposes. You pay $199 a day for a double room. A
single room costs $149 a day. You can deduct
IF you have the total cost of driving your car to and from Chi-
expenses for... THEN you can deduct the cost of... cago, but only $149 a day for your hotel room. If
both you and your spouse use public transpor-
transportation travel by airplane, train, bus, or car between your home and your tation, you can only deduct your fare.
business destination. If you were provided with a free ticket or you are
riding free as a result of a frequent traveler or similar program, your
cost is zero. If you travel by ship, see Luxury Water Travel and Cruise Meals
Ships under Conventions, later, for additional rules and limits.
You can deduct the cost of meals if it is neces-
taxi, commuter bus, fares for these and other types of transportation that take you between: sary for you to stop for substantial sleep or rest
and airport • The airport or station and your hotel; and to properly perform your duties while traveling
limousine • The hotel and the work location of your customers or clients, your away from home on business. Meal and enter-
business meeting place, or your temporary work location. tainment expenses are discussed in chapter 2.
baggage and sending baggage and sample or display material between your
shipping regular and temporary work locations. Lavish or extravagant. You can't deduct ex-
penses for meals that are lavish or extravagant.
car operating and maintaining your car when traveling away from home on An expense isn't considered lavish or extrava-
business. You can deduct actual expenses or the standard mileage gant if it is reasonable based on the facts and
rate, as well as business-related tolls and parking. If you rent a car circumstances. Meal expenses won't be disal-
while away from home on business, you can deduct only the lowed merely because they are more than a
business-use portion of the expenses. fixed dollar amount or because the meals take
place at deluxe restaurants, hotels, or resorts.
lodging and meals your lodging and non-entertainment-related meals if your business trip
is overnight or long enough that you need to stop for sleep or rest to 50% limit on meals. You can figure your meal
properly perform your duties. Meals include amounts spent for food, expenses using either of the following methods.
beverages, taxes, and related tips. See Meals, later, for additional • Actual cost.
rules and limits. • The standard meal allowance.
cleaning dry cleaning and laundry. Both of these methods are explained below.
telephone business calls while on your business trip. This includes business But, regardless of the method you use, you can
communication by fax machine or other communication devices. generally deduct only 50% of the unreimbursed
cost of your meals. However, you can deduct
tips tips you pay for any expenses in this chart. 100% of your meal expenses if the meals are
other other similar ordinary and necessary expenses related to your food and beverages provided by a restaurant,
business travel. These expenses might include transportation to or and paid or incurred after December 31, 2020,
from a business meal, public stenographer's fees, computer rental and before January 1, 2023. See IRS.gov/
fees, and operating and maintaining a house trailer. Newsroom/IRS-Provides-Guidance-on-Per-
Diem-Rates-and-the-Temporary-100-Percent-
When you travel away from home on 1. Is your employee, Deduction-for-Food-or-Beverages-From-
Restaurants for additional information.
business, you must keep records of all 2. Has a bona fide business purpose for the If you are reimbursed for the cost of your
RECORDS the expenses you have and any advan-
ces you receive from your employer. You can travel, and meals, how you apply the 50% limit depends on
use a log, diary, notebook, or any other written 3. Would otherwise be allowed to deduct the whether your employer's reimbursement plan
record to keep track of your expenses. The travel expenses. was accountable or nonaccountable. If you
types of expenses you need to record, along aren’t reimbursed, the 50% limit applies even if
with supporting documentation, are described Business associate. If a business asso- the unreimbursed meal expense is for business
in Table 5-1 (see chapter 5). ciate travels with you and meets the conditions travel. Chapter 2 discusses the 50% Limit in
in (2) and (3) above, you can deduct the travel more detail, and chapter 6 discusses accounta-
expenses you have for that person. A business ble and nonaccountable plans.
Separating costs. If you have one expense associate is someone with whom you could rea-
that includes the costs of non-entertainment-re- sonably expect to actively conduct business. A Actual Cost
lated meals, entertainment, and other services business associate can be a current or pro-
(such as lodging or transportation), you must al- spective (likely to become) customer, client,
locate that expense between the cost of supplier, employee, agent, partner, or profes- You can use the actual cost of your meals to fig-
non-entertainment-related meals, and entertain- sional advisor. ure the amount of your expense before reim-
ment and the cost of other services. You must bursement and application of the 50% deduc-
have a reasonable basis for making this alloca- Bona fide business purpose. A bona fide tion limit. If you use this method, you must keep
tion. For example, you must allocate your ex- business purpose exists if you can prove a real records of your actual cost.
penses if a hotel includes one or more meals in business purpose for the individual's presence.
its room charge. Incidental services, such as typing notes or as- Standard Meal Allowance
sisting in entertaining customers, aren’t enough
Travel expenses for another individual. If a to make the expenses deductible.
spouse, dependent, or other individual goes Generally, you can use the “standard meal al-
with you (or your employee) on a business trip Example. You drive to Chicago on busi- lowance” method as an alternative to the actual
or to a business convention, you generally can’t ness and take your spouse with you. Your cost method. It allows you to use a set amount
deduct their travel expenses. spouse isn’t your employee. Your spouse occa- for your daily meals and incidental expenses
sionally types notes, performs similar services, (M&IE), instead of keeping records of your ac-
Employee. You can deduct the travel ex- and accompanies you to luncheons and din- tual costs. The set amount varies depending on
penses of someone who goes with you if that ners. The performance of these services where and when you travel. In this publication,
person: doesn’t establish that your spouse’s presence “standard meal allowance” refers to the federal
rate for M&IE, discussed later under Amount of
Chapter 1 Travel Page 5

- 6 -

Page 6 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

standard meal allowance. If you use the stand- Amount of standard meal allowance. The must use the special rate (and not use the regu-
ard meal allowance, you must still keep records standard meal allowance is the federal M&IE lar standard meal allowance rates) for all trips
to prove the time, place, and business purpose rate. For travel in 2022, the rate for most small you take that year.
of your travel. See the recordkeeping rules for localities in the United States is $59 per day.
travel in chapter 5. Most major cities and many other localities Travel for days you depart and return. For
in the United States are designated as both the day you depart for and the day you re-
Incidental expenses. The term “incidental ex- high-cost areas, qualifying for higher standard turn from a business trip, you must prorate the
penses” means fees and tips given to porters, meal allowances. standard meal allowance (figure a reduced
baggage carriers, hotel staff, and staff on ships. amount for each day). You can do so by one of
Incidental expenses don’t include expenses You can find this information (organ- two methods.
for laundry, cleaning and pressing of clothing, ized by state) at GSA.gov/travel/plan- • Method 1: You can claim / of the stand-3 4
lodging taxes, costs of telegrams or telephone book/per-diem-rates. Enter a zip code ard meal allowance.
calls, transportation between places of lodging or select a city and state for the per diem rates • Method 2: You can prorate using any
or business and places where meals are taken, for the current fiscal year. Per diem rates for method that you consistently apply and
or the mailing cost of filing travel vouchers and prior fiscal years are available by using the that is in accordance with reasonable busi-
paying employer-sponsored charge card bill- drop-down menu. ness practice.
ings. If you travel to more than one location in one
day, use the rate in effect for the area where Example. You are employed in New Or-
Incidental-expenses-only method. You can you stop for sleep or rest. If you work in the leans as a convention planner. In March, your
use an optional method (instead of actual cost) transportation industry, however, see Special employer sent you on a 3-day trip to Washing-
for deducting incidental expenses only. The rate for transportation workers, later. ton, DC, to attend a planning seminar. You left
amount of the deduction is $5 a day. You can your home in New Orleans at 10 a.m. on Wed-
use this method only if you didn’t pay or incur Federal government's fiscal year. Per nesday and arrived in Washington, DC, at 5:30
any meal expenses. You can’t use this method diem rates are listed by the federal govern- p.m. After spending 2 nights there, you flew
on any day that you use the standard meal al- ment's fiscal year, which runs from October 1 to back to New Orleans on Friday and arrived
lowance. This method is subject to the proration September 30. You can choose to use the rates back home at 8 p.m. Your employer gave you a
rules for partial days. See Travel for days you from the 2021 fiscal year per diem tables or the flat amount to cover your expenses and inclu-
depart and return, later, in this chapter. rates from the 2022 fiscal year tables, but you ded it with your wages.
must consistently use the same tables for all Under Method 1, you can claim 2 / days of 1 2
Note. The incidental-expenses-only travel you are reporting on your income tax re- the standard meal allowance for Washington,
method isn’t subject to the 50% limit discussed turn for the year. See Transition Rules, later. DC: / of the daily rate for Wednesday and Fri-3 4
day (the days you departed and returned), and
below. Standard meal allowance for areas out- the full daily rate for Thursday.
Federal employees should refer to the side the continental United States. The Under Method 2, you could also use any
! Federal Travel Regulations at GSA.gov standard meal allowance rates above don’t ap- method that you apply consistently and that is in
CAUTION for changes affecting claims for reim- ply to travel in Alaska, Hawaii, or any other loca- accordance with reasonable business practice.
bursement. tion outside the continental United States. The For example, you could claim 3 days of the
Department of Defense establishes per diem standard meal allowance even though a federal
50% limit may apply. If you use the standard rates for Alaska, Hawaii, Puerto Rico, American employee would have to use Method 1 and be
meal allowance method for non-entertain- Samoa, Guam, Midway, the Northern Mariana limited to only 2 / days.1 2
ment-related meal expenses and you aren’t re- Islands, the U.S. Virgin Islands, Wake Island,
imbursed or you are reimbursed under a nonac- and other non-foreign areas outside the conti-
countable plan, you can generally deduct only nental United States. The Department of State Travel in the United States
50% of the standard meal allowance. If you are establishes per diem rates for all other foreign
reimbursed under an accountable plan and you areas. The following discussion applies to travel in the
are deducting amounts that are more than your You can access per diem rates for United States. For this purpose, the United
reimbursements, you can deduct only 50% of non-foreign areas outside the continen- States includes the 50 states and the District of
the excess amount. The 50% Limit is discussed tal United States at Travel.dod.mil/ Columbia. The treatment of your travel expen-
in more detail in chapter 2, and accountable Travel-Transportation-Rates/Per-Diem/Per- ses depends on how much of your trip was
and nonaccountable plans are discussed in Diem-Rate-Lookup/. You can access all other business related and on how much of your trip
chapter 6. foreign per diem rates at aoprals.state.gov/ occurred within the United States. See Part of
There is no optional standard lodging web920/per_diem.asp. Trip Outside the United States, later.

! amount similar to the standard meal al- Special rate for transportation workers. Trip Primarily for Business
CAUTION lowance. Your allowable lodging ex-
pense deduction is your actual cost. You can use a special standard meal allowance
if you work in the transportation industry. You You can deduct all of your travel expenses if
are in the transportation industry if your work: your trip was entirely business related. If your
Who can use the standard meal allowance. • Directly involves moving people or goods trip was primarily for business and, while at your
You can use the standard meal allowance by airplane, barge, bus, ship, train, or business destination, you extended your stay
whether you are an employee or self-employed, truck; and for a vacation, made a personal side trip, or had
and whether or not you are reimbursed for your • Regularly requires you to travel away from other personal activities, you can deduct only
traveling expenses. home and, during any single trip, usually your business-related travel expenses. These
involves travel to areas eligible for different expenses include the travel costs of getting to
Use of the standard meal allowance for standard meal allowance rates. and from your business destination and any
other travel. You can use the standard meal
allowance to figure your meal expenses when If this applies, you can claim a standard meal al- business-related expenses at your business
you travel in connection with investment and lowance of $69 a day ($74 for travel outside the destination.
other income-producing property. You can also continental United States) for travel in 2022.
use it to figure your meal expenses when you Using the special rate for transportation Example. You work in Atlanta and take a
travel for qualifying educational purposes. You workers eliminates the need for you to deter- business trip to New Orleans in May. Your busi-
can’t use the standard meal allowance to figure mine the standard meal allowance for every ness travel totals 900 miles round trip. On your
the cost of your meals when you travel for medi- area where you stop for sleep or rest. If you way home, you stop in Mobile to visit your pa-
cal or charitable purposes. choose to use the special rate for any trip, you rents. You spend $2,165 for the 9 days you are
away from home for travel, non-entertain-
ment-related meals, lodging, and other travel

Page 6 Chapter 1 Travel

- 7 -

Page 7 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

expenses. If you hadn’t stopped in Mobile, you trip from the border to Mexico City and back to business discussions, and from Saturday until
would have been gone only 6 days, and your to- the border. Tuesday, you were sightseeing. You flew back
tal cost would have been $1,633.50. You can to New York, arriving Wednesday afternoon. On
deduct $1,633.50 for your trip, including the Thursday, you flew back to Denver.
cost of round-trip transportation to and from Travel Outside Although you were away from your home in
New Orleans. The deduction for your non-enter- the United States Denver for more than a week, you weren’t out-
tainment-related meals is subject to the 50% side the United States for more than a week.
limit on meals mentioned earlier. If any part of your business travel is outside the This is because the day you depart doesn’t
United States, some of your deductions for the count as a day outside the United States.
cost of getting to and from your destination may You can deduct your cost of the round-trip
Trip Primarily for be limited. For this purpose, the United States flight between Denver and Brussels. You can
Personal Reasons includes the 50 states and the District of Colum- also deduct the cost of your stay in Brussels for
bia. Thursday and Friday while you conducted busi-
If your trip was primarily for personal reasons, ness. However, you can’t deduct the cost of
such as a vacation, the entire cost of the trip is a How much of your travel expenses you can your stay in Brussels from Saturday through
nondeductible personal expense. However, you deduct depends in part upon how much of your Tuesday because those days were spent on
can deduct any expenses you have while at trip outside the United States was business re- nonbusiness activities.
your destination that are directly related to your lated.
business. Exception 3—Less than 25% of time on
Travel Entirely for Business or personal activities. Your trip is considered
A trip to a resort or on a cruise ship may be a Considered Entirely for Business entirely for business if:
vacation even if the promoter advertises that it • You were outside the United States for
is primarily for business. The scheduling of inci- You can deduct all your travel expenses of get- more than a week, and
dental business activities during a trip, such as ting to and from your business destination if • You spent less than 25% of the total time
viewing videotapes or attending lectures deal- your trip is entirely for business or considered you were outside the United States on
ing with general subjects, won’t change what is entirely for business. nonbusiness activities.
really a vacation into a business trip. For this purpose, count both the day your trip
Travel entirely for business. If you travel out- began and the day it ended.
Part of Trip Outside side the United States and you spend the entire
the United States time on business activities, you can deduct all Example. You flew from Seattle to Tokyo,
of your travel expenses. where you spent 14 days on business and 5
days on personal matters. You then flew back
If part of your trip is outside the United States, Travel considered entirely for business. to Seattle. You spent 1 day flying in each direc-
use the rules described later in this chapter un- Even if you didn’t spend your entire time on tion.
der Travel Outside the United States for that business activities, your trip is considered en- Because only / (less than 25%) of your to-5 21
part of the trip. For the part of your trip that is in- tirely for business if you meet at least one of the tal time abroad was for nonbusiness activities,
side the United States, use the rules for travel in following four exceptions. you can deduct as travel expenses what it
the United States. Travel outside the United would have cost you to make the trip if you
States doesn’t include travel from one point in Exception 1—No substantial control.
the United States to another point in the United Your trip is considered entirely for business if hadn’t engaged in any nonbusiness activity.
States. The following discussion can help you you didn’t have substantial control over arrang- The amount you can deduct is the cost of the
determine whether your trip was entirely within ing the trip. The fact that you control the timing round-trip plane fare and 16 days of non-enter-
the United States. of your trip doesn’t, by itself, mean that you tainment-related meals (subject to the 50%
have substantial control over arranging your Limit), lodging, and other related expenses.
Public transportation. If you travel by public trip. Exception 4—Vacation not a major con-
transportation, any place in the United States You don’t have substantial control over your sideration. Your trip is considered entirely for
where that vehicle makes a scheduled stop is a trip if you: business if you can establish that a personal va-
point in the United States. Once the vehicle • Are an employee who was reimbursed or cation wasn’t a major consideration, even if you
leaves the last scheduled stop in the United paid a travel expense allowance, and have substantial control over arranging the trip.
States on its way to a point outside the United • Aren’t related to your employer, or
States, you apply the rules under Travel Out- • Aren’t a managing executive.
Travel Primarily for Business
side the United States, later. “Related to your employer” is defined later in
chapter 6 under Per Diem and Car Allowances. If you travel outside the United States primarily
Example. You fly from New York to Puerto A “managing executive” is an employee who for business but spend some of your time on
Rico with a scheduled stop in Miami. Puerto has the authority and responsibility, without be- other activities, you generally can’t deduct all of
Rico isn’t considered part of the United States ing subject to the veto of another, to decide on your travel expenses. You can only deduct the
for purposes of travel. You return to New York the need for the business travel. business portion of your cost of getting to and
nonstop. The flight from New York to Miami is in A self-employed person generally has sub- from your destination. You must allocate the
the United States, so only the flight from Miami stantial control over arranging business trips. costs between your business and other activi-
to Puerto Rico is outside the United States. Be-
cause there are no scheduled stops between Exception 2—Outside United States no ties to determine your deductible amount. See
Puerto Rico and New York, all of the return trip more than a week. Your trip is considered en- Travel allocation rules, later.
is outside the United States. tirely for business if you were outside the United You don’t have to allocate your travel
States for a week or less, combining business TIP expenses if you meet one of the four
Private car. Travel by private car in the United and nonbusiness activities. One week means 7 exceptions listed earlier under Travel
States is travel between points in the United consecutive days. In counting the days, don’t considered entirely for business. In those ca-
States, even though you are on your way to a count the day you leave the United States, but ses, you can deduct the total cost of getting to
destination outside the United States. do count the day you return to the United and from your destination.
States.
Example. You travel by car from Denver to
Mexico City and return. Your travel from Denver Example. You traveled to Brussels primar- Travel allocation rules. If your trip outside the
to the border and from the border back to Den- ily for business. You left Denver on Tuesday United States was primarily for business, you
ver is travel in the United States, and the rules and flew to New York. On Wednesday, you flew must allocate your travel time on a day-to-day
in this section apply. The rules below under from New York to Brussels, arriving the next basis between business days and nonbusiness
Travel Outside the United States apply to your morning. On Thursday and Friday, you had days. The days you depart from and return to

Chapter 1 Travel Page 7

- 8 -

Page 8 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

the United States are both counted as days out- and your nonbusiness destination and a return Example. Assume that the dates are the
side the United States. to the point where travel outside the United same as in the previous example but that in-
To figure the deductible amount of your States ends. stead of going to Dublin for your vacation, you
round-trip travel expenses, use the following You determine the nonbusiness portion of fly to Venice, Italy, for a vacation.
fraction. The numerator (top number) is the total that expense by multiplying it by a fraction. The You can’t deduct any part of the cost of your
number of business days outside the United numerator (top number) of the fraction is the trip from Paris to Venice and return to Paris. In
States. The denominator (bottom number) is number of nonbusiness days during your travel addition, you can’t deduct / of the airfare and 7 18
the total number of business and nonbusiness outside the United States, and the denominator other expenses from New York to Paris and
days of travel. (bottom number) is the total number of days you back to New York.
spend outside the United States. You can deduct / of the round-trip plane 11 18
Counting business days. Your business fare and other travel expenses from New York
days include transportation days, days your Example. You live in New York. On May 4, to Paris, plus your non-entertainment-related
presence was required, days you spent on busi- you flew to Paris to attend a business confer- meals (subject to the 50% Limit), lodging, and
ness, and certain weekends and holidays. ence that began on May 5. The conference any other business expenses you had in Paris.
ended at noon on May 14. That evening, you (Assume these expenses total $4,939.) If the
Transportation day. Count as a business flew to Dublin where you visited with friends un- round-trip plane fare and other travel-related
day any day you spend traveling to or from a til the afternoon of May 21, when you flew di- expenses (such as food during the trip) are
business destination. However, if because of a rectly home to New York. The primary purpose $1,750, you can deduct travel costs of $1,069
nonbusiness activity you don’t travel by a direct for the trip was to attend the conference. ( / × $1,750), plus the full $4,939 for the ex-11 18
route, your business days are the days it would If you hadn’t stopped in Dublin, you would penses you had in Paris.
take you to travel a reasonably direct route to have arrived home the evening of May 14. You
your business destination. Extra days for side don’t meet any of the exceptions that would al- Other methods. You can use another method
trips or nonbusiness activities can’t be counted low you to consider your travel entirely for busi- of counting business days if you establish that it
as business days. ness. May 4 through May 14 (11 days) are busi- more clearly reflects the time spent on other
Presence required. Count as a business ness days and May 15 through May 21 (7 days) than business activities outside the United
day any day your presence is required at a par- are nonbusiness days. States.
ticular place for a specific business purpose. You can deduct the cost of your non-enter-
Count it as a business day even if you spend tainment-related meals (subject to the 50% Travel Primarily for Personal
most of the day on nonbusiness activities. Limit), lodging, and other business-related Reasons
travel expenses while in Paris.
Day spent on business. If your principal You can’t deduct your expenses while in If you travel outside the United States primarily
activity during working hours is the pursuit of Dublin. You also can’t deduct / of what it 7 18
for vacation or for investment purposes, the en-
your trade or business, count the day as a busi- would have cost you to travel round trip be- tire cost of the trip is a nondeductible personal
ness day. Also, count as a business day any tween New York and Dublin. expense. However, if you spend some time at-
day you are prevented from working because of You paid $750 to fly from New York to Paris, tending brief professional seminars or a con-
circumstances beyond your control. $400 to fly from Paris to Dublin, and $700 to fly tinuing education program, you can deduct your
from Dublin back to New York. Round-trip air- registration fees and other expenses you have
Certain weekends and holidays. Count fare from New York to Dublin would have been that are directly related to your business.
weekends, holidays, and other necessary $1,250.
standby days as business days if they fall be- You figure the deductible part of your air Example. The university from which you
tween business days. But if they follow your travel expenses by subtracting / of the 7 18
graduated has a continuing education program
business meetings or activity and you remain at round-trip airfare and other expenses you would for members of its alumni association. This pro-
your business destination for nonbusiness or have had in traveling directly between New gram consists of trips to various foreign coun-
personal reasons, don’t count them as business York and Dublin ($1,250 × / = $486) from 7 18
tries where academic exercises and conferen-
days. your total expenses in traveling from New York ces are set up to acquaint individuals in most
Example 1. Your tax home is New York to Paris to Dublin and back to New York ($750 + occupations with selected facilities in several
City. You travel to Quebec, where you have a $400 + $700 = $1,850). regions of the world. However, none of the con-
business appointment on Friday. You have an- Your deductible air travel expense is $1,364 ferences are directed toward specific occupa-
other appointment on the following Monday. ($1,850 − $486). tions or professions. It is up to each participant
to seek out specialists and organizational set-
Because your presence was required on both Nonbusiness activity at, near, or beyond tings appropriate to their occupational interests.
Friday and Monday, they are business days. business destination. If you had a vacation or Three-hour sessions are held each day over
Because the weekend is between business other nonbusiness activity at, near, or beyond a 5-day period at each of the selected overseas
days, Saturday and Sunday are counted as your business destination, you must allocate facilities where participants can meet with indi-
business days. This is true even though you use part of your travel expenses to the nonbusiness vidual practitioners. These sessions are com-
the weekend for sightseeing, visiting friends, or activity. posed of a variety of activities including work-
other nonbusiness activity.
The part you must allocate is the amount it shops, mini-lectures, roleplaying, skill
Example 2. If, in Example 1, you had no would have cost you to travel between the point development, and exercises. Professional con-
business in Quebec after Friday, but stayed un- where travel outside the United States begins ference directors schedule and conduct the
til Monday before starting home, Saturday and and your business destination and a return to sessions. Participants can choose those ses-
Sunday would be nonbusiness days. the point where travel outside the United States sions they wish to attend.
ends. You can participate in this program because
Nonbusiness activity on the way to or from You determine the nonbusiness portion of you are a member of the alumni association.
your business destination. If you stopped for that expense by multiplying it by a fraction. The You and your family take one of the trips. You
a vacation or other nonbusiness activity either numerator (top number) of the fraction is the spend about 2 hours at each of the planned
on the way from the United States to your busi- number of nonbusiness days during your travel sessions. The rest of the time you go touring
ness destination, or on the way back to the Uni- outside the United States, and the denominator and sightseeing with your family. The trip lasts
ted States from your business destination, you (bottom number) is the total number of days you less than 1 week.
must allocate part of your travel expenses to the spend outside the United States. Your travel expenses for the trip aren’t de-
nonbusiness activity. None of your travel expenses for nonbusi- ductible since the trip was primarily a vacation.
The part you must allocate is the amount it ness activities at, near, or beyond your busi- However, registration fees and any other inci-
would have cost you to travel between the point ness destination are deductible. dental expenses you have for the five planned
where travel outside the United States begins sessions you attended that are directly related
and beneficial to your business are deductible
Page 8 Chapter 1 Travel

- 9 -

Page 9 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

business expenses. These expenses should be Entertainment . . . . . . . . . . . . . . $1,000 Conventions Held Outside
specifically stated in your records to ensure 0% limit . . . . . . . . . . . . . . . . . . . x 0.00 the North American Area
proper allocation of your deductible business
expenses. Allowable entertainment . . . . . . $0.00
Non-entertainment-related You can’t deduct expenses for attending a con-
meals . . . . . . . . . . . . . . . . . . . . . $3,700 vention, seminar, or similar meeting held
Luxury Water Travel 50% limit . . . . . . . . . . . . . . . . . . × 0.50 outside the North American area unless:
Allowable non-entertainment • The meeting is directly related to the active
If you travel by ocean liner, cruise ship, or other meals & entertainment . . . . . . . . $1,850 conduct of your trade or business, and
form of luxury water transportation for business Other travel expenses . . . . . . . + 1,500 • It is as reasonable to hold the meeting out-
side the North American area as within the
you can deduct. The limit is twice the highest Allowable cost before the daily limit
purposes, there is a daily limit on the amount . . . $3,350 North American area. See Reasonable-
federal per diem rate allowable at the time of Daily limit for May 2022 . . . . . . $ 720 ness test, later.
your travel. (Generally, the federal per diem is Times number of days . . . . . . . × 6 If the meeting meets these requirements, you
the amount paid to federal government employ- Maximum luxury water travel . . . . must also satisfy the rules for deducting expen-
ees for daily living expenses when they travel deduction . . . . . . . . . . . . . . . . . . . . . . . $4,320 ses for business trips in general, discussed ear-
away from home within the United States for lier under Travel Outside the United States.
business purposes.) Amount of allowable deduction . . . . $3,350
North American area. The North American
Daily limit on luxury water travel. The high- area includes the following locations.
est federal per diem rate allowed and the daily Your deduction for your cruise is limited to
limit for luxury water travel in 2022 are shown in $3,350, even though the limit on luxury water
the following table. travel is higher. American Samoa Jarvis Island
Antigua and Barbuda Johnston Island
Not separately stated. If your meal or en- Aruba Kingman Reef
Highest Daily Limit on tertainment charges aren’t separately stated or Bahamas Marshall Islands
Federal Luxury Water aren’t clearly identifiable, you don’t have to allo- Baker Island Mexico
2022 Dates Per Diem Travel cate any portion of the total charge to meals or Barbados Micronesia
entertainment.
January 1 – $497 $994 Bermuda Midway Islands
March 31 Canada Northern Mariana
Exceptions Costa Rica Islands
April 1 – April 30 373 746 Curaçao Palau
May 1– May 31 360 720 The daily limit on luxury water travel (discussed Dominica Palmyra Atoll
June 1 – 433 866 earlier) doesn’t apply to expenses you have to Dominican Republic Panama
September 30 attend a convention, seminar, or meeting on Grenada Puerto Rico
board a cruise ship. See Cruise Ships, later, un- Guam Saint Lucia
October 1 – 388 776 der Conventions. Guyana Trinidad and Tobago
October 31 Honduras USA
Howland Island U.S. Virgin Islands
November 1 – 367 734 Conventions Jamaica Wake Island
November 30
December 1 – 564 1,128 You can deduct your travel expenses when you The North American area also includes U.S. is-
December 31 attend a convention if you can show that your lands, cays, and reefs that are territories of the
attendance benefits your trade or business. You United States and not part of the 50 states or
can’t deduct the travel expenses for your family.
Example. You are a travel agent and trav- the District of Columbia. See Revenue Ruling
eled by ocean liner from New York to London, If the convention is for investment, political, 2016-16, available at IRS.gov/irb/
England, on business in May. Your expense for social, or other purposes unrelated to your 2016-26_IRB#RR-2016-16, for more informa-
the 6-day cruise was $6,200. Your deduction for trade or business, you can’t deduct the expen- tion.
the cruise can’t exceed $4,320 (6 days × $720 ses.
Reasonableness test. The following factors
daily limit). Your appointment or election as a dele- are taken into account to determine if it was as
Meals and entertainment. If your expenses ! gate doesn’t, in itself, determine reasonable to hold the meeting outside the
for luxury water travel include separately stated CAUTION whether you can deduct travel expen- North American area as within the North Ameri-
amounts for meals or entertainment, those ses. You can deduct your travel expenses only can area.
amounts are subject to the 50% limit on non-en- if your attendance is connected to your own • The purpose of the meeting and the activi-
tertainment-related meals and entertainment trade or business. ties taking place at the meeting.
before you apply the daily limit. For a discussion • The purposes and activities of the spon-
of the 50% Limit, see chapter 2. Convention agenda. The convention agenda soring organizations or groups.
or program generally shows the purpose of the • The homes of the active members of the
Example. In the previous example, your convention. You can show your attendance at sponsoring organizations and the places at
luxury water travel had a total cost of $6,200. Of the convention benefits your trade or business which other meetings of the sponsoring or-
that amount, $3,700 was separately stated as by comparing the agenda with the official duties ganizations or groups have been or will be
non-entertainment-related meals and $1,000 and responsibilities of your position. The held.
was separately stated as entertainment. Con- agenda doesn’t have to deal specifically with • Other relevant factors you may present.
sidering that you are self-employed, you aren’t your official duties and responsibilities; it will be
reimbursed for any of your travel expenses. You enough if the agenda is so related to your posi- Cruise Ships
figure your deductible travel expenses as fol- tion that it shows your attendance was for busi-
lows. ness purposes. 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.

Chapter 1 Travel Page 9

- 10 -

Page 10 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

1. The convention, seminar, or meeting is di- or on hunting, fishing, vacation, and similar
rectly related to the active conduct of your trips.
trade or business. Entertainment
Entertainment facilities. Generally, you can’t
2. The cruise ship is a vessel registered in deduct any expense for the use of an entertain-
the United States. Entertainment—Defined ment facility. This includes expenses for depre-
3. All of the cruise ship's ports of call are in Entertainment includes any activity generally ciation and operating costs such as rent, utilit-
the United States or in territories of the considered to provide entertainment, amuse- ies, maintenance, and protection.
United States. ment, or recreation. Examples include enter- An entertainment facility is any property you
4. You attach to your return a written state- taining guests at nightclubs; at social, athletic, own, rent, or use for entertainment. Examples
ment signed by you that includes informa- and sporting clubs; at theaters; at sporting include a yacht, hunting lodge, fishing camp,
tion about: events; on yachts; or on hunting, fishing, vaca- swimming pool, tennis court, bowling alley, car,
tion, and similar trips. Entertainment may also airplane, apartment, hotel suite, or home in a
a. The total days of the trip (not including include meeting personal, living, or family vacation resort.
the days of transportation to and from needs of individuals, such as providing meals, a
the cruise ship port), hotel suite, or a car to customers or their fami- Club dues and membership fees. You can’t
b. The number of hours each day that lies. deduct dues (including initiation fees) for mem-
bership in any club organized for business,
you devoted to scheduled business Deduction may depend on your type of pleasure, recreation, or other social purposes.
activities, and business. Your kind of business may deter- This rule applies to any membership organi-
c. A program of the scheduled business mine if a particular activity is considered enter- zation if one of its principal purposes is either:
activities of the meeting. tainment. For example, if you are a dress de- • To conduct entertainment activities for
signer and have a fashion show to introduce members or their guests; or
5. You attach to your return a written state- your new designs to store buyers, the show • To provide members or their guests with
ment signed by an officer of the organiza- generally isn’t considered entertainment. This is access to entertainment facilities, dis-
tion or group sponsoring the meeting that because fashion shows are typical in your busi- cussed later.
includes: ness. But, if you are an appliance distributor
a. A schedule of the business activities and hold a fashion show for the spouses of your The purposes and activities of a club, not its
of each day of the meeting, and retailers, the show is generally considered en- name, will determine whether or not you can
tertainment. deduct the dues. You can’t deduct dues paid to:
b. The number of hours you attended • Country clubs,
the scheduled business activities. Separating costs. If you have one expense • Golf and athletic clubs,
that includes the costs of entertainment and • Airline clubs,
other services (such as lodging or transporta- • Hotel clubs, and
tion), you must allocate that expense between • Clubs operated to provide meals under cir-
the cost of entertainment and the cost of other cumstances generally considered to be
services. You must have a reasonable basis for conducive to business discussions.
making this allocation. For example, you must
2. allocate your expenses if a hotel includes enter- Gift or entertainment. Any item that might be
tainment in its lounge on the same bill with your considered either a gift or entertainment will
room charge. generally be considered entertainment. How-
ever, if you give a customer packaged food or
Meals and beverages that you intend the customer to use
Exceptions to the Rules at a later date, treat it as a gift.
Entertainment In general, entertainment expenses are nonde-
ductible. However, there are a few exceptions
You can no longer take a deduction for any ex- to the general rule, including: Meals
pense related to activities generally considered • Entertainment treated as compensation on
entertainment, amusement, or recreation. You your originally filed tax returns (and treated As discussed above, entertainment expenses
can continue to deduct 50% of the cost of busi- as wages to your employees); are generally nondeductible. However, you may
ness meals if you (or your employee) are • Recreational expenses for employees continue to deduct 50% of the cost of business
present and the food or beverages aren't con- such as a holiday party or a summer pic- meals if you (or an employee) is present and
sidered lavish or extravagant. You can deduct nic; the food or beverages are not considered lavish
100% of your meal expenses if the meals are • Expenses related to attending business or extravagant. You can deduct 100% of your
food and beverages provided by a restaurant, meetings or conventions of certain exempt meal expenses if the meals are food and bever-
and paid or incurred after December 31, 2020, organizations such as business leagues, ages provided by a restaurant, and paid or in-
and before January 1, 2023. See IRS.gov/ chambers of commerce, professional as- curred after December 31, 2020, and before
Newsroom/IRS-Provides-Guidance-on-Per- sociations, etc.; and January 1, 2023. The meals may be provided to
Diem-Rates-and-the-Temporary-100-Percent- • Entertainment sold to customers. For ex- a current or potential business customer, client,
Deduction-for-Food-or-Beverages-From- ample, if you run a nightclub, your expen- consultant, or similar business contact.
Restaurants for additional information. ses for the entertainment you furnish to Food and beverages that are provided dur-
your customers, such as a floor show, ing entertainment events are not considered en-
If food or beverages are provided dur- aren’t subject to the nondeductible rules. tertainment if purchased separately from the
TIP ing or at an entertainment event, and entertainment, or if the cost of the food and bev-
the food and beverages were pur- erages is stated separately from the cost of the
chased separately from the entertainment or Examples of Nondeductible
the cost of the food and beverages was stated Entertainment entertainment on one or more bills, invoices, or
separately from the cost of the entertainment on receipts. However, the entertainment disallow-
one or more bills, invoices, or receipts, you may Entertainment events. Generally, you can't ance rule may not be circumvented through in-
be able to deduct the separately stated costs as deduct any expense for an entertainment event. flating the amount charged for food and bever-
a meal expense. For more information, see This includes expenses for entertaining guests ages.
Regulations section 1.274-11(d)(2), Example 2. at nightclubs; at social, athletic, and sporting
clubs; at theaters; at sporting events; on yachts; Other rules for meals and entertainment ex-
penses. Any allowed expense must be ordi-
nary and necessary. An ordinary expense is
Page 10 Chapter 2 Meals and Entertainment

- 11 -

Page 11 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Figure A. Does the 50% Limit Apply to Your Expenses? entertainment expense and is not deductible by
C. However, the cost of the food and bever-
There are exceptions to these rules. See Exceptions to the 50% Limit for Meals, later. ages, which is stated separately on the invoice
All employees and self-employed persons can use this chart. for the game tickets, is not an entertainment ex-
pense and is not subject to the section 274(a)
Start Here (1) disallowance. Therefore, C may deduct 50%
of the expenses associated with the food and
Were your meal and entertainment expenses reimbursed? beverages provided at the game.
(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 No
aren’t included on Form 1099-MISC, Miscellaneous 50% Limit
Income.)
In general, you can deduct only 50% of your
Yes business-related meal expenses, unless an ex-
ception applies. However, you can deduct
100% of your meal expenses if the meals are
If an employee, did you adequately account food and beverages provided by a restaurant,
to your employer under an accountable plan? and paid or incurred after December 31, 2020,
If self-employed, did you provide the payer No and before January 1, 2023. See IRS.gov/
with adequate records? (See chapter 6.) Newsroom/IRS-Provides-Guidance-on-Per-
Diem-Rates-and-the-Temporary-100-Percent-
Yes Deduction-for-Food-or-Beverages-From-
Restaurants for additional information. (If you
are subject to the Department of Transporta-
Did your expenses exceed the reimbursement? tion's “hours of service” limits, you can deduct
No Yes 80% of your business-related meal expenses.
See Individuals subject to “hours of service” lim-
its, later.)
For the amount reimbursed... For the excess amount... The 50% limit applies to employees or their
employers, and to self-employed persons (in-
cluding independent contractors) or their cli-
ents, depending on whether the expenses are
reimbursed.
Your meal and entertainment
expenses are NOT subject to Your meal expenses ARE Examples of meals might include:
the limitations. However, since subject to the 50% limit. • Meals while traveling away from home
the reimbursement wasn’t Your entertainment (whether eating alone or with others) on
treated as wages or as other expenses are nondeduct- business, or
taxable income, you can’t ible. • Meal at a business convention or business
deduct the expenses. league meeting.

one that is common and accepted in your trade Therefore, A may deduct 50% of the expenses
or business. A necessary expense is one that is associated with the hot dogs and drinks pur- Costs to include or exclude. Taxes and tips
helpful and appropriate for your business. An chased at the game. relating to a business meal are included as a
expense doesn't have to be required to be con- cost of the meal and are subject to the 50%
sidered necessary. Expenses must not be lav- Example 2. Taxpayer C invites D, a busi- limit. However, the cost of transportation to and
ish or extravagant. An expense isn't considered ness contact, to a basketball game. C purcha- from the meal is not treated as part of the cost
lavish or extravagant if it is reasonable based ses tickets for C and D to attend the game in a and would not be subject to the limit.
on the facts and circumstances. suite, where they have access to food and bev-
erages. The cost of the basketball game tickets, Application of 50% limit. The 50% limit on
Examples. For each example, assume that the as stated on the invoice, includes the food and meal expenses applies if the expense is other-
food and beverage expenses are ordinary and beverages. The basketball game is entertain- wise deductible and isn’t covered by one of the
necessary expenses under section 162(a) paid ment as defined in Regulations section exceptions discussed later. Figure A can help
or incurred during the tax year in carrying on a 1.274-11(b)(1)(i) and, thus, the cost of the you determine if the 50% limit applies to you.
trade or business and are not lavish or extrava- game tickets is an entertainment expense and The 50% limit also applies to certain meal
gant under the circumstances. Also assume is not deductible by C. The cost of the food and expenses that aren’t business related. It applies
that the taxpayer and the business contact are beverages, which are not purchased separately to meal expenses you have for the production
not engaged in a trade or business that has any from the game tickets, is not stated separately of income, including rental or royalty income. It
relation to the entertainment activity. on the invoice. Thus, the cost of the food and also applies to the cost of meals included in de-
beverages is also an entertainment expense ductible educational expenses.
Example 1. Taxpayer A invites B, a busi- that is subject to the section 274(a)(1) disallow-
ness contact, to a baseball game. A purchases ance. Therefore, C may not deduct any of the When to apply the 50% limit. The 50% limit
tickets for A and B to attend the game. While at expenses associated with the basketball game. will apply after determining the amount that
the game, A buys hot dogs and drinks for A and would otherwise qualify for a deduction. You
B. The baseball game is entertainment as de- Example 3. Assume the same facts as in
fined in Regulations section 1.274-11(b)(1)(i) Example 2, except that the invoice for the bas- first have to determine the amount of meal ex-
and, thus, the cost of the game tickets is an en- ketball game tickets separately states the cost penses that would be deductible under the
tertainment expense and is not deductible by A. of the food and beverages. As in Example 2, other rules discussed in this publication.
The cost of the hot dogs and drinks, which are the basketball game is entertainment as defined
purchased separately from the game tickets, is in Regulations section 1.274-2(b)(1)(i) and, Taking turns paying for meals. If a group of
not an entertainment expense and is not sub- thus, the cost of the game tickets, other than the business acquaintances takes turns picking up
ject to the section 274(a)(1) disallowance. cost of the food and beverages, is an each others' meal checks primarily for personal
reasons, without regard to whether any
Chapter 2 Meals and Entertainment Page 11

- 12 -

Page 12 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Figure B. When Are Transportation Expenses Deductible? • You provide adequate records of these ex-
penses to your customer or client. (See
Most employees and self-employed persons can use this chart. (Don’t use this chart if your home is chapter 5.)
your principal place of business. See Office in the home, later.)
In this case, your client or customer is sub-
ject to the 50% limit on the expenses.
Example. You are a self-employed attorney
Always deductible who adequately accounts for meal expenses to
a client who reimburses you for these expen-
ses. You aren’t subject to the limitation on meal
Temporary expenses. If the client can deduct the expen-
work location
Deductible if you have aregular or main job ses, the client is subject to the 50% limit.
at another location
Always If you (as an independent contractor) have
deductible expenses for meals related to providing serv-
ices for a client but don’t adequately account for
and seek reimbursement from the client for
those expenses, you are subject to the 50%
Never deductible limit on non-entertainment-related meals and
the entertainment-related meal expenses are
nondeductible to you.
Home Regular or
main job 4—Recreational expenses for employ-
ees. You aren't subject to the 50% limit for ex-
Never deductible Always penses for recreational, social, or similar activi-
deductible ties (including facilities) such as a holiday party
or a summer picnic.
5—Advertising expenses. You aren’t
subject to the 50% limit if you provide meals to
the general public as a means of advertising or
promoting goodwill in the community. For ex-
Second job ample, neither the expense of sponsoring a tel-
evision or radio show nor the expense of distrib-
Home: The place where you reside. Transportation expenses between your home and uting free food and beverages to the general
your main or regular place of work are personal commuting expenses. public is subject to the 50% limit.
Regular or main job: Your principal place of business. If you have more than one job, 6—Sale of meals. You aren’t subject to the
you must determine which one is your regular or main job. Consider the time you 50% limit if you actually sell meals to the public.
spend at each, the activity you have at each, and the income you earn at each. For example, if you run a restaurant, your ex-
pense for the food you furnish to your custom-
Temporary work location: A place where your work assignment is realistically ers isn’t subject to the 50% limit.
expected to last (and does in fact last) one year or less. Unless you have a regular
place of business, you can only deduct your transportation expenses to a temporary Individuals subject to “hours of service”
work location outside your metropolitan area. limits. You can deduct a higher percentage of
Second job: If you regularly work at two or more places in one day, whether or not your meal expenses while traveling away from
for the same employer, you can deduct your transportation expenses of getting from your tax home if the meals take place during or
one workplace to another. If you don’t go directly from your rst job to your second incident to any period subject to the Department
job, you can only deduct the transportation expenses of going directly from your rst of Transportation's “hours of service” limits. The
job to your second job. You can’t deduct your transportation expenses between percentage is 80%.
your home and a second job on a day off from your main job. Individuals subject to the Department of
Transportation's “hours of service” limits include
business purposes are served, no member of 1—Expenses treated as compensation. the following persons.
the group can deduct any part of the expense. In general, expenses for goods, services, and • Certain air transportation workers (such as
facilities, to the extent the expenses are treated pilots, crew, dispatchers, mechanics, and
Example 1. You spend $200 (including tax by the taxpayer, with respect to entertainment, control tower operators) who are under
and tip) for a business meal. If $110 of that amusement, or recreation, as compensation to Federal Aviation Administration regula-
amount isn’t allowable because it is lavish and an employee and as wages to the employee for tions.
extravagant, the remaining $90 is subject to the tax purposes. • Interstate truck operators and bus drivers
50% limit. Your deduction can’t be more than who are under Department of Transporta-
$45 (50% (0.50) × $90). 2—Employee's reimbursed expenses. If tion regulations.
you are an employee, you aren’t subject to the • Certain railroad employees (such as engi-
Example 2. You purchase two tickets to a 50% limit on expenses for which your employer neers, conductors, train crews, dispatch-
concert for $200 for you and your client. Your reimburses you under an accountable plan. Ac- ers, and control operations personnel) who
deduction is zero because no deduction is al- countable plans are discussed in chapter 6. are under Federal Railroad Administration
regulations.
lowed for entertainment expenses. 3—Self-employed reimbursed expenses. • Certain merchant mariners who are under
If you are self-employed, your deductible meal Coast Guard regulations.
Exception to the 50% Limit expenses aren’t subject to the 50% limit if all of
for Meals the following requirements are met. 7—Food and beverages provided by a
• You have these expenses as an independ- restaurant. You can deduct 100% of your
ent contractor. meal expenses if the meals are food and bever-
Your meal expense isn’t subject to the 50% limit • Your customer or client reimburses you or ages provided by a restaurant, and paid or in-
if the expense meets one of the following ex- gives you an allowance for these expenses curred after December 31, 2020, and before
ceptions. in connection with services you perform. January 1, 2023. See 50% Limit above and

Page 12 Chapter 2 Meals and Entertainment

- 13 -

Page 13 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

IRS.gov/Newsroom/IRS-Provides-Guidance- 1. An item that costs $4 or less and: Daily transportation expenses you incur while
on-Per-Diem-Rates-and-the-Temporary-100- a. Has your name clearly and perma- traveling from home to one or more regular pla-
Percent-Deduction-for-Food-or-Beverages- nently imprinted on the gift, and ces of business are generally nondeductible
From-Restaurants for additional information. commuting expenses. However, there may be
b. Is one of a number of identical items exceptions to this general rule. You can deduct
you widely distribute. Examples in- daily transportation expenses incurred going
clude pens, desk sets, and plastic between your residence and a temporary work
bags and cases. station outside the metropolitan area where you
2. Signs, display racks, or other promotional live. Also, daily transportation expenses can be
material to be used on the business prem- deducted if (1) you have one or more regular
3. ises of the recipient. work locations away from your residence; or (2)
your residence is your principal place of busi-
ness and you incur expenses going between
the residence and another work location in the
Gifts Gift or entertainment. Any item that might be same trade or business, regardless of whether
considered either a gift or entertainment will the work is temporary or permanent and regard-
If you give gifts in the course of your trade or generally be considered entertainment. How- less of the distance.
business, you may be able to deduct all or part ever, if you give a customer packaged food or If you are entitled to a reimbursement
of the cost. This chapter explains the limits and beverages you intend the customer to use at a ! from your employer but you don’t claim
rules for deducting the costs of gifts. later date, treat it as a gift. CAUTION it, you can’t claim a deduction for the
If you are entitled to a reimbursement expenses to which that unclaimed reimburse-
ment applies. This type of deduction is consid-
for business gifts you give directly or indirectly CAUTION it, you can’t claim a deduction for the
$25 limit. You can deduct no more than $25 ! from your employer but you don’t claim ered a miscellaneous deduction that is no lon-
to each person during your tax year. A gift to a expenses to which that unclaimed reimburse- ger allowable due to the suspension of
company that is intended for the eventual per- ment applies. This type of deduction is consid- miscellaneous itemized deductions subject to
sonal use or benefit of a particular person or a ered a miscellaneous deduction that is no lon- the 2% floor under section 67(a).
limited class of people will be considered an in- ger allowable due to the suspension of
direct gift to that particular person or to the indi- miscellaneous itemized deductions subject to Illustration of transportation expenses. Fig-
viduals within that class of people who receive the 2% floor under section 67(a). ure B, earlier, illustrates the rules that apply for
the gift.
If you give a gift to a member of a custom- deducting transportation expenses when you
er's family, the gift is generally considered to be have a regular or main job away from your
an indirect gift to the customer. This rule doesn’t home. You may want to refer to it when decid-
apply if you have a bona fide, independent busi- ing whether you can deduct your transportation
ness connection with that family member and expenses.
the gift isn’t intended for the customer's even-
Temporary work location. If you have one or
tual use. 4. more regular work locations away from your
If you and your spouse both give gifts, both home and you commute to a temporary work lo-
of you are treated as one taxpayer. It doesn’t cation in the same trade or business, you can
matter whether you have separate businesses, deduct the expenses of the daily round-trip
are separately employed, or whether each of Transportation
transportation between your home and the tem-
you has an independent connection with the re- porary location, regardless of distance.
cipient. If a partnership gives gifts, the partner- This chapter discusses expenses you can de-
ship and the partners are treated as one tax- duct for business transportation when you If your employment at a work location is real-
payer. aren’t traveling away from home, as defined in istically expected to last (and does in fact last)
chapter 1. These expenses include the cost of for 1 year or less, the employment is temporary
Example. You sell products to Local Com- transportation by air, rail, bus, taxi, etc., and the unless there are facts and circumstances that
pany. You and your spouse gave Local Com- cost of driving and maintaining your car. would indicate otherwise.
pany three gourmet gift baskets to thank them If your employment at a work location is real-
for their business. They paid $80 for each gift Transportation expenses include the ordinary istically expected to last for more than 1 year or
basket, or $240 total. Three of Local Company's and necessary costs of all of the following. if there is no realistic expectation that the em-
executives took the gift baskets home for their • Getting from one workplace to another in ployment will last for 1 year or less, the employ-
families' use. You and your spouse have no in- the course of your business or profession ment isn’t temporary, regardless of whether it
dependent business relationship with any of the when you are traveling within the city or actually lasts for more than 1 year.
executives' other family members. They can de- general area that is your tax home. Tax If employment at a work location initially is
duct a total of $75 ($25 limit × 3) for the gift bas- home is defined in chapter 1. realistically expected to last for 1 year or less,
kets. • Visiting clients or customers. but at some later date the employment is realis-
• Going to a business meeting away from tically expected to last more than 1 year, that
Incidental costs. Incidental costs, such as en- your regular workplace. employment will be treated as temporary (un-
graving on jewelry, or packaging, insuring, and • Getting from your home to a temporary less there are facts and circumstances that
mailing, are generally not included in determin- workplace when you have one or more would indicate otherwise) until your expectation
ing the cost of a gift for purposes of the $25 regular places of work. These temporary changes. It won’t be treated as temporary after
limit. workplaces can be either within the area of the date you determine it will last more than 1
A cost is incidental only if it doesn’t add sub- your tax home or outside that area. year.
stantial value to the gift. For example, the cost Transportation expenses don’t include expen- If the temporary work location is beyond the
of gift wrapping is an incidental cost. However, ses you have while traveling away from home general area of your regular place of work and
the purchase of an ornamental basket for pack- overnight. Those expenses are travel expenses you stay overnight, you are traveling away from
aging fruit isn’t an incidental cost if the value of discussed in chapter 1. However, if you use home. You may have deductible travel expen-
the basket is substantial compared to the value your car while traveling away from home over- ses, as discussed in chapter 1.
of the fruit. night, use the rules in this chapter to figure your
car expense deduction. See Car Expenses, No regular place of work. If you have no reg-
Exceptions. The following items aren’t consid- later. ular place of work but ordinarily work in the met-
ered gifts for purposes of the $25 limit. ropolitan area where you live, you can deduct
daily transportation costs between home and a

Chapter 4 Transportation Page 13

- 14 -

Page 14 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

temporary work site outside that metropolitan business. You can’t deduct your commuting ex- inside the metropolitan area is considered your
area. penses. office. Transportation expenses between your
Generally, a metropolitan area includes the home and this first contact are nondeductible
area within the city limits and the suburbs that Parking fees. Fees you pay to park your commuting expenses. Transportation expenses
are considered part of that metropolitan area. car at your place of business are nondeductible between your last business contact and your
commuting expenses. You can, however, de- home are also nondeductible commuting ex-
You can’t deduct daily transportation costs duct business-related parking fees when visit- penses. While you can’t deduct the costs of
between your home and temporary work sites ing a customer or client. these trips, you can deduct the costs of going
within your metropolitan area. These are nonde-
ductible commuting expenses. Advertising display on car. Putting dis- from one client or customer to another.
play material that advertises your business on
Two places of work. If you work at two places your car doesn’t change the use of your car
in 1 day, whether or not for the same employer, from personal use to business use. If you use Car Expenses
you can deduct the expense of getting from one this car for commuting or other personal uses,
workplace to the other. However, if for some you still can’t deduct your expenses for those If you use your car for business purposes, you
personal reason you don’t go directly from one uses. may be able to deduct car expenses. You can
location to the other, you can’t deduct more generally use one of the two following methods
than the amount it would have cost you to go di- Car pools. You can’t deduct the cost of us- to figure your deductible expenses.
rectly from the first location to the second. ing your car in a nonprofit car pool. Don’t in- • Standard mileage rate.
Transportation expenses you have in going clude payments you receive from the passen- • Actual car expenses.
between home and a part-time job on a day off gers in your income. These payments are
from your main job are commuting expenses. considered reimbursements of your expenses. If you qualify to use both methods, you
You can’t deduct them. However, if you operate a car pool for a profit, TIP may want to figure your deduction both
you must include payments from passengers in ways to see which gives you a larger
Armed Forces reservists. A meeting of an your income. You can then deduct your car ex- deduction.
Armed Forces reserve unit is a second place of penses (using the rules in this publication).
The cost of using your car as an employee,
business if the meeting is held on a day on Hauling tools or instruments. Hauling whether measured using actual expenses or
which you work at your regular job. You can de- tools or instruments in your car while commut- the standard mileage rate, will no longer be al-
duct the expense of getting from one workplace ing to and from work doesn’t make your car ex- lowed to be claimed as an unreimbursed em-
to the other as just discussed under Two places penses deductible. However, you can deduct ployee travel expense as a miscellaneous item-
of work. any additional costs you have for hauling tools ized deduction due to the suspension of
You usually can’t deduct the expense if the or instruments (such as for renting a trailer you miscellaneous itemized deductions that are
reserve meeting is held on a day on which you tow with your car). subject to the 2% floor under section 67(a). The
don’t work at your regular job. In this case, your
transportation is generally a nondeductible Union members' trips from a union hall. suspension applies to tax years beginning after
commuting expense. However, you can deduct If you get your work assignments at a union hall December 2017 and before January 2026. De-
your transportation expenses if the location of and then go to your place of work, the costs of ductions for expenses that are deductible in de-
the meeting is temporary and you have one or getting from the union hall to your place of work termining adjusted gross income are not sus-
more regular places of work. are nondeductible commuting expenses. Al- pended. For example, Armed Forces reservists,
If you ordinarily work in a particular metro- though you need the union to get your work as- qualified performing artists, and fee-basis state
politan area but not at any specific location and signments, you are employed where you work, or local government officials are allowed to de-
the reserve meeting is held at a temporary loca- not where the union hall is located. duct unreimbursed employee travel expenses
as an adjustment to total income on Schedule 1
tion outside that metropolitan area, you can de- (Form 1040), line 12.
duct your transportation expenses. Office in the home. If you have an office in
If you travel away from home overnight to at- your home that qualifies as a principal place of If you use actual expenses to figure your de-
tend a guard or reserve meeting, you can de- business, you can deduct your daily transporta- duction for a car you lease, there are rules that
duct your travel expenses. These expenses are tion costs between your home and another affect the amount of your lease payments you
discussed in chapter 1. work location in the same trade or business. can deduct. See Leasing a Car, later.
(See Pub. 587, Business Use of Your Home, for
If you travel more than 100 miles away from information on determining if your home office In this publication, “car” includes a van,
home in connection with your performance of qualifies as a principal place of business.) pickup, or panel truck. For the definition of “car”
services as a member of the reserves, you may
for depreciation purposes, see Car defined un-
be able to deduct some of your reserve-related Examples of deductible transportation. The der Actual Car Expenses, later.
travel costs as an adjustment to gross income following examples show when you can deduct
rather than as an itemized deduction. For more transportation expenses based on the location
information, see Armed Forces Reservists Trav- of your work and your home. Standard Mileage Rate
eling More Than 100 Miles From Home under
Special Rules in chapter 6. Example 1. You regularly work in an office For 2022, the standard mileage rate for the cost
in the city where you live. Your employer sends of operating your car for business use is 58.5
Commuting expenses. You can’t deduct the you to a 1-week training session at a different cents (0.585) per mile from January 1–June 30
costs of taking a bus, trolley, subway, or taxi, or office in the same city. You travel directly from and 62.5 cents (0.625) per mile from July 1–De-
of driving a car between your home and your your home to the training location and return cember 31.
main or regular place of work. These costs are each day. You can deduct the cost of your daily If you use the standard mileage rate for
personal commuting expenses. You can’t de- round-trip transportation between your home ! a year, you can’t deduct your actual car
duct commuting expenses no matter how far and the training location. CAUTION expenses for that year. You can’t de-
your home is from your regular place of work.
duct depreciation, lease payments, mainte-
You can’t deduct commuting expenses even if Example 2. Your principal place of busi- nance and repairs, gasoline (including gasoline
you work during the commuting trip. ness is in your home. You can deduct the cost taxes), oil, insurance, or vehicle registration
of round-trip transportation between your quali- fees. See Choosing the standard mileage rate
Example. You sometimes use your cell fying home office and your client's or custom- and Standard mileage rate not allowed, later.
phone to make business calls while commuting er's place of business.
to and from work. Sometimes business asso-
ciates ride with you to and from work, and you Example 3. You have no regular office, and You can generally use the standard mileage
have a business discussion in the car. These you don’t have an office in your home. In this rate whether or not you are reimbursed and
activities don’t change the trip from personal to case, the location of your first business contact whether or not any reimbursement is more or
less than the amount figured using the standard
Page 14 Chapter 4 Transportation

- 15 -

Page 15 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

mileage rate. See chapter 6 for more informa- three cars and the two vans because they don’t Sale, trade-in, or other disposition. If you
tion on reimbursements. use them at the same time. sell, trade in, or otherwise dispose of your car,
you may have a gain or loss on the transaction
Choosing the standard mileage rate. If you Example 2. You and your employees use or an adjustment to the basis of your new car.
want to use the standard mileage rate for a car your four pickup trucks in your landscaping See Disposition of a Car, later.
you own, you must choose to use it in the first business. During the year, you traded in two of
year the car is available for use in your busi- your old trucks for two newer ones. You can use
ness. Then, in later years, you can choose to the standard mileage rate for the business mile- Actual Car Expenses
use either the standard mileage rate or actual age of all six of the trucks you owned during the
expenses. year. If you don’t use the standard mileage rate, you
If you want to use the standard mileage rate may be able to deduct your actual car expen-
for a car you lease, you must use it for the entire Example 3. You own a repair shop and an ses.
lease period. For leases that began on or be- insurance business. You and your employees
fore December 31, 1997, the standard mileage use your two pickup trucks and van for the re- Actual car expenses include:
rate must be used for the entire portion of the pair shop. You alternate using your two cars for
lease period (including renewals) that is after the insurance business. No one else uses the Depreciation Lease Registration
1997. cars for business purposes. You can use the Licenses payments fees
You must make the choice to use the stand- standard mileage rate for the business use of Gas Insurance Repairs
ard mileage rate by the due date (including ex- the pickup trucks, the van, and the cars be- Oil Garage rent Tires
tensions) of your return. You can’t revoke the cause you never have more than four vehicles Tolls Parking fees
choice. However, in later years, you can switch used for business at the same time.
from the standard mileage rate to the actual ex- If you have fully depreciated a car that you
penses method. If you change to the actual ex- Example 4. You own a car and four vans
penses method in a later year, but before your that are used in your housecleaning business. still use in your business, you can continue to
car is fully depreciated, you have to estimate Your employees use the vans, and you use the claim your other actual car expenses. Continue
the remaining useful life of the car and use car to travel to various customers. You can’t use to keep records, as explained later in chapter 5.
straight line depreciation for the car’s remaining the standard mileage rate for the car or the
estimated useful life, subject to depreciation vans. This is because all five vehicles are used Business and personal use. If you use your
limits (discussed later). in your business at the same time. You must car for both business and personal purposes,
For more information about depreciation in- use actual expenses for all vehicles. you must divide your expenses between busi-
ness and personal use. You can divide your ex-
cluded in the standard mileage rate, see Excep- pense based on the miles driven for each pur-
tion under Methods of depreciation, later. Interest. If you are an employee, you can’t de-
duct any interest paid on a car loan. This ap- pose.
Standard mileage rate not allowed. You plies even if you use the car 100% for business
can’t use the standard mileage rate if you: as an employee. Example. You are a contractor and drive
your car 20,000 miles during the year: 12,000
• Use five or more cars at the same time However, if you are self-employed and use miles for business use and 8,000 miles for per-
(such as in fleet operations); your car in your business, you can deduct that sonal use. You can claim only 60% (12,000 ÷
• Claimed a depreciation deduction for the part of the interest expense that represents your 20,000) of the cost of operating your car as a
car using any method other than straight business use of the car. For example, if you use business expense.
line for the car’s estimated useful life; your car 60% for business, you can deduct 60%
• Used the Modified Accelerated Cost Re- of the interest on Schedule C (Form 1040). You Employer-provided vehicle. If you use a ve-
covery System (MACRS) (as discussed can’t deduct the part of the interest expense hicle provided by your employer for business
later under Depreciation Deduction); that represents your personal use of the car. purposes, you can deduct your actual unreim-
• Claimed a section 179 deduction (dis- If you use a home equity loan to pur- bursed car expenses. You can’t use the stand-
cussed later) on the car; TIP chase your car, you may be able to de- ard mileage rate. See Vehicle Provided by Your
• Claimed the special depreciation allow- duct the interest. See Pub. 936, Home Employer in chapter 6.
ance on the car; or Mortgage Interest Deduction, for more informa-
• Claimed actual car expenses after 1997 for tion. Interest on car loans. If you are an employee,
a car you leased. you can’t deduct any interest paid on a car loan.
This interest is treated as personal interest and
Note. You can elect to use the standard Personal property taxes. If you itemize your isn’t deductible. If you are self-employed and
mileage rate if you used a car for hire (such as a deductions on Schedule A (Form 1040), you use your car in that business, see Interest, ear-
taxi) unless the standard mileage rate is other- can deduct on line 5c state and local personal lier, under Standard Mileage Rate.
wise not allowed, as discussed above. property taxes on motor vehicles. You can take
this deduction even if you use the standard Taxes paid on your car. If you are an em-
Five or more cars. If you own or lease five mileage rate or if you don’t use the car for busi- ployee, you can deduct personal property taxes
or more cars that are used for business at the ness. paid on your car if you itemize deductions. En-
same time, you can’t use the standard mileage If you are self-employed and use your car in ter the amount paid on Schedule A (Form
rate for the business use of any car. However, your business, you can deduct the business 1040), line 5c.
you may be able to deduct your actual expen- part of state and local personal property taxes
ses for operating each of the cars in your busi- on motor vehicles on Schedule C (Form 1040), Sales taxes. Generally, sales taxes on
ness. See Actual Car Expenses, later, for infor- or Schedule F (Form 1040). If you itemize your your car are part of your car's basis and are re-
mation on how to figure your deduction. deductions, you can include the remainder of covered through depreciation, discussed later.
You aren’t using five or more cars for busi- your state and local personal property taxes on
ness at the same time if you alternate using the car on Schedule A (Form 1040). Fines and collateral. You can’t deduct fines
(use at different times) the cars for business. you pay or collateral you forfeit for traffic viola-
The following examples illustrate the rules Parking fees and tolls. In addition to using tions.
for when you can and can’t use the standard the standard mileage rate, you can deduct any
mileage rate for five or more cars. business-related parking fees and tolls. (Park- Casualty and theft losses. If your car is dam-
ing fees you pay to park your car at your place aged, destroyed, or stolen, you may be able to
Example 1. A salesperson owns three cars of work are nondeductible commuting expen- deduct part of the loss not covered by insur-
and two vans that they alternate using for call- ses.) ance. See Pub. 547, Casualties, Disasters, and
ing on their customers. They can use the stand- Thefts, for information on deducting a loss on
ard mileage rate for the business mileage of the your car.

Chapter 4 Transportation Page 15

- 16 -

Page 16 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Depreciation and section 179 deductions. the car by the amount of the section 179 deduc- listed above cannot be more than the taxable
Generally, the cost of a car, plus sales tax and tion. income from the active conduct of any trade or
improvements, is a capital expense. Because business during the year.
the benefits last longer than 1 year, you gener- There is a limit on the total section 179 If you are married and file a joint return, you
ally can’t deduct a capital expense. However, TIP deduction, special depreciation allow- and your spouse are treated as one taxpayer in
you can recover this cost through the section ance, and depreciation deduction for determining any reduction to the dollar limit, re-
179 deduction (the deduction allowed by sec- cars, trucks, and vans that may reduce or elimi- gardless of which of you purchased the prop-
tion 179 of the Internal Revenue Code), special nate any benefit from claiming the section 179 erty or placed it in service.
depreciation allowance, and depreciation de- deduction. See Depreciation Limits, later. If you and your spouse file separate returns,
ductions. Depreciation allows you to recover you are treated as one taxpayer for the dollar
the cost over more than 1 year by deducting You can claim the section 179 deduction limit. You must allocate the dollar limit (after any
part of it each year. The section 179 deduction, only in the year you place the car in service. For reduction) between you.
special depreciation allowance, and deprecia- this purpose, a car is placed in service when it For more information on the above section
tion deductions are discussed later. is ready and available for a specifically as- 179 deduction limits, see Pub. 946, How To De-
Generally, there are limits on these deduc- signed use in a trade or business. Even if you preciate Property.
tions. Special rules apply if you use your car aren’t using the property, it is in service when it
50% or less in your work or business. is ready and available for its specifically as- Limit for sport utility and certain other
You can claim a section 179 deduction and signed use. vehicles. You cannot elect to deduct more
than $27,000 of the cost of any heavy sport util-
use a depreciation method other than straight ity vehicle (SUV) and certain other vehicles
line only if you don’t use the standard mileage A car first used for personal purposes can’t
rate to figure your business-related car expen- qualify for the deduction in a later year when its placed in service during the tax years beginning
ses in the year you first place a car in service. use changes to business. in 2022. This rule applies to any four-wheeled
vehicle primarily designed or used to carry pas-
If, in the year you first place a car in service, sengers over public streets, roads, or highways
you claim either a section 179 deduction or use Example. In 2021, you bought a new car
a depreciation method other than straight line and used it for personal purposes. In 2022, you that isn’t subject to any of the passenger auto-
for its estimated useful life, you can’t use the began to use it for business. Changing its use to mobile limits explained under Depreciation Lim-
standard mileage rate on that car in any future business use doesn’t qualify the cost of your car its, later, and that is rated at more than 6,000
year. for a section 179 deduction in 2022. However, pounds gross vehicle weight and not more than
you can claim a depreciation deduction for the 14,000 pounds gross vehicle weight. However,
Car defined. For depreciation purposes, a car business use of the car starting in 2022. See the $27,000 limit doesn’t apply to any vehicle:
is any four-wheeled vehicle (including a truck or Depreciation Deduction, later. • Designed to have a seating capacity of
more than nine persons behind the driver's
van) made primarily for use on public streets, seat;
roads, and highways. Its unloaded gross vehi- More than 50% business use requirement.
cle weight (for trucks and vans, gross vehicle You must use the property more than 50% for • Equipped with a cargo area of at least 6
weight) must not be more than 6,000 pounds. A business to claim any section 179 deduction. If feet in interior length that is an open area
car includes any part, component, or other item you used the property more than 50% for busi- or is designed for use as an open area but
physically attached to it or usually included in ness, multiply the cost of the property by the is enclosed by a cap and isn’t readily ac-
the purchase price. percentage of business use. The result is the cessible directly from the passenger com-
A car doesn’t include: cost of the property that can qualify for the sec- partment; or
• An ambulance, hearse, or combination tion 179 deduction. • That has an integral enclosure, fully en-
closing the driver compartment and load
ambulance-hearse used directly in a busi- Example. You purchased a new car in April carrying device, doesn’t have seating rear-
ness; 2022 for $24,500 and used it 60% for business. ward of the driver's seat, and has no body
• A vehicle used directly in the business of Based on your business usage, the total cost of section protruding more than 30 inches
transporting persons or property for pay or your car that qualifies for the section 179 de- ahead of the leading edge of the wind-
hire; or duction is $14,700 ($24,500 cost × 60% (0.60) shield.
• A truck or van that is a qualified nonperso- business use). But see Limit on total section
nal use vehicle. 179, special depreciation allowance, and de- Limit on total section 179 deduction,
Qualified nonpersonal use vehicles. preciation deduction, discussed later. special depreciation allowance, and depre-
These are vehicles that by their nature aren’t ciation deduction. The first-year limit on the
likely to be used more than a minimal amount Limits. There are limits on: depreciation deduction, special depreciation al-
for personal purposes. They include trucks and • The amount of the section 179 deduction; lowance, and section 179 deduction for vehi-
vans that have been specially modified so that • The section 179 deduction for sport utility cles acquired before September 28, 2017, and
they aren’t likely to be used more than a mini- and certain other vehicles; and placed in service during 2022, is $11,200. The
mal amount for personal purposes, such as by • The total amount of the section 179 deduc- first-year limit on depreciation, special deprecia-
installation of permanent shelving and painting tion, special depreciation allowance, and tion allowance, and section 179 deduction for
the vehicle to display advertising or the compa- depreciation deduction (discussed later) vehicles acquired after September 27, 2017,
ny's name. Delivery trucks with seating only for you can claim for a qualified property. and placed in service during 2022 increases to
$19,200. If you elect not to claim a special de-
the driver, or only for the driver plus a folding Limit on the amount of the section 179 preciation allowance for a vehicle placed in
jump seat, are qualified nonpersonal use vehi- deduction. For tax years beginning in 2022, service in 2022, the amount increases to
cles. the total amount you can elect to deduct under $11,200. The limit is reduced if your business
More information. See Depreciation De- section 179 generally can’t be more than use of the vehicle is less than 100%. See De-
duction, later, for more information on how to $1,080,000. preciation Limits, later, for more information.
depreciate your vehicle. If the cost of your section 179 property
placed in service in tax years beginning in 2022 Example. In the earlier example under
is over $2,700,000, you must reduce the More than 50% business use requirement, you
Section 179 Deduction $1,080,000 dollar limit (but not below zero) by had a car with a cost (for purposes of the sec-
the amount of cost over $2,700,000. If the cost tion 179 deduction) of $14,700. However,
You can elect to recover all or part of the cost of of your section 179 property placed in service based on your business usage of the car, the
a car that is qualifying section 179 property, up during tax years beginning in 2022 is total of your section 179 deduction, special de-
to a limit, by deducting it in the year you place $3,780,000 or more, you can’t take a section preciation allowance, and depreciation deduc-
the property in service. This is the section 179 179 deduction. tions is limited to $11,520 ($19,200 limit x 60%
deduction. If you elect the section 179 deduc- The total amount you can deduct under sec- (0.60) business use) because the car was
tion, you must reduce your depreciable basis in tion 179 each year after you apply the limits
Page 16 Chapter 4 Transportation

- 17 -

Page 17 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

acquired after September 27, 2017, and placed year during the recovery period, you have to re- Election not to claim the special deprecia-
in service during 2022. capture (include in income) in that later year tion allowance. You can elect not to claim the
any excess depreciation. Any section 179 de- special depreciation allowance for your car,
Cost of car. For purposes of the section 179 duction claimed on the car is included in figur- truck, or van that is qualified property. If you
deduction, the cost of the car doesn’t include ing the excess depreciation. For information on make this election, it applies to all 5-year prop-
any amount figured by reference to any other this calculation, see Excess depreciation, later erty placed in service during the year.
property held by you at any time. For example, in this chapter under Car Used 50% or Less for To make this election, attach a statement to
if you buy a car as a replacement for a car that Business. For more information on recapture of your timely filed return (including extensions) in-
was stolen or that was destroyed in a casualty a section 179 deduction, see Pub. 946. dicating the class of property (5-year for cars)
loss, and you use section 1033 to determine the for which you are making the election and that
basis in your replacement vehicle, your cost for Dispositions. If you dispose of a car on which you are electing not to claim the special depre-
purposes of the section 179 deduction doesn’t you had claimed the section 179 deduction, the ciation allowance for qualified property in that
include your adjusted basis in the relinquished amount of that deduction is treated as a depre- class of property.
car. In that case, your cost includes only the ciation deduction for recapture purposes. You
cash you paid. treat any gain on the disposition of the property Unless you elect not to claim the spe-
as ordinary income up to the amount of the sec- cial depreciation allowance, you must
Basis of car for depreciation. The tion 179 deduction and any allowable deprecia- CAUTION! reduce the car's adjusted basis by the
amount of the section 179 deduction reduces tion (unless you establish the amount actually amount of the allowance, even if the allowance
your basis in your car. If you choose the section allowed). For information on the disposition of a wasn’t claimed.
179 deduction, you must subtract the amount of car, see Disposition of a Car, later. For more in-
the deduction from the cost of your car. The re- formation on recapture of a section 179 deduc- Depreciation Deduction
sulting amount is the basis in your car you use tion, see Pub. 946.
to figure your depreciation deduction.
If you use actual car expenses to figure your de-
When to elect. If you want to take the section Special Depreciation Allowance duction for a car you own and use in your busi-
179 deduction, you must make the election in ness, you can claim a depreciation deduction.
the tax year you place the car in service for You may be able to claim the special deprecia- This means you can deduct a certain amount
business or work. tion allowance for your car, truck, or van if it is each year as a recovery of your cost or other
qualified property and was placed in service in basis in your car.
How to elect. Employees use Form 2106, Em- 2022. The allowance for 2022 is an additional
ployee Business Expenses, to make the elec- depreciation deduction for 100% of the car's You generally need to know the following
tion and report the section 179 deduction. All depreciable basis (after any section 179 deduc- things about the car you intend to depreciate.
others use Form 4562, Depreciation and Amor- tion, but before figuring your regular deprecia- • Your basis in the car.
tization, to make an election. tion deduction under MACRS) if the vehicle was • The date you place the car in service.
acquired after September 27, 2017, and placed
Form 2106 is only used by Armed in service during 2022. Further, while it applies • The method of depreciation and recovery
period you will use.
! Forces reservists, qualified performing to a new vehicle, it also applies to a used vehi-
CAUTION artists, fee-basis state or local govern- cle only if the vehicle meets the used property Basis. Your basis in a car for figuring deprecia-
ment officials, and employees with impair- requirements. For more information on the used tion is generally its cost. This includes any
ment-related work expenses. Due to the sus- property requirements, see section 168(k)(2)(E) amount you borrow or pay in cash, other prop-
pension of miscellaneous itemized deductions (ii). To qualify for the allowance, more than 50% erty, or services.
subject to the 2% floor under section 67(a), em- of the use of the car must be in a qualified busi- Generally, you figure depreciation on your
ployees who do not fit into one of the listed cat- ness use (as defined under Depreciation De- car, truck, or van using your unadjusted basis
egories may not use Form 2106. duction, later). (see Unadjusted basis, later). However, in
File the appropriate form with either of the some situations, you will use your adjusted ba-
following. Combined depreciation. The first-year limit
• Your original tax return filed for the year the on the depreciation deduction, special depreci- sis (your basis reduced by depreciation allowed
property was placed in service (whether or ation allowance, and section 179 deduction for or allowable in earlier years). For one of these
not you file it timely). vehicles acquired before September 28, 2017, situations, see Exception under Methods of de-
• An amended return filed within the time and placed in service during 2022, is $11,200. preciation, later.
prescribed by law. An election made on an Your combined section 179 depreciation, spe- If you change the use of a car from personal
amended return must specify the item of cial depreciation allowance, and regular to business, your basis for depreciation is the
section 179 property to which the election MACRS depreciation deduction is limited to the lesser of the fair market value or your adjusted
applies and the part of the cost of each maximum allowable depreciation deduction for basis in the car on the date of conversion. Addi-
such item to be taken into account. The vehicles acquired after September 27, 2017, tional rules concerning basis are discussed
amended return must also include any re- and placed in service during 2022 is $19,200. If later in this chapter under Unadjusted basis.
sulting adjustments to taxable income. you elect not to claim a special depreciation al-
lowance for a vehicle placed in service in 2022, Placed in service. You generally place a car
You must keep records that show the the amount is $11,200. See Depreciation Lim- in service when it is available for use in your
! specific identification of each piece of its, later in this chapter. work or business, in an income-producing activ-
CAUTION qualifying section 179 property. These ity, or in a personal activity. Depreciation begins
records must show how you acquired the prop- Qualified car. To be qualified property, the car when the car is placed in service for use in your
erty, the person you acquired it from, and when (including the truck or van) must meet all of the work or business or for the production of in-
you placed it in service. following tests. come.
• You acquired the car after September 27, For purposes of figuring depreciation, if you
Revoking an election. An election (or any 2017, but only if no written binding contract first start using the car only for personal use and
specification made in the election) to take a to acquire the car existed before Septem- later convert it to business use, you place the
section 179 deduction for 2022 can only be re- ber 28, 2017. car in service on the date of conversion.
voked with the Commissioner's approval. • You acquired the car new or used. Car placed in service and disposed of in
Recapture of section 179 deduction. To be • You placed the car in service in your trade the same year. If you place a car in service
eligible to claim the section 179 deduction, you or business before January 1, 2027. and dispose of it in the same tax year, you can’t
claim any depreciation deduction for that car.
must use your car more than 50% for business • You used the car more than 50% in a quali-
or work in the year you acquired it. If your busi- fied business use during the tax year. Methods of depreciation. Generally, you fig-
ness use of the car is 50% or less in a later tax ure depreciation on cars using the Modified
Chapter 4 Transportation Page 17

- 18 -

Page 18 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Accelerated Cost Recovery (MACRS) dis- tax year, you must allocate the use to the vari- If you acquired the car by gift or inheritance,
cussed later in this chapter. ous purposes. You do this on the basis of mile- see Pub. 551, Basis of Assets, for information
age. Figure the percentage of qualified busi- on your basis in the car.
Exception. If you used the standard mile- ness use by dividing the number of miles you
age rate in the first year of business use and drive your car for business purposes during the Improvements. A major improvement to a
change to the actual expenses method in a later year by the total number of miles you drive the car is treated as a new item of 5-year recovery
year, you can’t depreciate your car under the car during the year for any purpose. property. It is treated as placed in service in the
MACRS rules. You must use straight line depre- year the improvement is made. It doesn’t matter
ciation over the estimated remaining useful life Change from personal to business use. If how old the car is when the improvement is
of the car. The amount you depreciate can’t be you change the use of a car from 100% per- added. Follow the same steps for depreciating
more than the depreciation limit that applies for sonal use to business use during the tax year, the improvement as you would for depreciating
that year. See Depreciation Limits, later. you may not have mileage records for the time the original cost of the car. However, you must
To figure depreciation under the straight line before the change to business use. In this case, treat the improvement and the car as a whole
method, you must reduce your basis in the car you figure the percentage of business use for when applying the limits on the depreciation de-
(but not below zero) by a set rate per mile for all the year as follows. ductions. Your car's depreciation deduction for
miles for which you used the standard mileage the year (plus any section 179 deduction, spe-
rate. The rate per mile varies depending on the 1. Determine the percentage of business use cial depreciation allowance, and depreciation
year(s) you used the standard mileage rate. For for the period following the change. Do on any improvements) can’t be more than the
the rate(s) to use, see Depreciation adjustment this by dividing business miles by total depreciation limit that applies for that year. See
when you used the standard mileage rate under miles driven during that period. Depreciation Limits, later.
Disposition of a Car, later. 2. Multiply the percentage in (1) by a fraction.
This reduction of basis is in addition to those The numerator (top number) is the number Car trade-in. If you traded one car (the “old
basis adjustments described later under Unad- of months the car is used for business, car”) for another car (the “new car”) in 2022, you
justed basis. You must use your adjusted basis and the denominator (bottom number) is must treat the transaction as a disposition of the
in your car to figure your depreciation deduc- 12. old car and the purchase of the new car. You
tion. For additional information on the straight must treat the old car as disposed of at the time
line method of depreciation, see Pub. 946. Example. You use a car only for personal of the trade-in. The depreciable basis of the
purposes during the first 6 months of the year. new car is the adjusted basis of the old car (fig-
More-than-50%-use test. Generally, you must During the last 6 months of the year, you drive ured as if 100% of the car’s use had been for
use your car more than 50% for qualified busi- the car a total of 15,000 miles of which 12,000 business purposes) plus any additional amount
ness use (defined next) during the year to use miles are for business. This gives you a busi- you paid for the new car. You then figure your
MACRS. You must meet this ness use percentage of 80% (12,000 ÷ 15,000) depreciation deduction for the new car begin-
more-than-50%-use test each year of the recov- for that period. Your business use for the year is ning with the date you placed it in service. You
ery period (6 years under MACRS) for your car. 40% (80% (0.80) × / ).6 12 must also complete Form 2106, Part II, Sec-
If your business use is 50% or less, you tion D. This method is explained later, begin-
must use the straight line method to depreciate Limits. The amount you can claim for section ning at Effect of trade-in on basis.
your car. This is explained later under Car Used 179, special depreciation allowance, and de- Form 2106 is only used by Armed
50% or Less for Business. preciation deductions may be limited. The maxi- ! Forces reservists, qualified performing
mum amount you can claim depends on the CAUTION artists, fee-basis state or local govern-
Qualified business use. A qualified business year in which you placed your car in service. ment officials, and employees with impair-
use is any use in your trade or business. It You have to reduce the maximum amount if you ment-related work expenses. Due to the sus-
doesn’t include use for the production of in- did not use the car exclusively for business. pension of miscellaneous itemized deductions
come (investment use), or use provided under See Depreciation Limits, later. subject to the 2% floor under section 67(a), em-
lease to, or as compensation to, a 5% owner or ployees who do not fit into one of the listed cat-
related person. However, you do combine your Unadjusted basis. You use your unadjusted egories may not use Form 2106.
business and investment use to figure your de- basis (often referred to as your basis or your ba-
preciation deduction for the tax year. sis for depreciation) to figure your depreciation Effect of trade-in on basis. The discus-
Use of your car by another person. Don’t using the MACRS depreciation chart, explained sion that follows applies to trade-ins of cars in
treat any use of your car by another person as later under Modified Accelerated Cost Recov- 2022, where the election was made to treat the
use in your trade or business unless that use ery System (MACRS). Your unadjusted basis transaction as a disposition of the old car and
meets one of the following conditions. for figuring depreciation is your original basis in- the purchase of the new car. For information on
• It is directly connected with your business. creased or decreased by certain amounts. how to figure depreciation for cars involved in a
• It is properly reported by you as income to To figure your unadjusted basis, begin with like-kind exchange (trade-in) in 2022, for which
the other person (and, if you have to, you your car's original basis, which is generally its the election wasn’t made, see Pub. 946 and
withhold tax on the income). cost. Cost includes sales taxes (see Sales Regulations section 1.168(i)-6(d)(3).
• It results in a payment of fair market rent. taxes, earlier), destination charges, and dealer
This includes any payment to you for the preparation. Increase your basis by any sub- Note. Like kind exchanges completed after ‐
use of your car. stantial improvements you make to your car, December 31, 2017, are generally limited to ex-
such as adding air conditioning or a new en- changes of real property not held primarily for
Business use changes. If you used your car gine. Decrease your basis by any section 179 sale. Regulations section 1.168(i)-6 doesn't re-
more than 50% in qualified business use in the deduction, special depreciation allowance, gas flect this change in law.
year you placed it in service, but 50% or less in guzzler tax, and alternative motor vehicle credit.
a later year (including the year of disposition), See Form 8910, Alternative Motor Vehicle Traded car used only for business. If
you have to change to the straight line method Credit, for information on the alternative motor you trade in a car you used only in your busi-
of depreciation. See Qualified business use vehicle credit. ness for another car that will be used only in
your business, your original basis in the new car
50% or less in a later year under Car Used 50% If your business use later falls to 50% is your adjusted basis in the old car, plus any
or Less for Business, later. ! or less, you may have to recapture (in- additional amount you pay for the new car.
Property doesn’t cease to be used CAUTION clude in your income) any excess de-
TIP more than 50% in qualified business preciation. See Car Used 50% or Less for Busi- Example. You trade in a car that has an ad-
use by reason of a transfer at death. ness, later, for more information. justed basis of $5,000 for a new car. In addition,
you pay cash of $20,000 for the new car. Your
Use for more than one purpose. If you use original basis of the new car is $25,000 (your
your car for more than one purpose during the $5,000 adjusted basis in the old car plus the

Page 18 Chapter 4 Transportation

- 19 -

Page 19 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

$20,000 cash paid). Your unadjusted basis is • The straight line method (SL) over a 5-year Disposition of car during recovery pe-
$25,000 unless you claim the section 179 de- recovery period. riod. If you dispose of the car before the last
duction, special depreciation allowance, or year of the recovery period, you are generally
have other increases or decreases to your origi- If you use Table 4-1 (discussed later) allowed a half-year of depreciation in the year of
nal basis, discussed under Unadjusted basis, TIP to determine your depreciation rate for disposition. This rule applies unless the
earlier. 2022, you don’t need to determine in mid-quarter convention applies to the vehicle
what year using the straight line method pro- being disposed of. See Depreciation deduction
Traded car used partly in business. If vides an equal or greater deduction. This is be- for the year of disposition under Disposition of a
you trade in a car you used partly in your busi- cause the chart has the switch to the straight Car, later, for information on how to figure the
ness for a new car you will use in your business, line method built into its rates. depreciation allowed in the year of disposition.
you must make a “trade-in” adjustment for the Before choosing a method, you may wish to
personal use of the old car. This adjustment has consider the following facts. How to use the 2022 chart. To figure your
the effect of reducing your basis in your old car, • Using the straight line method provides depreciation deduction for 2022, find the per-
but not below zero, for purposes of figuring your equal yearly deductions throughout the re- centage in the column of Table 4-1 based on
depreciation deduction for the new car. (This covery period. the date that you first placed the car in service
adjustment isn’t used, however, when you de- • Using the declining balance methods pro- and the depreciation method that you are using.
termine the gain or loss on the later disposition vides greater deductions during the earlier Multiply the unadjusted basis of your car (de-
of the new car. See Pub. 544, Sales and Other recovery years with the deductions gener- fined earlier) by that percentage to determine
Dispositions of Assets, for information on how ally getting smaller each year. the amount of your depreciation deduction. If
to report the disposition of your car.) you prefer to figure your depreciation deduction
To figure the unadjusted basis of your new MACRS depreciation chart. A 2022 MACRS without the help of the chart, see Pub. 946.
car for depreciation, first add to your adjusted Depreciation Chart and instructions are inclu- Your deduction can’t be more than the
basis in the old car any additional amount you ded in this chapter as Table 4-1. Using this ta- ! maximum depreciation limit for cars.
pay for the new car. Then subtract from that to- ble will make it easy for you to figure the 2022 CAUTION See Depreciation Limits, later.
tal the excess, if any, of: depreciation deduction for your car. A similar
1. The total of the amounts that would have chart appears in the Instructions for Form 2106.
Example. You bought a used truck in Feb-
been allowable as depreciation during the You may have to use the tables in Pub. ruary 2021 to use exclusively in your landscape
tax years before the trade if 100% of the ! 946 instead of using this MACRS De- business. You paid $9,200 for the truck with no
use of the car had been business and in- CAUTION preciation Chart. trade-in. You didn’t claim any section 179 de-
vestment use, over duction, the truck didn’t qualify for the special
You must use the Depreciation Tables in
2. The total of the amounts actually allowed Pub. 946 rather than the 2022 MACRS Depreci- depreciation allowance, and you chose to use
as depreciation during those years. ation Chart in this publication if any one of the the 200% DB method to get the largest depreci-
For information about figuring depreciation, see following three conditions applies to you. ation deduction in the early years.
You used the MACRS Depreciation Chart in
Modified Accelerated Cost Recovery System 1. You file your return on a fiscal year basis. 2021 to find your percentage. The unadjusted
(MACRS) next. basis of the truck equals its cost because you
2. You file your return for a short tax year
Modified Accelerated Cost Recovery Sys- (less than 12 months). used it exclusively for business. You multiplied
the unadjusted basis of the truck, $9,200, by the
tem (MACRS). MACRS is the name given to 3. During the year, all of the following condi- percentage that applied, 20%, to figure your
the tax rules for getting back (recovering) tions apply. 2021 depreciation deduction of $1,840.
through depreciation deductions the cost of In 2022, you used the truck for personal pur-
property used in a trade or business or to pro- a. You placed some property in service
duce income. from January through September. poses when you repaired your parent’s cabin.
Your records show that the business use of the
The maximum amount you can deduct is b. You placed some property in service truck was 90% in 2022. You used Table 4-1 to
limited, depending on the year you placed your from October through December. find your percentage. Reading down the first
car in service. See Depreciation Limits, later. column for the date placed in service and
c. Your basis in the property you placed
Recovery period. Under MACRS, cars are in service from October through De- across to the 200% DB column, you locate your
classified as 5-year property. You actually de- cember (excluding nonresidential real percentage, 32%. You multiply the unadjusted
preciate the cost of a car, truck, or van over a property, residential rental property, basis of the truck, $8,280 ($9,200 cost × 90%
period of 6 calendar years. This is because your and property placed in service and (0.90) business use), by 32% (0.32) to figure
car is generally treated as placed in service in disposed of in the same year) was your 2022 depreciation deduction of $2,650.
the middle of the year, and you claim deprecia- more than 40% of your total bases in
tion for one-half of both the first year and the all property you placed in service dur- Depreciation Limits
sixth year. ing the year.
There are limits on the amount you can deduct
For more information on the qualifications Depreciation in future years. If you use for depreciation of your car, truck, or van. The
for this shorter recovery period and the percen- the percentages from the chart, you generally section 179 deduction and special depreciation
tages to use in figuring the depreciation deduc- must continue to use them for the entire recov- allowance are treated as depreciation for pur-
tion, see chapter 4 of Pub. 946. ery period of your car. However, you can’t con- poses of the limits. The maximum amount you
tinue to use the chart if your basis in your car is can deduct each year depends on the date you
Depreciation methods. You can use one adjusted because of a casualty. In that case, for acquired the passenger automobile and the
of the following methods to depreciate your car. the year of the adjustment and the remaining re- year you place the passenger automobile in
• The 200% declining balance method covery period, figure the depreciation without service. These limits are shown in the following
(200% DB) over a 5-year recovery period the chart using your adjusted basis in the car at tables for 2022.
that switches to the straight line method the end of the year of the adjustment and over
when that method provides an equal or the remaining recovery period. See Figuring the
greater deduction. Deduction Without Using the Tables in chap-
• The 150% declining balance method ter 4 of Pub. 946.
(150% DB) over a 5-year recovery period
that switches to the straight line method In future years, don’t use the chart in
when that method provides an equal or TIP this edition of the publication. Instead,
greater deduction. use the chart in the publication or the
form instructions for those future years.

Chapter 4 Transportation Page 19

- 20 -

Page 20 of 42             Fileid: … tions/p463/2022/a/xml/cycle02/source                                                       14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                                                                               Maximum
           Maximum                                                    Maximum                                           Depreciation Deduction
 Depreciation Deduction                                    Depreciation Deduction                                        for Trucks and Vans
 for Passenger Automobiles                                 for Cars Placed in Service                                       Placed in Service
 (Including Trucks and                                                Prior to 2018                                            Prior to 2018
Vans) Acquired Before September 
           28, 2017, and                                   Date                                        4th &
 Placed in Service During 2018–                            Placed     1st         2nd    3rd           Later        Date                                 4th &
                  2022                                     in Service Year        Year   Year          Years         Placed    1st        2nd     3rd    Later
                                                                                                                    in Service Year       Year    Year   Years
 Date                                              4th &  2012–2017 $11,1601      $5,100 $3,050 $1,875
                                                                                                                    2017       $11,5601   $5,700 $3,450 $2,075
 Service   Year          Year   Year               Years  2010–2011  11,0602       4,900  2,950        1,775        2016        11,560
 Placed in 1st           2nd    3rd                Later                                                                              1   5,700   3,350  2,075
 2022      $11,200  $18,000 $10,800                $6,460 2008–2009  10,9603       4,800  2,850         1,775       2015        11,4601   5,600   3,350  1,975
 2021      10,200       16,400   9,800              5,860  2007       3,060        4,900  2,850        1,775        2014        11,4601   5,500   3,350  1,975
 2020       10,100       16,100  9,700              5,760  2006       2,960        4,800  2,850        1,775        2013        11,3601    5,400  3,250  1,975
 2019       14,9001      16,100  9,700              5,760  2005       2,960        4,700  2,850        1,675        2012        11,360  5,3001     3,150  1,875
 2018       16,4002       16,000  9,600             5,760  2004       10,6103      4,800  2,850        1,675        2011        11,260  5,2001     3,150  1,875
1 $10,100 if the passenger automobile isn’t qualified     5/06/2003– 10,7104       4,900  2,950        1,775        2010        11,160  5,1001    3,050   1,875
 property or if you elect not to claim the special        12/31/2003                                                2009        11,060  4,9001    2,950  1,775
 depreciation allowance.                                  1/01/2003–  7,6605       4,900  2,950        1,775        2008        11,1601   5,100   3,050  1,875
2 $10,000 if the passenger automobile isn’t qualified      5/05/2003
                                                                                                                    2007       3,260 5,200        3,050  1,875
 property or if you elect not to claim the special        1 $3,160 if the car isn’t qualified property or if you 
 depreciation allowance.                                   elect not to claim the special depreciation             2005–2006   3,260 5,200        3,150  1,875
                                                           allowance.                                               2004        10,9101   5,300   3,150  1,875
                                                          2 $3,060 if the car isn’t qualified property or if you    2003        11,0101,2 5,400   3,250  1,975
           Maximum                                         elect not to claim the special depreciation             1 If the special depreciation allowance doesn’t apply 
 Depreciation Deduction                                    allowance.
                                                                                                                    or you make the election not to claim the special 
 for Passenger Automobiles                                3 $2,960 if the car isn’t qualified property or if you    depreciation allowance, the first-year limit is $3,560 
 (Including Trucks and
Vans) Acquired After September                             elect not to claim the special depreciation              for 2017 and 2016, $3,460 for 2015 and 2014, 
                                                           allowance.
           27, 2017, and                                                                                            $3,360 for 2013 and 2012, $3,260 for 2011, $3,160 
Placed in Service During 2018 or                          4 $7,660 if you acquired the car before 5/06/2003.        for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 
                  Later                                    $3,060 if the car isn’t qualified property or if you     for 2004, and $3,360 for 2003.
                                                           elect not to claim any special depreciation             2 If the truck or van was acquired before 5/06/2003, 
 Date                                              4th &   allowance.                                               the truck or van is qualified property, and you claim 
 Placed in 1st           2nd    3rd                Later  5 $3,060 if you acquired the car before 9/11/2001, the    the special depreciation allowance for the truck or 
 Service   Year          Year   Year               Years                                                            van, the maximum deduction is $7,960.
                                                           car isn’t qualified property, or you elect not to claim 
 2022      $19,2001     $18,000 $10,800            $6,460  the special depreciation allowance.
 2021       18,2002      16,400  9,800              5,860                                                           Car used less than full year.  The depreci-
2019–2020  18,1003       16,100  9,700              5,760  Trucks  and  vans.     For  tax  years  prior  to       ation  limits  aren’t  reduced  if  you  use  a  car  for 
                                                          2018, the maximum depreciation deductions for            less than a full year. This means that you don’t 
 2018       18,0004  16,000      9,600              5,760 trucks and vans are generally higher than those          reduce the limit when you either place a car in 
1 $11,200 if the passenger automobile isn’t qualified     for cars. A truck or van is a passenger automo-          service  or  dispose  of  a  car  during  the  year. 
 property or if you elect not to claim the special        bile that is classified by the manufacturer as a         However, the depreciation limits are reduced if 
 depreciation allowance.                                  truck  or  van  and  rated  at  6,000  pounds  gross     you  don’t  use  the  car  exclusively  for  business 
2 $10,200 if the passenger automobile isn’t qualified     vehicle weight or less.                                  and  investment  purposes.  See Reduction  for 
                                                                                                                   personal use next.
 property or if you elect not to claim the special 
 depreciation allowance.                                                                                           Reduction  for  personal  use.  The  deprecia-
3 $10,100 if the passenger automobile isn’t qualified                                                              tion limits are reduced based on your percent-
 property or if you elect not to claim the special                                                                 age of personal use. If you use a car less than 
 depreciation allowance.                                                                                           100% in your business or work, you must deter-
4 $10,000 if the passenger automobile isn’t qualified                                                              mine  the  depreciation  deduction  limit  by  multi-
 property or if you elect not to claim the special                                                                 plying  the  limit  amount  by  the  percentage  of 
 depreciation allowance.                                                                                           business  and  investment  use  during  the  tax 
                                                                                                                   year.
The  maximum  amount  you  can  deduct  each 
year depends on the year you place the car in                                                                      Section 179 deduction. The section 179 de-
service. These limits are shown in the following                                                                   duction is treated as a depreciation deduction. 
tables for prior years.                                                                                            If you acquired a passenger automobile (includ-
                                                                                                                   ing trucks and vans) after September 27, 2017, 
                                                                                                                   and placed it in service in 2022, use it only for 
                                                                                                                   business,  and  choose  the  section  179  deduc-
                                                                                                                   tion, the special depreciation allowance and de-
                                                                                                                   preciation deduction for that vehicle for 2022 is 
                                                                                                                   limited to $19,200.
                                                                                                                    Example.   On  September  4,  2022,  you 
                                                                                                                   bought  and  placed  in  service  a  used  car  for 
                                                                                                                   $15,000.  You  used  it  80%  for  your  business, 
Page 20    Chapter 4     Transportation

- 21 -

Page 21 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

and you choose to take a section 179 deduction Depreciation Deduction for Passenger Automo- period. You must continue to use the
for the car. The car isn’t qualified property for biles (Including Trucks and Vans) Acquired Be- straight line method even if your percent-
purposes of the special depreciation allowance. fore September 28, 2017, and Placed in Serv- age of business use increases to more
Before applying the limit, you figure your ice During 2018–2022 table, earlier, for the than 50% in a later year.
maximum section 179 deduction to be $12,000. applicable tax year to figure your depreciation Instead of making the computation yourself,
This is the cost of your qualifying property (up to deductions during the recovery period. Your de- you can use column (c) of Table 4-1 to find the
the maximum $1,080,000 amount) multiplied by preciation deductions were subject to the de- percentage to use.
your business use ($15,000 × 80% (0.80)). preciation limits, so you will have unrecovered
You then figure that your section 179 deduc- basis at the end of the recovery period as Example. In May 2022, you bought and
tion for 2022 is limited to $8,960 (80% of shown in the following table. placed in service a car for $17,500. You used it
$11,200). You then figure your unadjusted ba- 40% for your consulting business. Because you
sis of $3,040 (($15,000 × 80% (0.80)) − $8,960) MACRS Deprec. didn’t use the car more than 50% for business,
for determining your depreciation deduction. Year % Amount Limit Allowed you can’t take any section 179 deduction or
You have reached your maximum depreciation special depreciation allowance, and you must
deduction for 2022. For 2023, you will use your 2016 20.00 $6,300 $3,160 $3,160
unadjusted basis of $3,040 to figure your depre- 2017 32.00 10,080 5,100 5,100 use the straight line method over a 5-year re-
ciation deduction. 2018 19.20 6,048 3,050 3,050 covery period to recover the cost of your car.
2019 11.52 3,629 1,875 1,875 You deduct $700 in 2022. This is the lesser
Deductions in years after the recovery pe- 2020 11.52 3,629 1,875 1,875 of:
riod. If the depreciation deductions for your car 2021 5.76 1,814 1,875 1,814 1. $700 (($17,500 cost × 40% (0.40) busi-
are reduced under the passenger automobile Total $31,500 $16,874 ness use) × 10% (0.10) recovery percent-
limits (discussed earlier), you will have unrecov- age (from column (c) of Table 4-1)), or
ered basis in your car at the end of the recovery For the correct limit, see the Maximum De- 2. $1,264 ($3,160 maximum limit × 40%
period. If you continue to use your car for busi- preciation Deduction for Cars Placed in Service (0.40) business use).
ness, you can deduct that unrecovered basis Prior to 2018 table and the Maximum Deprecia-
(subject to depreciation limits) after the recov- tion Deduction for Passenger Automobiles (In- Qualified business use 50% or less in a
ery period ends. cluding Trucks and Vans) Acquired Before Sep- later year. If you use your car more than 50%
tember 28, 2017, and Placed in Service During in qualified business use in the tax year it is
Unrecovered basis. This is your cost or 2018–2022 table under Depreciation Limits, placed in service but the business use drops to
other basis in the car reduced by any clean-fuel earlier, for the maximum amount of depreciation 50% or less in a later year, you can no longer
vehicle deduction (for vehicles placed in service allowed each year. use an accelerated depreciation method for that
before January 1, 2006), alternative motor vehi- At the end of 2021, you had an unrecovered car.
cle credit, electric vehicle credit, gas guzzler basis in the car of $14,626 ($31,500 – $16,874). For the year the business use drops to 50%
tax, and depreciation (including any special de- If you continued to use the car 100% for busi- or less and all later years in the recovery period,
preciation allowance, discussed earlier, unless ness in 2022 and later years, you can claim a you must use the straight line depreciation
you elect not to claim it) and section 179 deduc- depreciation deduction equal to the lesser of method over a 5-year recovery period. In addi-
tions that would have been allowable if you had $1,875 or your remaining unrecovered basis. tion, for the year your business use drops to
used the car 100% for business and investment If your business use of the car was less than 50% or less, you must recapture (include in
use. 100% during any year, your depreciation de- your gross income) any excess depreciation
The recovery period. For 5-year property, duction would be less than the maximum (discussed later). You also increase the adjus-
your recovery period is 6 calendar years. A part amount allowable for that year. However, in de- ted basis of your car by the same amount.
year's depreciation is allowed in the first calen- termining your unrecovered basis in the car,
dar year, a full year's depreciation is allowed in you would still reduce your original basis by the Example. In June 2019, you purchased a
each of the next 4 calendar years, and a part maximum amount allowable as if the business car for exclusive use in your business. You met
year's depreciation is allowed in the 6th calen- use had been 100%. For example, if you had the more-than-50%-use test for the first 3 years
dar year. used your car 60% for business instead of of the recovery period (2019 through 2021) but
Under MACRS, your recovery period is the 100%, your allowable depreciation deductions failed to meet it in the fourth year (2022). You
same whether you use declining balance or would have been $10,124 ($16,874 × 60% determine your depreciation for 2022 using
straight line depreciation. You determine your (0.60)), but you still would have to reduce your 20% (from column (c) of Table 4-1). You will
unrecovered basis in the 7th year after you basis by $16,874 to determine your unrecov- also have to determine and include in your
placed the car in service. ered basis. gross income any excess depreciation, dis-
cussed next.
How to treat unrecovered basis. If you Car Used 50% or Less
continue to use your car for business after the for Business Excess depreciation. You must include
recovery period, you can claim a depreciation any excess depreciation in your gross income
deduction in each succeeding tax year until you and add it to your car's adjusted basis for the
recover your basis in the car. The maximum If you use your car 50% or less for qualified
amount you can deduct each year is deter- business use (defined earlier under Deprecia- first tax year in which you don’t use the car
mined by the date you placed the car in service tion Deduction) either in the year the car is more than 50% in qualified business use. Use
and your business-use percentage. For exam- placed in service or in a later year, special rules Form 4797, Sales of Business Property, to fig-
ple, no deduction is allowed for a year you use apply. The rules that apply in these two situa- ure and report the excess depreciation in your
your car 100% for personal purposes. tions are explained in the following paragraphs. gross income.
(For this purpose, “car” was defined earlier un- Excess depreciation is:
Example. In April 2016, you bought and der Actual Car Expenses and includes certain 1. The amount of the depreciation deduc-
placed in service a car you used exclusively in trucks and vans.) tions allowable for the car (including any
your business. The car cost $31,500. You didn’t section 179 deduction claimed and any
claim a section 179 deduction or the special de- Qualified business use 50% or less in year special depreciation allowance claimed)
preciation allowance for the car. You continued placed in service. If you use your car 50% or for tax years in which you used the car
to use the car 100% in your business through- less for qualified business use, the following more than 50% in qualified business use,
out the recovery period (2016 through 2021). rules apply. minus
For those years, you used the MACRS Depreci- • You can’t take the section 179 deduction.
ation Chart (200% DB method), the Maximum • You can’t take the special depreciation al- 2. The amount of the depreciation deduc-
Depreciation Deduction for Cars Placed in lowance. tions that would have been allowable for
Service Prior to 2018 table and the Maximum • You must figure depreciation using the those years if you hadn’t used the car
straight line method over a 5-year recovery more than 50% in qualified business use

Chapter 4 Transportation Page 21

- 22 -

Page 22 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 4-1. 2022 MACRS Depreciation Chart
(Use To Figure Depreciation for 2022)
If you claim actual expenses for your car, use the chart below to find the depreciation method For cars placed in service before 2022, you must use the same method you used on last
and percentage to use for your 2022 return for cars placed in service in 2022. year's return unless a decline in your business use requires you to change to the straight
line method. Refer back to the MACRS Depreciation Chart for the year you placed the
First, using the left column, find the date you first placed the car in service in 2022. Then select car in service. (See Car Used 50% or Less for Business, earlier.)
the depreciation method and percentage from column (a), (b), or (c) following the rules
explained in this chapter. Multiply the unadjusted basis of your car by your business-use percentage. Multiply the
result by the percentage you found in the chart to find the amount of your depreciation
deduction for 2022. (Also see Depreciation Limits, earlier.)
If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan.
1–Sept. 30 percentage instead of the Oct. 1–Dec. 31 percentage for your car. To find out if this applies to you, determine: 1) the basis of all business property
CAUTION! (including other cars) you placed in service after September of that year, and 2) the basis of all business property you placed in service during that entire year. If the
basis of the property placed in service after September isn’t more than 40% of the basis of all property (certain property is excluded) placed in service for the entire
year, use the percentage for Jan. 1–Sept. 30 for figuring depreciation for your car. See Which Convention Applies? in chapter 4 of Pub. 946 for more details.

Example. You buy machinery (basis of $32,000) in May 2022 and a new van (basis of $20,000) in October 2022, both used 100% in your business. You use the percentage for Jan. 1–
Sept. 30, 2022, to figure the depreciation for your van. This is because the $20,000 basis of the property (van) placed in service after September isn’t more than 40% of the basis of all
property placed in service during the year (40% (0.40) × ($32,000 + 20,000) = $20,800).
(a) (b) (c)
Date Placed in Service 200% Declining 150% Declining Straight Line
Balance (200% DB)1 Balance (150% DB)1 (SL)
Oct. 1–Dec. 31, 2022 200 DB 5.0% 150 DB 3.75% SL 2.5%
Jan. 1–Sept. 30, 2022 200 DB 20.0 150 DB 15.0 SL 10.0
Oct. 1–Dec. 31, 2021 200 DB 38.0 150 DB 28.88 SL 20.0
Jan. 1–Sept. 30, 2021 200 DB 32.0 150 DB 25.5 SL 20.0
Oct. 1–Dec. 31, 2020 200 DB 22.8 150 DB 20.21 SL 20.0
Jan. 1–Sept. 30, 2020 200 DB 19.2 150 DB 17.85 SL 20.0
Oct. 1–Dec. 31, 2019 200 DB 13.68 150 DB 16.4 SL 20.0
Jan. 1–Sept. 30, 2019 200 DB 11.52 150 DB 16.66 SL 20.0
Oct. 1–Dec. 31, 2018 200 DB 10.94 150 DB 16.41 SL 20.0
Jan. 1–Sept. 30, 2018 200 DB 11.52 150 DB 16.66 SL 20.0
Oct. 1–Dec. 31, 2017 200 DB 9.58 150 DB 14.35 SL 17.5
Jan. 1–Sept. 30, 2017 200 DB 5.76 150 DB 8.33 SL 10.0
Prior to 20172
1 You can use this column only if the business use of your car is more than 50%.
2 If your car was subject to the maximum limits for depreciation and you have unrecovered basis in the car, you can continue to claim depreciation. See
Deductions in years after the recovery period under Depreciation Limits, earlier.
for the year you placed it in service. This Total depreciation claimed: percentage) × 20% (0.20) (from column (c) of
means the amount of depreciation figured (MACRS 200% DB method) . . . . . . $13,185 Table 4-1 on the line for Jan. 1–Sept. 30,
using the straight line method. Minus total depreciation allowable: 2018)). However, your depreciation deduction
(Straight line method) is limited to $563 ($1,875 x 30% (0.30) busi-
Example. In September 2018, you bought 2018—10% of $20,500 . . . . $2,050 ness use).
a car for $20,500 and placed it in service. You (Limit: $3,160)
didn’t claim the section 179 deduction or the 2019—20% of $20,500 . . . . 4,100 Leasing a Car
special depreciation allowance. You used the (Limit: $5,100)
car exclusively in qualified business use for 2020—20% of $20,500 . . . . 3,050 If you lease a car, truck, or van that you use in
2018, 2019, 2020, and 2021. For those years, (Limit: $3,050) your business, you can use the standard mile-
you used the appropriate MACRS Depreciation 2021—20% of $20,500 . . . . 1,875 –11,075 age rate or actual expenses to figure your de-
Chart to figure depreciation deductions totaling
$13,185 ($3,160 for 2018, $5,100 for 2019, (Limit: $1,875) ductible expense. This section explains how to
$3,050 for 2020, and $1,875 for 2021) under Excess depreciation. . . . . $2,110 figure actual expenses for a leased car, truck,
the 200% DB method. or van.
During 2022, you used the car 30% for busi- For the correct limit, see the Maximum De- Deductible payments. If you choose to use
ness and 70% for personal purposes. Since you preciation Deduction for Cars Placed in Service actual expenses, you can deduct the part of
didn’t meet the more-than-50%-use test, you Prior to 2018 table and the Maximum Deprecia- each lease payment that is for the use of the ve-
must switch from the 200% DB depreciation tion Deduction for Passenger Automobiles (In- hicle in your business. You can’t deduct any
method to the straight line depreciation method cluding Trucks and Vans) Acquired Before Sep- part of a lease payment that is for personal use
for 2022, and include in gross income for 2022 tember 28, 2017, and Placed in Service During of the vehicle, such as commuting.
your excess depreciation determined as fol- 2018-2022 table under Depreciation Limits, ear- You must spread any advance payments
lows. lier, for the maximum amount of depreciation al- over the entire lease period. You can’t deduct
lowed each year. any payments you make to buy a car, truck, or
In 2022, using Form 4797, you figure and re- van even if the payments are called “lease pay-
port the $2,110 excess depreciation you must ments.”
include in your gross income. Your adjusted ba-
sis in the car is also increased by $2,110. Your If you lease a car, truck, or van for 30 days
2022 depreciation is $1,230 ($20,500 (unadjus- or more, you may have to reduce your lease
ted basis) × 30% (0.30) (business-use

Page 22 Chapter 4 Transportation

- 23 -

Page 23 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

payment deduction by an “inclusion amount,” Figure the fair market value on the first day the inclusion amount. For the tax year in which
explained next. of the lease term. If the capitalized cost of a car you stop using the car for business, use the dol-
is specified in the lease agreement, use that lar amount for the previous tax year. Prorate the
Inclusion Amounts amount as the fair market value. dollar amount for the number of days in the
lease term that fall within the tax year.
Figuring the inclusion amount. Inclusion
If you lease a car, truck, or van that you use in amounts for tax years 2018–2022 are listed in Example. On August 16, 2021, you leased
your business for a lease term of 30 days or Appendices A-1 through A-5 for passenger ve- a car with a fair market value of $64,500 for 3
more, you may have to include an inclusion hicles (including trucks and vans). If the fair years. You used the car exclusively in your data
amount in your income for each tax year you market value of the vehicle is $100,000 or less, processing business. On November 5, 2022,
lease the vehicle. To do this, you don’t add an use the appropriate appendix (depending on you closed your business and went to work for
amount to income. Instead, you reduce your de- the year you first placed the vehicle in service) a company where you aren’t required to use a
duction for your lease payment. (This reduction to determine the inclusion amount. If the fair car for business. Using Appendix A-4, you fig-
has an effect similar to the limit on the deprecia- market value is more than $100,000, see the ured your inclusion amount for 2021 and 2022
tion deduction you would have on the vehicle if revenue procedure(s) identified in the footnote as shown in the following table and reduced
you owned it.) of that year’s appendix for the inclusion amount. your deductions for lease payments by those
For each tax year during which you lease amounts.
The inclusion amount is a percentage of part the car for business, determine your inclusion
of the fair market value of the leased vehicle amount by following these three steps. Tax Dollar Business Inclusion
multiplied by the percentage of business and in- year amount Proration use amount
vestment use of the vehicle for the tax year. It is 1. Locate the appendix that applies to you.
prorated for the number of days of the lease To find the inclusion amount, do the fol- 2021 $5 137/365 100% $2
term in the tax year. lowing. 2022 5 309/365 100% 4
a. Find the line that includes the fair mar-
The inclusion amount applies to each tax ket value of the car on the first day of
year that you lease the vehicle if the fair market the lease term. Leased car changed from personal to busi-
value (defined next) when the lease began was b. Go across the line to the column for ness use. If you lease a car for personal use
more than the amounts shown in the following the tax year in which the car is used and, in a later year, change it to business use,
tables. under the lease to find the dollar you must determine the car's fair market value
amount. For the last tax year of the on the date of conversion. Then figure the inclu-
All vehicles are subject to a single inclusion lease, use the dollar amount for the sion amount using the rules explained earlier
amount threshold for passenger automobiles preceding year. under Figuring the inclusion amount. Use the
leased and put into service in 2022. You may fair market value on the date of conversion.
have an inclusion amount for a passenger auto- 2. Prorate the dollar amount from (1b) for the
mobile if: number of days of the lease term included Example. In March 2020, you leased a
in the tax year. truck for 4 years for personal use. On June 1,
Passenger Automobiles 2022, you started working as a self-employed
(Including Trucks and Vans) 3. Multiply the prorated amount from (2) by
the percentage of business and invest- advertising consultant and started using the
Year Lease Began Fair Market Value ment use for the tax year. This is your in- leased truck for business purposes. Your re-
2022 $56,000 clusion amount. cords show that your business use for June 1
through December 31 was 60%. To figure your
2021 51,000 Example. On January 17, 2022, you leased inclusion amount for 2022, you obtained an ap-
2018 –2020* 50,000 a car for 3 years and placed it in service for use praisal from an independent car leasing com-
*If the lease term began before 2018, see tables below to find out if in your business. The car had a fair market pany that showed the fair market value of your
you have an inclusion amount. value of $62,500 on the first day of the lease 2020 truck on June 1, 2022, was $57,650. Us-
term. You use the car 75% for business and ing Appendix A-5, you figured your inclusion
25% for personal purposes during each year of amount for 2022 as shown in the following ta-
For years prior to 2018, see the inclusion ta- the lease. Assuming you continue to use the car ble.
bles below. You may have an inclusion amount 75% for business, you use Appendix A-5 to ar-
for a passenger automobile if: rive at the following inclusion amounts for each Tax Dollar Business Inclusion
year of the lease. For the last tax year of the year amount Proration use amount
Cars lease, 2025, you use the amount for the preced-
(Except for Trucks and Vans) ing year. 2022 $2 214/365 60% $1
Year Lease Began Fair Market Value
2013–2017 $19,000 Tax Dollar Business Inclusion Reporting inclusion amounts. For informa-
year amount Proration use amount tion on reporting inclusion amounts, employees
2010–2012 18,500 should see Car rentals under Completing
2022 $9 348/365 75% $6 Forms 2106 in chapter 6. Sole proprietors
2023 19 365/365 75% 14 should see the Instructions for Schedule C
Trucks and Vans 2024 27 366/366 75% 20 (Form 1040), and farmers should see the In-
Year Lease Began Fair Market Value 2025 27 16/365 75% 1 structions for Schedule F (Form 1040).
2014–2017 $19,500
2010–2013 19,000 Note. 2024 is a leap year and includes an
extra calendar day, February 29, 2024. Disposition of a Car
For each year of the lease that you deduct
Fair market value. Fair market value is the lease payments, you must reduce your deduc- If you dispose of your car, you may have a taxa-
price at which the property would change hands tion by the inclusion amount figured for that ble gain or a deductible loss. The portion of any
between a willing buyer and seller, neither hav- year. gain that is due to depreciation (including any
ing to buy or sell, and both having reasonable section 179 deduction, clean-fuel vehicle de-
knowledge of all the necessary facts. Sales of Leased car changed from business to per- duction (for vehicles placed in service before
similar property around the same date may be sonal use. If you lease a car for business use January 1, 2006), and special depreciation al-
helpful in figuring the fair market value of the and, in a later year, change it to personal use, lowance) that you claimed on the car will be
property. follow the rules explained earlier under Figuring treated as ordinary income. However, you may

Chapter 4 Transportation Page 23

- 24 -

Page 24 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

not have to recognize a gain or loss if you dis- Rate of Depreciation Allowed in Quarter Percentage
pose of the car because of a casualty or theft. Standard Mileage Rate
First . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
This section gives some general information Year(s) Depreciation Second . . . . . . . . . . . . . . . . . . . . . 37.5
about dispositions of cars. For information on Third . . . . . . . . . . . . . . . . . . . . . . . . 62.5
how to report the disposition of your car, see Rate per Mile
Fourth . . . . . . . . . . . . . . . . . . . . . . 87.5
Pub. 544. 2021–2022 0.26
2020 0.27 If the car is subject to the Depreciation Lim-
Note. Like kind exchanges completed after ‐ its, discussed earlier, reduce (but do not in-
December 31, 2017, are generally limited to ex- 2019 0.26 crease) the computed depreciation to this
changes of real property not held primarily for 2017–2018 0.25 amount. See Sale or Other Disposition Before
sale. the Recovery Period Ends in chapter 4 of Pub.
2015–2016 0.24
946 for more information.
Casualty or theft. For a casualty or theft, a 2014 0.22
gain results when you receive insurance or
other reimbursement that is more than your ad- 2012–2013 0.23
justed basis in your car. If you then spend all of 2011 0.22
the proceeds to acquire replacement property 2010 0.23
(a new car or repairs to the old car) within a 2008–2009 0.21
specified period of time, you don’t recognize 2007 0.19
any gain. Your basis in the replacement prop- 2005–2006 0.17 5.
erty is its cost minus any gain that isn’t recog- 2003–2004 0.16
nized. See Pub. 547 for more information. 2001–2002 0.15
2000 0.14
Trade-in. When you trade in an old car for a Recordkeeping
new one, the transaction is considered a Example. In 2017, you bought and placed
like-kind exchange. Generally, no gain or loss is in service a car for exclusive use in your busi- If you deduct travel, gift, or transportation ex-
recognized. (For exceptions, see chapter 1 of ness. The car cost $25,500. From 2017 through penses, you must be able to prove (substanti-
Pub. 544.) In a trade-in situation, your basis in 2022, you used the standard mileage rate to fig- ate) certain elements of expense. This chapter
the new property is generally your adjusted ba- ure your car expense deduction. You drove discusses the records you need to keep to
sis in the old property plus any additional your car 14,100 miles in 2017, 16,300 miles in prove these expenses.
amount you pay. (See Unadjusted basis, ear- 2018, 15,600 miles in 2019, 16,700 miles in If you keep timely and accurate re-
lier.) 2020, 15,100 miles in 2021, and 14,900 miles in cords, you will have support to show
2022. The depreciation portion of your car ex- RECORDS the IRS if your tax return is ever exam-
Depreciation adjustment when you used pense deduction is figured as follows. ined. You will also have proof of expenses that
the standard mileage rate. If you used the your employer may require if you are reim-
standard mileage rate for the business use of Year Miles x Rate Depreciation bursed under an accountable plan. These plans
your car, depreciation was included in that rate. are discussed in chapter 6 under Reimburse-
The rate of depreciation that was allowed in the 2017 14,100 × $0.25 $3,525 ments.
standard mileage rate is shown in the Rate of 2018 16,300 × 0.25 4,075
Depreciation Allowed in Standard Mileage Rate 2019 15,600 × 0.26 4,056
table, later. You must reduce your basis in your 2020 16,700 × 0.27 4,509
car (but not below zero) by the amount of this 2021 15,100 × 0.26 3,926 How To Prove Expenses
depreciation. 2022 14,900 × 0.26 3,874
If your basis is reduced to zero (but not be- Total depreciation $23,965 Table 5-1 is a summary of records you need to
low zero) through the use of the standard mile- prove each expense discussed in this publica-
age rate, and you continue to use your car for At the end of 2022, your adjusted basis in the tion. You must be able to prove the elements
business, no adjustment (reduction) to the car is $1,535 ($25,500 − $23,965). listed across the top portion of the chart. You
standard mileage rate is necessary. Use the full prove them by having the information and re-
standard mileage rate (58.5 cents (0.585) per Depreciation deduction for the year of dis- ceipts (where needed) for the expenses listed
mile from January 1–June 30 and 62.5 cents position. If you deduct actual car expenses in the first column.
(0.625) per mile from July 1–December 31 for and you dispose of your car before the end of You can’t deduct amounts that you ap-
2022) for business miles driven. the recovery period (years 2 through 5), you are ! proximate or estimate.
These rates don’t apply for any year in allowed a reduced depreciation deduction in CAUTION
TIP which the actual expenses method was the year of disposition.
used. Use the depreciation tables in Pub. 946 to You should keep adequate records to prove
figure the reduced depreciation deduction for a your expenses or have sufficient evidence that
car disposed of in 2022. will support your own statement. You must gen-
The depreciation amounts computed using erally prepare a written record for it to be con-
the depreciation tables in Pub. 946 for years 2 sidered adequate. This is because written evi-
through 5 that you own your car are for a full dence is more reliable than oral evidence alone.
year’s depreciation. Years 1 and 6 apply the However, if you prepare a record on a com-
half-year or mid-quarter convention to the com- puter, it is considered an adequate record.
putation for you. If you dispose of the vehicle in
years 2 through 5 and the half-year convention
applies, then the full year’s depreciation amount What Are Adequate
must be divided by 2. If the mid-quarter conven- Records?
tion applies, multiply the full year’s depreciation
by the percentage from the following table for You should keep the proof you need in an ac-
the quarter that you disposed of the car. count 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 ex-
pense.

Page 24 Chapter 5 Recordkeeping

- 25 -

Page 25 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Documentary evidence. You must generally also be considered a timely kept record. This is Example. You use your car to visit the offi-
have documentary evidence, such as receipts, true if you copy it from your account book, diary, ces of clients, meet with suppliers and other
canceled checks, or bills, to support your ex- log, statement of expense, trip sheets, or similar subcontractors, and pick up and deliver items to
penses. record. clients. There is no other business use of the
car, but you and your family use the car for per-
Exception. Documentary evidence isn’t Proving business purpose. You must gener- sonal purposes. You keep adequate records
needed if any of the following conditions apply. ally provide a written statement of the business during the first week of each month that show
• You have meals or lodging expenses while purpose of an expense. However, the degree of that 75% of the use of the car is for business.
traveling away from home for which you proof varies according to the circumstances in Invoices and bills show that your business use
account to your employer under an ac- each case. If the business purpose of an ex- continues at the same rate during the later
countable plan, and you use a per diem al- pense is clear from the surrounding circumstan- weeks of each month. Your weekly records are
lowance method that includes meals ces, then you don’t need to give a written ex- representative of the use of the car each month
and/or lodging. (Accountable plans and planation. and are sufficient evidence to support the per-
per diem allowances are discussed in centage of business use for the year.
chapter 6.) Example. If you are a sales representative
• Your expense, other than lodging, is less who calls on customers on an established sales Exceptional circumstances. You can satisfy
than $75. route, you don’t have to give a written explana- the substantiation requirements with other evi-
• You have a transportation expense for tion of the business purpose for traveling that dence if, because of the nature of the situation
which a receipt isn’t readily available. route. You can satisfy the requirements by re- in which an expense is made, you can’t get a
Adequate evidence. Documentary evi- cording the length of the delivery route once, receipt. This applies if all the following are true.
dence will ordinarily be considered adequate if the date of each trip at or near the time of the • You were unable to obtain evidence for an
it shows the amount, date, place, and essential trips, and the total miles you drove the car dur- element of the expense or use that com-
character of the expense. ing the tax year. You could also establish the pletely satisfies the requirements ex-
For example, a hotel receipt is enough to date of each trip with a receipt, record of deliv- plained earlier under What Are Adequate
support expenses for business travel if it has all ery, or other documentary evidence. Records.
of the following information. • You are unable to obtain evidence for an
• The name and location of the hotel. Confidential information. You don’t need to element that completely satisfies the two
• The dates you stayed there. put confidential information relating to an ele- rules listed earlier under What if I Have In-
• Separate amounts for charges such as ment of a deductible expense (such as the complete Records.
lodging, meals, and telephone calls. place, business purpose, or business relation- • You have presented other evidence for the
ship) in your account book, diary, or other re- element that is the best proof possible un-
A restaurant receipt is enough to prove an cord. However, you do have to record the infor- der the circumstances.
expense for a business meal if it has all of the mation elsewhere at or near the time of the
following information. expense and have it available to fully prove that Destroyed records. If you can’t produce a re-
• The name and location of the restaurant. element of the expense. ceipt because of reasons beyond your control,
• The number of people served. you can prove a deduction by reconstructing
• The date and amount of the expense. your records or expenses. Reasons beyond
What if I Have Incomplete
If a charge is made for items other than food your control include fire, flood, and other casu-
and beverages, the receipt must show that this Records? alties.
is the case. If you don’t have complete records to prove an
Canceled check. A canceled check, to- element of an expense, then you must prove Separating and Combining
gether with a bill from the payee, ordinarily es- the element with: Expenses
tablishes the cost. However, a canceled check • Your own written or oral statement contain-
by itself doesn’t prove a business expense with- ing specific information about the element, This section explains when expenses must be
out other evidence to show that it was for a and kept separate and when expenses can be com-
business purpose. • Other supporting evidence that is sufficient bined.
to establish the element.
Duplicate information. You don‘t have to re- If the element is the description of a gift, or Separating expenses. Each separate pay-
cord information in your account book or other the cost, time, place, or date of an expense, the ment is generally considered a separate ex-
record that duplicates information shown on a supporting evidence must be either direct evi- pense. For example, if you entertain a customer
receipt as long as your records and receipts dence or documentary evidence. Direct evi- or client at dinner and then go to the theater, the
complement each other in an orderly manner. dence can be written statements or the oral tes- dinner expense and the cost of the theater tick-
You don’t have to record amounts your em- timony of your guests or other witnesses setting ets are two separate expenses. You must re-
ployer pays directly for any ticket or other travel forth detailed information about the element. cord them separately in your records.
item. However, if you charge these items to Documentary evidence can be receipts, paid
your employer, through a credit card or other- bills, or similar evidence. Combining items. You can make one daily
wise, you must keep a record of the amounts entry in your record for reasonable categories of
you spend. If the element is either the business relation- expenses. Examples are taxi fares, telephone
ship of your guests or the business purpose of calls, or other incidental travel costs. Nonenter-
Timely kept records. You should record the the amount spent, the supporting evidence can tainment meals should be in a separate cate-
elements of an expense or of a business use at be circumstantial rather than direct. For exam- gory. You can include tips for meal-related serv-
or near the time of the expense or use and sup- ple, the nature of your work, such as making de- ices with the costs of the meals.
port it with sufficient documentary evidence. A liveries, provides circumstantial evidence of the Expenses of a similar nature occurring dur-
timely kept record has more value than a state- use of your car for business purposes. Invoices ing the course of a single event are considered
ment prepared later when there is generally a of deliveries establish when you used the car a single expense.
lack of accurate recall. for business.
You don’t need to write down the elements Car expenses. You can account for sev-
of every expense on the day of the expense. If Sampling. You can keep an adequate record eral uses of your car that can be considered
you maintain a log on a weekly basis that ac- for parts of a tax year and use that record to part of a single use, such as a round trip or un-
counts for use during the week, the log is con- prove the amount of business or investment use interrupted business use, with a single record.
sidered a timely kept record. for the entire year. You must demonstrate by Minimal personal use, such as a stop for lunch
other evidence that the periods for which an ad- on the way between two business stops, isn’t
If you give your employer, client, or cus- equate record is kept are representative of the an interruption of business use.
tomer an expense account statement, it can use throughout the tax year.
Chapter 5 Recordkeeping Page 25

- 26 -

Page 26 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 5-1. How To Prove Certain Business Expenses
IF you have THEN you must keep records that show details of the following elements . . .
expenses for . .
Amount Time Place or Business Purpose
Description Business Relationship
Travel Cost of each separate Dates you left Destination or area of Purpose: Business purpose for the expense or the
expense for travel, and returned your travel (name of business benefit gained or expected to be gained.
lodging, and meals. for each trip city, town, or other
Incidental expenses and number designation). Relationship: N/A
may be totaled in of days spent
reasonable categories on business.
such as taxis, fees and
tips, etc.
Gifts Cost of the gift. Date of the Description of the gift.
gift.
Transportation Cost of each separate Date of the Your business Purpose: Business purpose for the expense.
expense. For car expense. For destination.
expenses, the cost of car Relationship: N/A
the car and any expenses,
improvements, the date the date of
you started using it for the use of the
business, the mileage car.
for each business use,
and the total miles for
the year.

Table 5-2. Daily Business Mileage and Expense Log Name:
Odometer Readings Expenses
Destination Miles Type
Date (City, Town, or Area) Business Purpose Start Stop this trip (Gas, oil, tolls, etc.) Amount

Weekly
Total
Total
Year-to-Date
Example. You make deliveries at several on a pro rata basis. To do so, you must estab- which the deduction is claimed. A return filed
different locations on a route that begins and lish the number of persons who participated in early is considered filed on the due date. For a
ends at your employer's business premises and the event. more complete explanation of how long to keep
that includes a stop at the business premises records, see Pub. 583, Starting a Business and
between two deliveries. You can account for If your return is examined. If your return is Keeping Records.
these using a single record of miles driven. examined, you may have to provide additional
information to the IRS. This information could You must keep records of the business use
Gift expenses. You don’t always have to be needed to clarify or to establish the accuracy of your car for each year of the recovery period.
record the name of each recipient of a gift. A or reliability of information contained in your re- See More-than-50%-use test in chapter 4 under
general listing will be enough if it is evident that cords, statements, testimony, or documentary Depreciation Deduction.
you aren’t trying to avoid the $25 annual limit on evidence before a deduction is allowed.
the amount you can deduct for gifts to any one Reimbursed for expenses. Employees who
person. For example, if you buy a large number give their records and documentation to their
of tickets to local high school basketball games How Long To Keep employers and are reimbursed for their expen-
and give one or two tickets to each of many Records and Receipts ses generally don’t have to keep copies of this
customers, it is usually enough to record a gen- information. However, you may have to prove
eral description of the recipients. You must keep records as long as they may be your expenses if any of the following conditions
needed for the administration of any provision apply.
Allocating total cost. If you can prove the to- of the Internal Revenue Code. Generally, this • You claim deductions for expenses that
tal cost of travel or entertainment but you can’t means you must keep records that support your are more than reimbursements.
prove how much it cost for each person who deduction (or an item of income) for 3 years • Your expenses are reimbursed under a
participated in the event, you may have to allo- from the date you file the income tax return on nonaccountable plan.
cate the total cost among you and your guests

Page 26 Chapter 5 Recordkeeping

- 27 -

Page 27 of 42            Fileid: … tions/p463/2022/a/xml/cycle02/source                                                       14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                            THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM
Table 5-3. Weekly Traveling Expense Record
From:                 To:         Name:  
           Expenses         Sunday               Monday Tuesday Wednesday                     Thursday            Friday             Saturday     Total
1. Travel Expenses:
  Airlines
  Excess Baggage
  Bus – Train
  Cab and Limousine
  Tips
  Porter
2.
Non-Entertainment-Related 
Meals and Lodging:
  Breakfast
  Lunch
 Dinner
   Hotel and Motel 
  (Detail in Schedule B)
3. Other Expenses: 
  Postage
  Telephone & Telegraph
  Stationery & Printing
  Stenographer
  Sample Room
  Advertising
  Assistant(s)
  Trade Shows
4. Car Expenses: (List all car expenses—the division between business and personal expenses may be made at the end of the year.)
  (Detail mileage in Schedule A (if applicable).)
  Gas, oil, lube, wash
  Repairs, parts
  Tires, supplies
  Parking fees, tolls
5. Other (Identify)
Total
Note: Attach receipted bills for (1) ALL lodging and (2) any other expenses of $75.00 or more.
Schedule A—Car
  Mileage: End
  Start
  Total
Business Mileage
Schedule B—Lodging
                        Name
  Hotel or Motel
                        City
                                                        WEEKLY REIMBURSEMENTS:
                                                                Travel and transportation expenses . . . . . . . .  
                                                                Other reimbursements . . . . . . . . . . . . . . . . . .             
                                                                TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

                                                                                                              Chapter 5              Recordkeeping    Page 27

- 28 -

Page 28 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• Your employer doesn’t use adequate ac- on the use of your car in Part V of Form ble personal expenses, such as for vacation
counting procedures to verify expense ac- 4562. trips, your employer must report the reimburse-
counts. • Report all other business expenses dis- ment as wage income in box 1 of your Form
• You are related to your employer as de- cussed in this publication on line 32. You W-2. You can’t deduct personal expenses.
fined under Per Diem and Car Allowances can only include 50% of your non-enter-
in chapter 6. tainment-related meals on that line. How- Income-producing property. If you have
Reimbursements, adequate accounting, and ever, you can deduct 100% of your meal travel or transportation expenses related to in-
nonaccountable plans are discussed in chap- expenses if the meals are food and bever- come-producing property, report your deducti-
ter 6. ages provided by a restaurant, and paid or ble expenses on the form appropriate for that
incurred after December 31, 2020, and be- activity.
fore January 1, 2023. For example, if you have rental real estate
Examples of Records See your form instructions for more information income and expenses, report your expenses on
Table 5-2 and Table 5-3 are examples of work- on how to complete your tax return. Schedule E (Form 1040), Supplemental Income
and Loss. See Pub. 527, Residential Rental
sheets that can be used for tracking business Both self-employed and an employee. If you Property, for more information on the rental of
expenses. are both self-employed and an employee, you real estate.
must keep separate records for each business
activity. Report your business expenses for Vehicle Provided by
self-employment on Schedule C (Form 1040),
or Schedule F (Form 1040), as discussed ear- Your Employer
lier. Report your business expenses for your
work as an employee on Form 2106, as dis- If your employer provides you with a car, you
6. cussed next. may be able to deduct the actual expenses of
operating that car for business purposes. The
Form 2106 is only used by Armed amount you can deduct depends on the amount
Forces reservists, qualified performing
How To Report CAUTION! artists, fee-basis state or local govern- that your employer included in your income and
the business and personal miles you drove dur-
ment officials, and employees with impair- ing the year. You can’t use the standard mile-
This chapter explains where and how to report ment-related work expenses. Due to the sus- age rate.
the expenses discussed in this publication. It pension of miscellaneous itemized deductions
discusses reimbursements and how to treat subject to the 2% floor under section 67(a), em- Form 2106 is only used by Armed
them under accountable and nonaccountable ployees who do not fit into one of the listed cat- ! Forces reservists, qualified performing
plans. It also explains rules for independent egories may not use Form 2106. CAUTION artists, fee-basis state or local govern-
ment officials, and employees with impair-
contractors and clients, fee-basis officials, cer- ment-related work expenses. Due to the sus-
tain performing artists, Armed Forces reserv- Employees. If you are an employee, you must pension of miscellaneous itemized deductions
ists, and certain disabled employees. The chap- generally complete Form 2106 to deduct your subject to the 2% floor under section 67(a), em-
ter ends with illustrations of how to report travel, travel and transportation expenses. ployees who do not fit into one of the listed cat-
gift, and car expenses on Forms 2106. • You are an employee deducting expenses egories may not use Form 2106.
attributable to your job.
• You weren’t reimbursed by your employer
Where To Report for your expenses (amounts included in Value reported on Form W-2. Your employer
box 1 of your Form W-2 aren’t considered can figure and report either the actual value of
This section provides general information on reimbursements). your personal use of the car or the value of the
where to report the expenses discussed in this • If you claim car expenses, you use the car as if you used it only for personal purposes
publication. standard mileage rate. (100% income inclusion). Your employer must
separately state the amount if 100% of the an-
For more information on how to report your nual lease value was included in your income. If
Self-employed. You must report your income expenses on Form 2106, see Completing Form you are unsure of the amount included on your
and expenses on Schedule C (Form 1040) if 2106, later. Form W-2, ask your employer.
you are a sole proprietor, or on Schedule F
(Form 1040) if you are a farmer. You don’t use Gifts. If you didn’t receive any reimburse-
Form 2106. ments (or the reimbursements were all included Full value included in your income. You
If you claim car or truck expenses, you must in box 1 of your Form W-2), the only business may be able to deduct the value of the business
provide certain information on the use of your expense you are claiming is for gifts, and the use of an employer-provided car if your em-
vehicle. You provide this information on Sched- special rules discussed later don’t apply to you, ployer reported 100% of the value of the car in
ule C (Form 1040) or Form 4562. don’t complete Form 2106. your income. On your 2022 Form W-2, the
amount of the value will be included in box 1,
If you file Schedule C (Form 1040): Statutory employees. If you received a Wages, tips, other compensation; and box 14.
• Report your travel expenses, except Form W-2 and the “Statutory employee” box in To claim your expenses, complete Form
meals, on line 24a; box 13 was checked, report your income and 2106, Part II, Sections A and C. Enter your ac-
• Report your deductible non-entertain- expenses related to that income on Schedule C tual expenses on line 23 of Section C and in-
ment-related meals (actual cost or stand- (Form 1040). Don’t complete Form 2106. clude the entire value of the employer-provided
ard meal allowance) on line 24b; Statutory employees include full-time life in- car on line 25. Complete the rest of the form.
• Report your gift expenses and transporta- surance salespersons, certain agent or com-
tion expenses, other than car expenses, mission drivers, traveling salespersons, and Less than full value included in your in-
on line 27a; and certain homeworkers. come. If less than the full annual lease value of
• Report your car expenses on line 9. Com- the car was included on your Form W-2, this
plete Part IV of the form unless you have to If you are entitled to a reimbursement
means that your Form W-2 only includes the
file Form 4562 for depreciation or amorti- ! from your employer but you don’t claim value of your personal use of the car. Don’t en-
zation. CAUTION it, you can’t claim a deduction for the
expenses to which that unclaimed reimburse- ter this value on your Form 2106 because it isn’t
If you file Schedule F (Form 1040), do the ment applies. deductible.
following. If you paid any actual costs (that your em-
• Report your car expenses on line 10. At- ployer didn’t provide or reimburse you for) to
tach Form 4562 and provide information Reimbursement for personal expenses. If operate the car, you can deduct the business
your employer reimburses you for nondeducti- portion of those costs. Examples of costs that

Page 28 Chapter 6 How To Report

- 29 -

Page 29 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

you may have are gas, oil, and repairs. Com- bursements treated as paid under nonaccount- Failure to return excess reimburse-
plete Form 2106, Part II, Sections A and C. En- able plans, as explained later, are reported as ments. If you are reimbursed under an ac-
ter your actual costs on line 23 of Section C and pay. See Pub. 15 (Circular E), Employer's Tax countable plan, but you fail to return, within a
leave line 25 blank. Complete the rest of the Guide, for information on employee pay. reasonable time, any amounts in excess of the
form. substantiated amounts, the amounts paid in ex-
cess of the substantiated expenses are treated
Accountable Plans as paid under a nonaccountable plan. See Rea-
Reimbursements To be an accountable plan, your employer's re- sonable period of time, earlier, and Returning
imbursement or allowance arrangement must Excess Reimbursements, later.
This section explains what to do when you re- include all of the following rules. Reimbursement of nondeductible ex-
ceive an advance or are reimbursed for any of penses. You may be reimbursed under your
the employee business expenses discussed in 1. Your expenses must have a business con-
this publication. nection—that is, you must have paid or in- employer's accountable plan for expenses rela-
curred deductible expenses while per- ted to that employer's business, some of which
If you received an advance, allowance, or forming services as an employee of your would be allowable as employee business ex-
reimbursement for your expenses, how you re- employer. pense deductions and some of which would
port this amount and your expenses depends not. The reimbursements you receive for the
on whether your employer reimbursed you un- 2. You must adequately account to your em- nondeductible expenses don’t meet rule (1) for
der an accountable plan or a nonaccountable ployer for these expenses within a reason- accountable plans, and they are treated as paid
plan. able period of time. under a nonaccountable plan.
3. You must return any excess reimburse-
This section explains the two types of plans, ment or allowance within a reasonable pe- Example. Your employer's plan reimburses
how per diem and car allowances simplify prov- riod of time. you for travel expenses while away from home
ing the amount of your expenses, and the tax on business and also for meals when you work
treatment of your reimbursements and expen- Adequate accounting and returning excess late at the office, even though you aren’t away
ses. It also covers rules for independent con- reimbursements are discussed later. from home. The part of the arrangement that re-
tractors. imburses you for the nondeductible meals when
An excess reimbursement or allowance is
No reimbursement. You aren’t reimbursed or any amount you are paid that is more than the you work late at the office is treated as paid un-
given an allowance for your expenses if you are business-related expenses that you adequately der a nonaccountable plan.
paid a salary or commission with the under- accounted for to your employer. The employer makes the decision
standing that you will pay your own expenses. Reasonable period of time. The definition TIP whether to reimburse employees under
In this situation, you have no reimbursement or of reasonable period of time depends on the an accountable plan or a nonaccounta-
allowance arrangement, and you don’t have to facts and circumstances of your situation. How- ble plan. If you are an employee who receives
read this section on reimbursements. Instead, ever, regardless of the facts and circumstances payments under a nonaccountable plan, you
see Completing Form 2106, later, for informa- of your situation, actions that take place within can’t convert these amounts to payments under
tion on completing your tax return. the times specified in the following list will be an accountable plan by voluntarily accounting
Form 2106 is only used by Armed treated as taking place within a reasonable pe- to your employer for the expenses and voluntar-
riod of time. ily returning excess reimbursements to the em-
! Forces reservists, qualified performing • You receive an advance within 30 days of ployer.
CAUTION artists, fee-basis state or local govern-
ment officials, and employees with impair- the time you have an expense.
ment-related work expenses. Due to the sus- • You adequately account for your expenses Adequate Accounting
pension of miscellaneous itemized deductions within 60 days after they were paid or in-
subject to the 2% floor under section 67(a), em- curred. One of the rules for an accountable plan is that
ployees who do not fit into one of the listed cat- • You return any excess reimbursement you must adequately account to your employer
egories may not use Form 2106. within 120 days after the expense was paid for your expenses. You adequately account by
or incurred. giving your employer a statement of expense,
• You are given a periodic statement (at an account book, a diary, or a similar record in
Reimbursement, allowance, or advance. A least quarterly) that asks you to either re- which you entered each expense at or near the
reimbursement or other expense allowance ar- turn or adequately account for outstanding time you had it, along with documentary evi-
rangement is a system or plan that an employer advances and you comply within 120 days dence (such as receipts) of your travel, mile-
uses to pay, substantiate, and recover the ex- of the statement. age, and other employee business expenses.
penses, advances, reimbursements, and
(See Table 5-1 in chapter 5 for details you need
amounts charged to the employer for employee Employee meets accountable plan rules. If to enter in your record and documents you
business expenses. Arrangements include per you meet the three rules for accountable plans, need to prove certain expenses.) A per diem or
diem and car allowances. your employer shouldn’t include any reimburse- car allowance satisfies the adequate account-
A per diem allowance is a fixed amount of ments in your income in box 1 of your Form ing requirement under certain conditions. See
daily reimbursement your employer gives you W-2. If your expenses equal your reimburse- Per Diem and Car Allowances, later.
for your lodging and M&IE when you are away ments, you don’t complete Form 2106. You
from home on business. (The term “incidental have no deduction since your expenses and re- You must account for all amounts you re-
expenses” is defined in chapter 1 under Stand- imbursements are equal. ceived from your employer during the year as
ard Meal Allowance.) A car allowance is an advances, reimbursements, or allowances. This
amount your employer gives you for the busi- If your employer included reimburse-
ness use of your car. TIP ments in box 1 of your Form W-2 and includes amounts you charged to your em-
Your employer should tell you what method you meet all the rules for accountable ployer by credit card or other method. You must
of reimbursement is used and what records you plans, ask your employer for a corrected Form give your employer the same type of records
must provide. W-2. and supporting information that you would have
to give to the IRS if the IRS questioned a de-
duction on your return. You must pay back the
Employers. If you are an employer and you re- Accountable plan rules not met. Even amount of any reimbursement or other expense
imburse employee business expenses, how though you are reimbursed under an accounta- allowance for which you don’t adequately ac-
you treat this reimbursement on your employ- ble plan, some of your expenses may not meet count or that is more than the amount for which
ee's Form W-2 depends in part on whether you all three rules. All reimbursements that fail to you accounted.
have an accountable plan. Reimbursements meet all three rules for accountable plans are
treated as paid under an accountable plan, as generally treated as having been reimbursed
explained next, aren’t reported as pay. Reim- under a nonaccountable plan (discussed later).
Chapter 6 How To Report Page 29

- 30 -

Page 30 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Per Diem and Car Allowances while they are traveling away from home in a b. For the day you return, add / of the 3 4
particular area. The rates are different for differ- standard meal allowance amount for
If your employer reimburses you for your expen- ent localities. Your employer should have these the preceding day.
ses using a per diem or a car allowance, you rates available. You can also find federal per 2. Method 2: Prorate the standard meal al-
can generally use the allowance as proof for the diem rates at GSA.gov/travel/plan-book/per- lowance using any method you consis-
amount of your expenses. A per diem or car al- diem-rates. tently apply in accordance with reasonable
lowance satisfies the adequate accounting re- business practice. For example, an em-
quirements for the amount of your expenses The standard meal allowance. The
only if all the following conditions apply. standard meal allowance is the federal M&IE ployer can treat 2 full days of per diem
• Your employer reasonably limits payments rate. For travel in 2022, the rate for most small (that includes M&IE) paid for travel away
of your expenses to those that are ordinary localities in the United States is $59 per day. from home from 9 a.m. of one day to 5
and necessary in the conduct of the trade Most major cities and many other localities p.m. of the next day as being no more than
or business. qualify for higher rates. You can find this infor- the federal rate. This is true even though a
• The allowance is similar in form to and not mation at GSA.gov/travel/plan-book/per-diem- federal employee would be limited to a re-
more than the federal rate (defined later). rates. imbursement of M&IE for only 1 / days of 1 2
• You prove the time (dates), place, and You receive an allowance only for M&IE the federal M&IE rate.
business purpose of your expenses to your when your employer does one of the following. The standard mileage rate. This is a set
employer (as explained in Table 5-1) within • Provides you with lodging (furnishes it in rate per mile that you can use to figure your de-
a reasonable period of time. kind). ductible car expenses. For 2022, the standard
• You aren’t related to your employer (as de- • Reimburses you, based on your receipts, mileage rate for the cost of operating your car
fined next). If you are related to your em- for the actual cost of your lodging. for business use is 58.5 cents (0.585) per mile
ployer, you must be able to prove your ex- • Pays the hotel, motel, etc., directly for your from January 1–June 30 and 62.5 cents (0.625)
penses to the IRS even if you have already lodging. per mile from July 1–December 31.
adequately accounted to your employer • Doesn’t have a reasonable belief that you
and returned any excess reimbursement. had (or will have) lodging expenses, such Fixed and variable rate (FAVR). This is
as when you stay with friends or relatives an allowance your employer may use to reim-
If the IRS finds that an employer's travel allow- or sleep in the cab of your truck. burse your car expenses. Under this method,
ance practices are not based on reasonably ac- • Figures the allowance on a basis similar to your employer pays an allowance that includes
curate estimates of travel costs (including rec- that used in figuring your compensation, a combination of payments covering fixed and
ognition of cost differences in different areas for such as number of hours worked or miles variable costs, such as a cents-per-mile rate to
per diem amounts), you won’t be considered to traveled. cover your variable operating costs (such as
have accounted to your employer. In this case, gas, oil, etc.) plus a flat amount to cover your
you must be able to prove your expenses to the High-low rate. This is a simplified method fixed costs (such as depreciation (or lease pay-
IRS. of figuring the federal per diem rate for travel ments), insurance, etc.). If your employer choo-
within the continental United States. It elimi-
Related to employer. You are related to your nates the need to keep a current list of the per ses to use this method, your employer will re-
employer if: diem rates for each city. quest the necessary records from you.
Under the high-low method, the per diem Reporting your expenses with a per diem or
1. Your employer is your brother or sister, amount for travel during January through Sep- car allowance. If your reimbursement is in the
half brother or half sister, spouse, ances- tember of 2022 is $296 (which includes $74 for form of an allowance received under an ac-
tor, or lineal descendant; M&IE) for certain high-cost locations. All other countable plan, the following facts affect your
2. Your employer is a corporation in which areas have a per diem amount of $202 (which reporting.
you own, directly or indirectly, more than includes $64 for M&IE). For more information, The federal rate.
10% in value of the outstanding stock; or see Notice 2021-52, which can be found at •
IRS.gov/irb/2021-38_IRB#NOT-2021-52. • Whether the allowance or your actual ex-
3. Certain relationships (such as grantor, fi- penses were more than the federal rate.
duciary, or beneficiary) exist between you, Effective October 1, 2022, the per diem The following discussions explain where to re-
a trust, and your employer. ! rate for certain high-cost locations in- port your expenses depending upon how the
CAUTION creased to $297 (which includes $74
amount of your allowance compares to the fed-
You may be considered to indirectly own stock for M&IE). The rate for all other locations in- eral rate.
for purposes of (2) if you have an interest in a creased to $204 (which includes $64 for M&IE).
corporation, partnership, estate, or trust that Employers who didn’t use the high-low method Allowance less than or equal to the fed-
owns the stock or if a member of your family or during the first 9 months of 2022 can’t begin to eral rate. If your allowance is less than or
your partner owns the stock. use it before 2023. For more information, see equal to the federal rate, the allowance won’t be
Notice 2022-44, which can be found at included in box 1 of your Form W-2. You don’t
The federal rate. The federal rate can be fig- IRS.gov/irb/2022-41_IRB#NOT-2022-44, and need to report the related expenses or the al-
ured using any one of the following methods. Revenue Procedure 2019-48 at IRS.gov/irb/ lowance on your return if your expenses are
1. For per diem amounts: 2019-51_IRB#RP-2019-48. equal to or less than the allowance.
However, if your actual expenses are more
a. The regular federal per diem rate. Prorating the standard meal allowance than your allowance, you can complete Form
b. The standard meal allowance. on partial days of travel. The standard meal 2106. If you are using actual expenses, you
c. The high-low rate. allowance is for a full 24-hour day of travel. If must be able to prove to the IRS the total
you travel for part of a day, such as on the days amount of your expenses and reimbursements
2. For car expenses: you depart and return, you must prorate the for the entire year. If you are using the standard
a. The standard mileage rate. full-day M&IE rate. This rule also applies if your meal allowance or the standard mileage rate,
employer uses the regular federal per diem rate you don’t have to prove that amount.
b. A fixed and variable rate (FAVR). or the high-low rate.
For per diem amounts, use the rate in You can use either of the following methods
to figure the federal M&IE for that day.
TIP effect for the locality where you stop for
sleep or rest. 1. Method 1:
a. For the day you depart, add / of the 3 4
Regular federal per diem rate. The regu- standard meal allowance amount for
lar federal per diem rate is the highest amount that day.
that the federal government will pay to its
employees for lodging and M&IE (or M&IE only)
Page 30 Chapter 6 How To Report

- 31 -

Page 31 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, Form 2106 is only used by Armed
and Car Expenses and Reimbursements ! Forces reservists, qualified performing
CAUTION artists, fee-basis state or local govern-
IF the type of reimbursement (or THEN the employer reports on AND the employee ment officials, and employees with impair-
other expense allowance) Form W-2: reports on ment-related work expenses. Due to the sus-
arrangement is under: Form 2106: pension of miscellaneous itemized deductions
An accountable plan with: subject to the 2% floor under section 67(a), em-
ployees who do not fit into one of the listed cat-
Actual expense reimbursement: Adequate No amount. No amount. egories may not use Form 2106.
accounting made and excess returned.
Actual expense reimbursement: Adequate The excess amount as wages in No amount.
accounting and return of excess both required box 1. Example 1. A performing artist lives and
but excess not returned. works in Austin. In July, their employer sent
Per diem or mileage allowance up to the No amount. All expenses and reimbursements them to Albuquerque for 4 days on business.
federal rate: Adequate accounting made and only if excess expenses are Their employer paid the hotel directly for their
excess returned. claimed. Otherwise, form is not lodging and reimbursed them $80 a day ($320
filed. total) for M&IE. Their actual meal expenses
Per diem or mileage allowance up to the The excess amount as wages in No amount. weren’t more than the federal rate for Albuquer-
federal rate: Adequate accounting and return box 1. The amount up to the que, which is $69 per day.
of excess both required but excess not federal rate is reported only under Their employer included the $44 that was
returned. code L in box 12 of Form W-2—it more than the federal rate (($80 − $69) × 4) in
isn’t reported in box 1. box 1 of their Form W-2. Their employer shows
Per diem or mileage allowance exceeds the The excess amount as wages in All expenses (and reimbursements $276 ($69 a day × 4) under code L in box 12 of
federal rate: Adequate accounting up to the box 1. The amount up to the reported under code L in box 12 of their Form W-2. This amount isn’t included in
federal rate only and excess not returned. federal rate is reported only under Form W-2) only if expenses in their income. They don’t have to complete Form
code L in box 12 of Form W-2—it excess of the federal rate are 2106; however, they must include the $44 in
isn’t reported in box 1. claimed. Otherwise, form isn’t filed. their gross income as wages (by reporting the
A nonaccountable plan with: total amount shown in box 1 of their Form W-2).
Either adequate accounting or return of The entire amount as wages in All expenses.
excess, or both, not required by plan. box 1. Example 2. A performing artist also lives in
Austin and works for the same employer as in
No reimbursement plan: The entire amount as wages in All expenses. Example 1. In May, the employer sent them to
box 1.
San Diego for 4 days and paid the hotel directly
Form 2106 is only used by Armed Example 3. A fee-basis state government for their hotel bill. The employer reimbursed
! Forces reservists, qualified performing official drives 5,000 miles during January them $75 a day for their M&IE. The federal rate
CAUTION artists, fee-basis state or local govern- through June 2022 and 5,000 miles during July for San Diego is $74 a day.
ment officials, and employees with impair- through December 2022 for business. Under They can prove that their actual non-enter-
ment-related work expenses. Due to the sus- their employer's accountable plan, they account tainment-related meal expenses totaled $380.
pension of miscellaneous itemized deductions for the time (dates), place, and business pur- Their employer's accountable plan won’t pay
subject to the 2% floor under section 67(a), em- pose of each trip. Their employer pays them a more than $75 a day for travel to San Diego, so
ployees who do not fit into one of the listed cat- mileage allowance of 40 cents (0.40) a mile. they don’t give their employer the records that
egories may not use Form 2106. Since their $6,050 expense figured under prove that they actually spent $380. However,
the standard mileage rate ((5,000 miles x 58.5 they do account for the time (dates), place, and
Example 1. In April, a member of a reserve cents (0.585) per mile) + (5,000 miles x 62.5 business purpose of the trip. This is their only
component of the Armed Forces takes a 2-day cents (0.625) per mile)) is more than their business trip this year.
business trip to Denver. The federal rate for $4,000 reimbursement (10,000 miles × 40 cents They were reimbursed $300 ($75 × 4 days),
Denver is $278 ($199 lodging + $79 M&IE) per (0.40)), they itemize their deductions to claim which is $4 more than the federal rate of $296
day. As required by their employer's accounta- the excess expense. They complete Form 2106 ($74 × 4 days). The employer includes the $4
ble plan, they account for the time (dates), (showing all their expenses and reimburse- as income on their employee’s Form W-2 in
place, and business purpose of the trip. Their ments) and enter $2,050 ($6,050 − $4,000) as box 1. The employer also enters $296 under
employer reimburses them $278 a day ($556 an itemized deduction. code L in box 12 of the employee’s Form W-2.
They complete Form 2106 to figure their de-
total) for living expenses. Their living expenses Allowance more than the federal rate. If ductible expenses. They enter the total of their
in Denver aren’t more than $278 a day. your allowance is more than the federal rate, actual expenses for the year ($380) on Form
Their employer doesn’t include any of the your employer must include the allowance 2106. They also enter the reimbursements that
reimbursement on their Form W-2 and they amount up to the federal rate under code L in weren’t included in their income ($296). Their
don’t deduct the expenses on their return. box 12 of your Form W-2. This amount isn’t tax- total deductible expense, before the 50% limit,
able. However, the excess allowance will be in- is $96. Since their meals consisted of food and
Example 2. In June, a fee-basis local gov- cluded in box 1 of your Form W-2. You must re- beverages that were provided by a restaurant
ernment official takes a 2-day business trip to port this part of your allowance as if it were and paid or incurred after 2020 and before
Boston. Their employer uses the high-low wage income. 2023, they can deduct 100% of their meal ex-
method to reimburse employees. Since Boston If your actual expenses are less than or penses. They will include the $96 as an item-
is a high-cost area, they are given an advance equal to the federal rate, you don’t complete ized deduction.
of $296 (which includes $74 for M&IE) a day Form 2106 or claim any of your expenses on
($592 total) for their lodging and M&IE. Their your return. Example 3. A fee-basis state government
actual expenses totaled $700. However, if your actual expenses are more official drives 5,000 miles during January
Since their $700 of expenses are more than than the federal rate, you can complete Form through June 2022 and 5,000 miles during July
their $592 advance, they include the excess ex- 2106 and deduct those excess expenses. You through December 2022 for business. Under
penses when they itemize their deductions. must report on Form 2106 your reimbursements their employer's accountable plan, they get re-
They complete Form 2106 (showing all of their up to the federal rate (as shown under code L in imbursed 65 cents (0.65) a mile, which is more
expenses and reimbursements). They must box 12 of your Form W-2) and all your expen- than the standard mileage rate. Their total reim-
also allocate their reimbursement between their ses. You should be able to prove these bursement is $6,500.
meals and other expenses as discussed later amounts to the IRS. Their employer must include the reimburse-
under Completing Form 2106. ment amount up to the standard mileage rate,
$6,050 ((5,000 miles x 58.5 cents (0.585) per
Chapter 6 How To Report Page 31

- 32 -

Page 32 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

mile) + (5,000 miles x 62.5 cents (0.625) per to cover your M&IE. The federal per diem for You are a performing artist and are being re-
mile)), under code L in box 12 of the employ- M&IE for Phoenix is $69. Your trip lasts only 3 imbursed under a nonaccountable plan. Your
ee’s Form W-2. That amount isn’t taxable. Their days. Under your employer's accountable plan, employer will include the $12,000 on your Form
employer must also include $450 ($6,500 − you must return the $160 ($80 × 2 days) ad- W-2 as if it were wages. If you want to deduct
$6,050) in box 1 of the employee's Form W-2. vance for the 2 days you didn’t travel. For the 3 your business expenses, you must complete
This is the reimbursement that is more than the days you did travel, you don’t have to return the Form 2106 and itemize your deductions.
standard mileage rate. $33 difference between the allowance you re-
If their expenses are equal to or less than ceived and the federal rate for Phoenix (($80 − Example 2. You are paid $2,000 a month
the standard mileage rate, they wouldn’t com- $69) × 3 days). However, the $33 will be repor- by your employer. On days that you travel away
plete Form 2106. If their expenses are more ted on your Form W-2 as wages. from home on business, your employer desig-
than the standard mileage rate, they would nates $50 a day of your salary as paid to reim-
complete Form 2106 and report their total ex- burse your travel expenses. Because your em-
penses and reimbursement (shown under code Nonaccountable Plans ployer would pay your monthly salary whether
L in box 12 of their Form W-2). They would then or not you were traveling away from home, the
claim the excess expenses as an itemized de- A nonaccountable plan is a reimbursement or arrangement is a nonaccountable plan. No part
duction. expense allowance arrangement that doesn’t of the $50 a day designated by your employer is
meet one or more of the three rules listed earlier treated as paid under an accountable plan.
under Accountable Plans.
Returning Excess
Reimbursements In addition, even if your employer has an ac- Rules for Independent
countable plan, the following payments will be Contractors and Clients
Under an accountable plan, you are required to treated as being paid under a nonaccountable
return any excess reimbursement or other ex- plan. This section provides rules for independent
pense allowances for your business expenses • Excess reimbursements you fail to return contractors who incur expenses on behalf of a
to the person paying the reimbursement or al- to your employer. client or customer. The rules cover the reporting
lowance. Excess reimbursement means any • Reimbursement of nondeductible expen- and substantiation of certain expenses dis-
amount for which you didn’t adequately account ses related to your employer's business. cussed in this publication, and they affect both
within a reasonable period of time. For exam- See Reimbursement of nondeductible ex- independent contractors and their clients or
ple, if you received a travel advance and you penses, earlier, under Accountable Plans. customers.
didn’t spend all the money on business-related
expenses or you don’t have proof of all your ex- An arrangement that repays you for business
penses, you have an excess reimbursement. expenses by reducing the amount reported as You are considered an independent con-
your wages, salary, or other pay will be treated tractor if you are self-employed and you per-
as a nonaccountable plan. This is because you form services for a customer or client.
Adequate accounting and reasonable period are entitled to receive the full amount of your
of time were discussed earlier in this chapter. pay whether or not you have any business ex- Accounting to Your Client
penses.
Travel advance. You receive a travel advance If you received a reimbursement or an allow-
if your employer provides you with an expense If you aren’t sure if the reimbursement or ex- ance for travel, or gift expenses that you incur-
allowance before you actually have the ex- pense allowance arrangement is an accounta- red on behalf of a client, you should provide an
pense, and the allowance is reasonably expec- ble or nonaccountable plan, ask your employer. adequate accounting of these expenses to your
ted to be no more than your expense. Under an client. If you don’t account to your client for
accountable plan, you are required to ade- Reporting your expenses under a nonac- these expenses, you must include any reim-
quately account to your employer for this ad- countable plan. Your employer will combine bursements or allowances in income. You must
vance and to return any excess within a reason- the amount of any reimbursement or other ex- keep adequate records of these expenses
able period of time. pense allowance paid to you under a nonac- whether or not you account to your client for
If you don’t adequately account for or don't countable plan with your wages, salary, or other these expenses.
return any excess advance within a reasonable pay. Your employer will report the total in box 1
period of time, the amount you don’t account for of your Form W-2. If you don’t separately account for and seek
or return will be treated as having been paid un- You must complete Form 2106 and itemize reimbursement for meal and entertainment ex-
der a nonaccountable plan (discussed later). your deductions to deduct your expenses for penses in connection with providing services for
Unproven amounts. If you don’t prove that travel, transportation, or non-entertainment-re- a client, you are subject to the 50% limit on
you actually traveled on each day for which you lated meals. Your meal and entertainment ex- those expenses. See 50% Limit in chapter 2.
received a per diem or car allowance (proving penses will be subject to the 50% Limit dis-
the elements described in Table 5-1), you must cussed in chapter 2. However, you can deduct Adequate accounting. As a self-employed
return this unproven amount of the travel ad- 100% of business meals if the meals are food person, you adequately account by reporting
vance within a reasonable period of time. If you and beverages provided by a restaurant, and your actual expenses. You should follow the re-
don’t do this, the unproven amount will be con- paid or incurred after 2020 and before 2023. cordkeeping rules in chapter 5.
sidered paid under a nonaccountable plan (dis- Form 2106 is only used by Armed How to report. For information on how to
cussed later). ! Forces reservists, qualified performing report expenses on your tax return, see
CAUTION artists, fee-basis state or local govern- Self-employed at the beginning of this chapter.
Per diem allowance more than federal ment officials, and employees with impair-
rate. If your employer's accountable plan pays ment-related work expenses. Due to the sus-
you an allowance that is higher than the federal pension of miscellaneous itemized deductions Required Records for
rate, you don’t have to return the difference be- subject to the 2% floor under section 67(a), em- Clients or Customers
tween the two rates for the period you can ployees who do not fit into one of the listed cat-
prove business-related travel expenses. How- egories may not use Form 2106. If you are a client or customer, you generally
ever, the difference will be reported as wages don’t have to keep records to prove the reim-
on your Form W-2. This excess amount is con- bursements or allowances you give, in the
sidered paid under a nonaccountable plan (dis- Example 1. Your employer gives you course of your business, to an independent
cussed later). $1,000 a month ($12,000 total for the year) for contractor for travel or gift expenses incurred on
your business expenses. You don’t have to pro- your behalf. However, you must keep records if:
Example. Your employer sends you on a vide any proof of your expenses to your em- • You reimburse the contractor for entertain-
5-day business trip to Phoenix in March 2022 ployer, and you can keep any funds that you ment expenses incurred on your behalf,
and gives you a $400 ($80 × 5 days) advance don’t spend. and
Page 32 Chapter 6 How To Report

- 33 -

Page 33 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• The contractor adequately accounts to you 2023. A special rule allows this 100% deduction
for these expenses. for the full meal portion of a per diem rate or al-
lowance. See 50% Limit in chapter 2 and Completing Form
Contractor adequately accounts. If the con- IRS.gov/Newsroom/IRS-Provides-Guidance-
tractor adequately accounts to you for non-en- on-Per-Diem-Rates-and-the-Temporary-100- 2106
tertainment-related meal expenses, you (the cli- Percent-Deduction-for-Food-or-Beverages-
ent or customer) must keep records From-Restaurants for additional information. For tax years beginning after 2017, the Form
documenting each element of the expense, as 2106 will be used by Armed Forces reservists,
explained in chapter 5. Use your records as Regular federal per diem rate method. Reg- qualified performing artists, fee-basis state or
proof for a deduction on your tax return. If ular federal per diem rates are published by the local government officials, and employees with
non-entertainment-related meal expenses are General Services Administration (GSA). Both impairment-related work expenses. Due to the
accounted for separately, you are subject to the tables include the separate rate for M&IE for suspension of miscellaneous itemized deduc-
50% limit on meals. However, you can deduct each locality. The rates listed for FY2022 at tions subject to the 2% floor under section
100% of business meals if the meals are food GSA.gov/travel/plan-book/per-diem-rates are 67(a), employees who do not fit into one of the
and beverages provided by a restaurant, and effective October 1, 2021, and those listed for listed categories may not use Form 2106.
paid or incurred after 2020 and before 2023. If FY2023 are effective October 1, 2022. The This section briefly describes how employ-
the contractor adequately accounts to you for standard rate for all locations within CONUS not ees complete Forms 2106. Table 6-1 explains
reimbursed amounts, you don’t have to report specifically listed for FY2022 is $155 ($96 for what the employer reports on Form W-2 and
the amounts on an information return. lodging and $59 for M&IE). For FY2023, this what the employee reports on Form 2106. The
rate increases to $157 ($98 for lodging and $59 instructions for the forms have more information
Contractor doesn’t adequately account. If for M&IE). on completing them.
the contractor doesn’t adequately account to
you for allowances or reimbursements of If you are self-employed, don’t file
non-entertainment-related meal expenses, you Transition Rules ! Form 2106. Report your expenses on
don’t have to keep records of these items. You CAUTION Schedule C (Form 1040) or Schedule F
aren’t subject to the 50% limit on meals in this The transition period covers the last 3 months (Form 1040). See the instructions for the form
case. You can deduct the reimbursements or of the calendar year, from the time that new that you must file.
allowances as payment for services if they are rates are effective (generally, October 1)
ordinary and necessary business expenses. through December 31. During this period, you
However, you must file Form 1099-MISC to re- may generally change to the new rates or finish Car expenses. If you used a car to perform
port amounts paid to the independent contrac- out the year with the rates you had been using. your job as an employee, you may be able to
deduct certain car expenses. These are gener-
tor if the total of the reimbursements and any High-low method. If you use the high-low sub- ally figured on Form 2106, Part II, and then
other fees is $600 or more during the calendar stantiation method, when new rates become ef- claimed on Form 2106, Part I, line 1, column A.
year. fective (generally, October 1) you can either Information on use of cars. If you claim
continue with the rates you used for the first part any deduction for the business use of a car, you
of the year or change to the new rates. How- must answer certain questions and provide in-
How To Use Per Diem ever, you must continue using the high-low formation about the use of the car. The informa-
Rate Tables method for the rest of the calendar year tion relates to the following items.
(through December 31). If you are an employer, • Date placed in service.
This section contains information about the per you must use the same rates for all employees • Mileage (total, business, commuting, and
diem rate substantiation methods available and reimbursed under the high-low method during other personal mileage).
the choice of rates you must make for the last 3 that calendar year. • Percentage of business use.
months of the year. The new rates and localities for the high-low • After-work use.
method are included each year in a notice that • Use of other vehicles.
is generally published in mid to late September. • Whether you have evidence to support the
The Two Substantiation You can find the notice in the weekly Internal deduction.
Methods Revenue Bulletin (IRB) at IRS.gov/IRB, or visit • Whether or not the evidence is written.
IRS.gov and enter “Special Per Diem Rates” in
High-low method. IRS Notices list the locali- the search box. Employees must complete Form 2106, Part II,
ties that are treated under the high-low substan- Section A, to provide this information.
tiation method as high-cost localities for all or Federal per diem rate method. New CONUS Standard mileage rate. If you claim a de-
part of the year. Notice 2021-52, available at per diem rates become effective on October 1 duction based on the standard mileage rate in-
IRS.gov/irb/2021-38_IRB#NOT-2021-52, lists of each year and remain in effect through Sep- stead of your actual expenses, you must com-
the high-cost localities that are eligible for $296 tember 30 of the following year. Employees be- plete Form 2106, Part II, Section B. The amount
(which includes $74 for meals and incidental ing reimbursed under the per diem rate method on line 22 (Section B) is carried to Form 2106,
expenses (M&IE)) per diem, effective October during the first 9 months of a year (January 1– Part I, line 1. In addition, on Part I, line 2, you
1, 2021. For travel on or after October 1, 2021, September 30) must continue under the same can deduct parking fees and tolls that apply to
all other localities within the continental United method through the end of that calendar year the business use of the car. See Standard Mile-
States (CONUS) are eligible for $202 (which in- (December 31). However, for travel by these age Rate in chapter 4 for information on using
cludes $64 for M&IE) per diem under the employees from October 1 through December this rate.
high-low method. 31, you can choose to continue using the same
Notice 2022-44, available at IRS.gov/irb/ per diem rates or use the new rates. Actual expenses. If you claim a deduction
2022-41_IRB#NOT-2022-44, lists the high-cost The new federal CONUS per diem rates are based on actual car expenses, you must com-
localities that are eligible for $297 (which in- published each year, generally early in Septem- plete Form 2106, Part II, Section C. In addition,
cludes $74 for M&IE) per diem, effective Octo- ber. Go to GSA.gov/travel/plan-book/per-diem- unless you lease your car, you must complete
ber 1, 2022. For travel on or after October 1, rates. Section D to show your depreciation deduction
and any section 179 deduction you claim.
2022, the per diem for all other localities in- Per diem rates for localities listed for If you are still using a car that is fully depre-
creased to $204 (which includes $64 for M&IE). ! FY2023 may change at any time. To be ciated, continue to complete Section C. Since
CAUTION sure you have the most current rate, you have no depreciation deduction, enter zero
Temporary 100% deduction of the full meal check GSA.gov/travel/plan-book/per-diem- on line 28. In this case, don’t complete Sec-
portion of a per diem rate or allowance. A rates. tion D.
100% deduction is allowed for certain business
meals paid or incurred after 2020 and before

Chapter 6 How To Report Page 33

- 34 -

Page 34 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Car rentals. If you claim car rental expen- your employer pays your reimbursement in the 1. Limit on meals and entertainment.
ses on Form 2106, line 24a, you may have to following manner. Certain non-entertainment-related meal expen-
reduce that expense by an inclusion amount, as • Pays you a single amount that covers ses are subject to a 50% limit. However, you
described in chapter 4. If so, you can show your non-entertainment-related meals and/or can deduct 100% of business meals if the
car expenses and any inclusion amount as fol- entertainment, as well as other business meals are food and beverages provided by a
lows. expenses. restaurant and paid or incurred after 2020 and
1. Figure the inclusion amount without taking • Doesn’t clearly identify how much is for de- before 2023. Generally, entertainment expen-
into account your business-use percent- ductible non-entertainment-related meals. ses are nondeductible if paid or incurred after
age for the tax year. You must allocate that single payment so that December 2017. If you are an employee, you
you know how much to enter on Form 2106, figure this limit on line 9 of Form 2106. See the
2. Report the inclusion amount from (1) on line 7, column A and column B. Meals Deduction From Restaurants Worksheet
Form 2106, Part II, line 24b. in the 2022 Instructions for Form 2106 for re-
3. Report on line 24c the net amount of car Example. Your employer paid you an ex- porting information. (See 50% Limit in chap-
rental expenses (total car rental expenses pense allowance of $12,000 this year under an ter 2.)
minus the inclusion amount figured in (1)). accountable plan. The $12,000 payment con- 2. Limit on total itemized deductions.
sisted of $5,000 for airfare and $7,000 for Limitations on itemized deductions are suspen-
The net amount of car rental expenses will be non-entertainment-related meals, and car ex- ded for tax years beginning after 2017 and be-
adjusted on Form 2106, Part II, line 27, to reflect penses. Your employer didn’t clearly show how fore tax year January 2026, per section 68(g).
the percentage of business use for the tax year. much of the $7,000 was for the cost of deducti-
ble non-entertainment-related meals. You ac-
Transportation expenses. Show your trans- tually spent $14,000 during the year ($5,500 for Special Rules
portation expenses that didn’t involve overnight airfare, $4,500 for non-entertainment-related
travel on Form 2106, line 2, column A. Also in- meals, and $4,000 for car expenses). This section discusses special rules that apply
clude on this line business expenses you have Since the airfare allowance was clearly iden- only to Armed Forces reservists, government
for parking fees and tolls. Don’t include expen- tified, you know that $5,000 of the payment officials who are paid on a fee basis, performing
ses of operating your car or expenses of com- goes in column A, line 7, of Form 2106. To allo- artists, and disabled employees with impair-
muting between your home and work. cate the remaining $7,000, you use the work- ment-related work expenses. For tax years be-
sheet from the Instructions for Form 2106. Your ginning after 2017, they are the only taxpayers
Employee business expenses other than completed worksheet follows. who can use Form 2106.
nonentertainment meals. Show your other
employee business expenses on Form 2106, Reimbursement Allocation Work- Armed Forces Reservists
lines 3 and 4, column A. Don’t include expen- sheet Traveling More Than 100 Miles
ses for nonentertainment meals on those lines. (Keep for your records.) From Home
Line 4 is for expenses such as gifts, educational
expenses (tuition and books), of- 1. Enter the total amount of
fice-in-the-home expenses, and trade and pro- reimbursements your If you are a member of a reserve component of
fessional publications. employer gave you that the Armed Forces of the United States and you
weren’t reported to you in travel more than 100 miles away from home in
If line 4 expenses are the only ones box 1 of Form W-2 . . . . . . . . . $7,000 connection with your performance of services
TIP you are claiming, you received no reim- 2. Enter the total amount of your as a member of the reserves, you can deduct
bursements (or the reimbursements expenses for the periods your travel expenses as an adjustment to gross
were all included in box 1 of your Form W-2), covered by this income rather than as a miscellaneous itemized
and the special rules discussed later don’t ap- reimbursement . . . . . . . . . . . . 8,500 deduction. The amount of expenses you can
ply to you, don’t complete Form 2106. 3. Enter the part of the amount deduct as an adjustment to gross income is
on line 2 that was your total limited to the regular federal per diem rate (for
Non-entertainment-related meal expenses. expense for lodging and M&IE) and the standard mileage
Show the full amount of your expenses for non- non-entertainment-related rate (for car expenses) plus any parking fees,
entertainment business-related meals on Form meals . . . . . . . . . . . . . . . . . . . 4,500 ferry fees, and tolls. See Per Diem and Car Al-
2106, line 5, column B. Include meals while 4. Divide line 3 by line 2. Enter lowances, earlier, for more information.
away from your tax home overnight and other the result as a decimal
business meals. See the Meals Deduction From (rounded to at least three Member of a reserve component. You are a
Restaurants Worksheet in the 2022 Instructions places) . . . . . . . . . . . . . . . . . . 0.529 member of a reserve component of the Armed
for Form 2106 for reporting information. 5. Multiply line 1 by line 4. Enter Forces of the United States if you are in the
the result here and in column Army, Navy, Marine Corps, Air Force, or Coast
“Hours of service” limits. If you are sub- B, line 7 . . . . . . . . . . . . . . . . . 3,703 Guard Reserve; the Army National Guard of the
ject to the Department of Transportation's 6. Subtract line 5 from line 1. United States; the Air National Guard of the Uni-
“hours of service” limits (as explained earlier un- Enter the result here and in ted States; or the Reserve Corps of the Public
der Individuals subject to “hours of service” lim- column A, line 7 . . . . . . . . . . . $3,297 Health Service.
its in chapter 2), use 80% instead of 50% for
meals while away from your tax home. On line 7 of Form 2106, you enter $8,297 How to report. If you have reserve-related
($5,000 airfare and $3,297 of the $7,000) in col- travel that takes you more than 100 miles from
Reimbursements. Enter on Form 2106, line 7, umn A and $3,703 (of the $7,000) in column B. home, you should first complete Form 2106.
the amounts your employer (or third party) reim- Then include your expenses for reserve travel
bursed you that weren’t reported to you in box 1 After you complete the form. If you are a over 100 miles from home, up to the federal
of your Form W-2. This includes any amount re- government official paid on a fee basis, a per- rate, from Form 2106, line 10, in the total on
ported under code L in box 12 of Form W-2. forming artist, an Armed Forces reservist, or a Schedule 1 (Form 1040), line 12.
Allocating your reimbursement. If you disabled employee with impairment-related You can’t deduct expenses of travel that
were reimbursed under an accountable plan work expenses, see Special Rules, later. doesn’t take you more than 100 miles from
and want to deduct excess expenses that home as an adjustment to gross income.
weren’t reimbursed, you may have to allocate Limits on employee business expenses.
your reimbursement. This is necessary when Your employee business expenses may be
subject to either of the limits described next. Officials Paid on a Fee Basis
They are figured in the following order on the
specified form. Certain fee-basis officials can claim their em-
ployee business expenses on Form 2106.
Page 34 Chapter 6 How To Report

- 35 -

Page 35 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Fee-basis officials are persons who are em- You are disabled if you have: • VITA. The Volunteer Income Tax Assis-
ployed by a state or local government and who • A physical or mental disability (for exam- tance (VITA) program offers free tax help
are paid in whole or in part on a fee basis. They ple, blindness or deafness) that function- to people with low-to-moderate incomes,
can deduct their business expenses in perform- ally limits your being employed; or persons with disabilities, and limited-Eng-
ing services in that job as an adjustment to • A physical or mental impairment (for exam- lish-speaking taxpayers who need help
gross income rather than as a miscellaneous ple, a sight or hearing impairment) that preparing their own tax returns. Go to
itemized deduction. substantially limits one or more of your ma- IRS.gov/VITA, download the free IRS2Go
jor life activities, such as performing man- app, or call 800-906-9887 for information
If you are a fee-basis official, include your ual tasks, walking, speaking, breathing, on free tax return preparation.
employee business expenses from Form 2106, learning, or working. • TCE. The Tax Counseling for the Elderly
line 10, in the total on Schedule 1 (Form 1040), (TCE) program offers free tax help for all
line 12. You can deduct impairment-related expen- taxpayers, particularly those who are 60
ses as business expenses if they are: years of age and older. TCE volunteers
• Necessary for you to do your work satis- specialize in answering questions about
Expenses of Certain factorily; pensions and retirement-related issues
Performing Artists • For goods and services not required or unique to seniors. Go to IRS.gov/TCE,
used, other than incidentally, in your per- download the free IRS2Go app, or call
If you are a performing artist, you may qualify to sonal activities; and 888-227-7669 for information on free tax
deduct your employee business expenses as • Not specifically covered under other in- return preparation.
an adjustment to gross income. To qualify, you come tax laws. • MilTax. Members of the U.S. Armed
must meet all of the following requirements. Forces and qualified veterans may use Mil-
1. During the tax year, you perform services Example 1. You are blind. You must use a Tax, a free tax service offered by the De-
in the performing arts as an employee for reader to do your work. You use the reader both partment of Defense through Military One-
at least two employers. during your regular working hours at your place Source.
of work and outside your regular working hours
2. You receive at least $200 each from any away from your place of work. The reader's For more information, go to
two of these employers. services are only for your work. You can deduct MilitaryOneSource (MilitaryOneSource.mil/
3. Your related performing-arts business ex- your expenses for the reader as business ex- MilTax).
penses are more than 10% of your gross penses. Also, the IRS offers Free Fillable Forms,
which can be completed online and then filed
income from the performance of those Example 2. You are deaf. You must use a electronically regardless of income.
services. sign language interpreter during meetings while
4. Your adjusted gross income isn’t more you are at work. The interpreter's services are Using online tools to help prepare your re-
than $16,000 before deducting these busi- used only for your work. You can deduct your turn. Go to IRS.gov/Tools for the following.
ness expenses. expenses for the interpreter as business expen- • The Earned Income Tax Credit Assistant
ses. (IRS.gov/EITCAssistant) determines if
Special rules for married persons. If you are you’re eligible for the earned income credit
married, you must file a joint return unless you (EIC).
• The Online EIN Application IRS.gov/EIN ( )
lived apart from your spouse at all times during How To Get Tax Help helps you get an employer identification
the tax year. If you file a joint return, you must
number (EIN) at no cost.
figure requirements (1), (2), and (3) separately If you have questions about a tax issue; need • The Tax Withholding Estimator IRS.gov/ (
for both you and your spouse. However, re- help preparing your tax return; or want to down- W4app) makes it easier for you to estimate
quirement (4) applies to your and your spouse's load free publications, forms, or instructions, go the federal income tax you want your em-
combined adjusted gross income. to IRS.gov to find resources that can help you ployer to withhold from your paycheck.
right away.
Where to report. If you meet all of the above This is tax withholding. See how your with-
holding affects your refund, take-home
requirements, you should first complete Form Preparing and filing your tax return. After pay, or tax due.
2106. Then you include your performing-arts-re- receiving all your wage and earnings state-
lated expenses from Form 2106, line 10, in the ments (Form W-2, W-2G, 1099-R, 1099-MISC, • The First Time Homebuyer Credit Account
total on Schedule 1 (Form 1040), line 12. 1099-NEC, etc.); unemployment compensation Look-up IRS.gov/HomeBuyer ( ) tool pro-
If you don’t meet all of the above require- statements (by mail or in a digital format) or vides information on your repayments and
ments, you don’t qualify to deduct your expen- other government payment statements (Form account balance.
ses as an adjustment to gross income. 1099-G); and interest, dividend, and retirement • The Sales Tax Deduction Calculator
statements from banks and investment firms (IRS.gov/SalesTax) figures the amount you
Impairment-Related Work (Forms 1099), you have several options to can claim if you itemize deductions on
Expenses of Disabled Employees choose from to prepare and file your tax return. Schedule A (Form 1040).
You can prepare the tax return yourself, see if Getting answers to your tax ques-
If you are an employee with a physical or men- you qualify for free tax preparation, or hire a tax tions. On IRS.gov, you can get
tal disability, your impairment-related work ex- professional to prepare your return. up-to-date information on current
events and changes in tax law.
penses aren’t subject to the 2%-of-adjus- Free options for tax preparation. Go to
ted-gross-income limit that applies to most IRS.gov to see your options for preparing and • Go to IRS.gov/Help: A variety of tools to
other employee business expenses. After you filing your return online or in your local commun- help you get answers to some of the most
complete Form 2106, enter your impairment-re- ity, if you qualify, which include the following. common tax questions.
lated work expenses from Form 2106, line 10, • Go to IRS.gov/ITA: The Interactive Tax As-
on Schedule A (Form 1040), line 16, and iden- • Free File. This program lets you prepare
tify the type and amount of this expense on the and file your federal individual income tax sistant, a tool that will ask you questions
line next to line 16. return for free using brand-name tax-prep- and, based on your input, provide answers
aration-and-filing software or Free File filla- on a number of tax law topics.
ble forms. However, state tax preparation • Go to IRS.gov/Forms: Find forms, instruc-
Impairment-related work expenses are your may not be available through Free File. Go tions, and publications. You will find details
allowable expenses for attendant care at your to IRS.gov/FreeFile to see if you qualify for on the most recent tax changes and inter-
workplace and other expenses in connection free online federal tax preparation, e-filing, active links to help you find answers to
with your workplace that are necessary for you and direct deposit or payment options. your questions.
to be able to work.

Publication 463 (2022) Page 35

- 36 -

Page 36 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• You may also be able to access tax law in- is available at Taxpayer Assistance Centers Tax Pro Account. This tool lets your tax pro-
formation in your electronic filing software. (TACs), other IRS offices, and every VITA/TCE fessional submit an authorization request to ac-
return site. OPI Service is accessible in more cess your individual taxpayer IRS online
than 350 languages. account. For more information, go to IRS.gov/
Need someone to prepare your tax return? TaxProAccount.
There are various types of tax return preparers, Accessibility Helpline available for taxpay-
including enrolled agents, certified public ac- ers with disabilities. Taxpayers who need in- Using direct deposit. The fastest way to re-
countants (CPAs), accountants, and many oth- formation about accessibility services can call ceive a tax refund is to file electronically and
ers who don’t have professional credentials. If 833-690-0598. The Accessibility Helpline can choose direct deposit, which securely and elec-
you choose to have someone prepare your tax answer questions related to current and future tronically transfers your refund directly into your
return, choose that preparer wisely. A paid tax accessibility products and services available in financial account. Direct deposit also avoids the
preparer is: alternative media formats (for example, braille, possibility that your check could be lost, stolen,
• Primarily responsible for the overall sub- large print, audio, etc.). The Accessibility Help- destroyed, or returned undeliverable to the IRS.
stantive accuracy of your return, line does not have access to your IRS account. Eight in 10 taxpayers use direct deposit to re-
• Required to sign the return, and For help with tax law, refunds, or account-rela- ceive their refunds. If you don’t have a bank ac-
• Required to include their preparer tax iden- ted issues, go to IRS.gov/LetUsHelp count, go to IRS.gov/DirectDeposit for more in-
tification number (PTIN). formation on where to find a bank or credit
Although the tax preparer always signs the Note. Form 9000, Alternative Media Prefer- union that can open an account online.
return, you're ultimately responsible for provid- ence, or Form 9000(SP) allows you to elect to
ing all the information required for the preparer receive certain types of written correspondence Getting a transcript of your return. The
to accurately prepare your return. Anyone paid in the following formats. quickest way to get a copy of your tax transcript
to prepare tax returns for others should have a • Standard Print. is to go to IRS.gov/Transcripts. Click on either
thorough understanding of tax matters. For • Large Print. "Get Transcript Online" or "Get Transcript by
more information on how to choose a tax pre- Mail" to order a free copy of your transcript. If
parer, go to Tips for Choosing a Tax Preparer • Braille. you prefer, you can order your transcript by call-
on IRS.gov. • Audio (MP3). ing 800-908-9946.
Coronavirus. Go to IRS.gov/Coronavirus for • Plain Text File (TXT). Reporting and resolving your tax-related
links to information on the impact of the corona- • Braille Ready File (BRF). identity theft issues.
virus, as well as tax relief available for individu- • Tax-related identity theft happens when
als and families, small and large businesses, Disasters. Go to Disaster Assistance and someone steals your personal information
and tax-exempt organizations. Emergency Relief for Individuals and to commit tax fraud. Your taxes can be af-
Businesses to review the available disaster tax fected if your SSN is used to file a fraudu-
Employers can register to use Business relief. lent return or to claim a refund or credit.
Services Online. The Social Security Adminis- • The IRS doesn’t initiate contact with tax-
tration (SSA) offers online service at SSA.gov/ Getting tax forms and publications. Go to payers by email, text messages (including
employer for fast, free, and secure online W-2 IRS.gov/Forms to view, download, or print all of shortened links), telephone calls, or social
filing options to CPAs, accountants, enrolled the forms, instructions, and publications you media channels to request or verify per-
agents, and individuals who process Form W-2, may need. Or, you can go to IRS.gov/ sonal or financial information. This in-
Wage and Tax Statement, and Form W-2c, OrderForms to place an order. cludes requests for personal identification
Corrected Wage and Tax Statement. numbers (PINs), passwords, or similar in-
Getting tax publications and instructions in formation for credit cards, banks, or other
IRS social media. Go to IRS.gov/SocialMedia eBook format. You can also download and financial accounts.
to see the various social media tools the IRS view popular tax publications and instructions • Go to IRS.gov/IdentityTheft, the IRS Iden-
uses to share the latest information on tax (including the Instructions for Form 1040) on tity Theft Central webpage, for information
changes, scam alerts, initiatives, products, and mobile devices as eBooks at IRS.gov/eBooks. on identity theft and data security protec-
services. At the IRS, privacy and security are Note. IRS eBooks have been tested using tion for taxpayers, tax professionals, and
our highest priority. We use these tools to share Apple's iBooks for iPad. Our eBooks haven’t businesses. If your SSN has been lost or
public information with you. Don’t post your so- been tested on other dedicated eBook readers, stolen or you suspect you’re a victim of
cial security number (SSN) or other confidential and eBook functionality may not operate as in- tax-related identity theft, you can learn
information on social media sites. Always pro- tended. what steps you should take.
tect your identity when using any social net- • Get an Identity Protection PIN (IP PIN). IP
working site. Access your online account (individual tax- PINs are six-digit numbers assigned to tax-
The following IRS YouTube channels pro- payers only). Go to IRS.gov/Account to se- payers to help prevent the misuse of their
vide short, informative videos on various tax-re- curely access information about your federal tax SSNs on fraudulent federal income tax re-
lated topics in English, Spanish, and ASL. account. turns. When you have an IP PIN, it pre-
• Youtube.com/irsvideos. • View the amount you owe and a break- vents someone else from filing a tax return
• Youtube.com/irsvideosmultilingua. down by tax year. with your SSN. To learn more, go to
• Youtube.com/irsvideosASL. • See payment plan details or apply for a IRS.gov/IPPIN.
new payment plan.
Watching IRS videos. The IRS Video portal • Make a payment or view 5 years of pay- Ways to check on the status of your refund.
(IRSVideos.gov) contains video and audio pre- ment history and any pending or sched- • Go to IRS.gov/Refunds.
sentations for individuals, small businesses, uled payments. • Download the official IRS2Go app to your
and tax professionals. • Access your tax records, including key mobile device to check your refund status.
data from your most recent tax return, and • Call the automated refund hotline at
Online tax information in other languages. transcripts. 800-829-1954.
You can find information on IRS.gov/ • View digital copies of select notices from Note. The IRS can’t issue refunds before
MyLanguage if English isn’t your native lan- the IRS. mid-February for returns that claimed the EIC or
guage. • Approve or reject authorization requests the additional child tax credit (ACTC). This ap-
from tax professionals. plies to the entire refund, not just the portion as-
Free Over-the-Phone Interpreter (OPI) Serv- • View your address on file or manage your sociated with these credits.
ice. The IRS is committed to serving our multi- communication preferences.
lingual customers by offering OPI services. The
OPI Service is a federally funded program and

Page 36 Publication 463 (2022)

- 37 -

Page 37 of 42 Fileid: … tions/p463/2022/a/xml/cycle02/source 14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Making a tax payment. Go to IRS.gov/ Understanding an IRS notice or letter What Can TAS Do For You?
Payments for information on how to make a you’ve received. Go to IRS.gov/Notices to
payment using any of the following options. find additional information about responding to TAS can help you resolve problems that you
• IRS Direct Pay: Pay your individual tax bill an IRS notice or letter. can’t resolve with the IRS. And their service is
or estimated tax payment directly from free. If you qualify for their assistance, you will
your checking or savings account at no Note. You can use Schedule LEP (Form be assigned to one advocate who will work with
cost to you. 1040), Request for Change in Language Prefer- you throughout the process and will do every-
• Debit or Credit Card: Choose an approved ence, to state a preference to receive notices, thing possible to resolve your issue. TAS can
payment processor to pay online or by letters, or other written communications from help you if:
phone. the IRS in an alternative language. You may not • Your problem is causing financial difficulty
• Electronic Funds Withdrawal: Schedule a immediately receive written communications in for you, your family, or your business;
payment when filing your federal taxes us- the requested language. The IRS’s commitment • You face (or your business is facing) an
ing tax return preparation software or to LEP taxpayers is part of a multi-year timeline immediate threat of adverse action; or
through a tax professional. that is scheduled to begin providing translations • You’ve tried repeatedly to contact the IRS
• Electronic Federal Tax Payment System: in 2023. You will continue to receive communi- but no one has responded, or the IRS
Best option for businesses. Enrollment is cations, including notices and letters in English hasn’t responded by the date promised.
required. until they are translated to your preferred lan-
• Check or Money Order: Mail your payment guage.
to the address listed on the notice or in- How Can You Reach TAS?
structions. Contacting your local IRS office. Keep in
• Cash: You may be able to pay your taxes mind, many questions can be answered on TAS has offices in every state, the District of
with cash at a participating retail store. IRS.gov without visiting an IRS Taxpayer Assis- Columbia, and Puerto Rico. Your local advo-
• Same-Day Wire: You may be able to do tance Center (TAC). Go to IRS.gov/LetUsHelp cate’s number is in your local directory and at
same-day wire from your financial institu- for the topics people ask about most. If you still TaxpayerAdvocate.IRS.gov/Contact-Us. You
tion. Contact your financial institution for need help, IRS TACs provide tax help when a can also call them at 877-777-4778.
availability, cost, and cut-off times. tax issue can’t be handled online or by phone.
All TACs now provide service by appointment, How Else Does TAS Help
Note. The IRS uses the latest encryption so you’ll know in advance that you can get the Taxpayers?
technology to ensure that the electronic pay- service you need without long wait times. Be-
ments you make online, by phone, or from a fore you visit, go to IRS.gov/TACLocator to find
mobile device using the IRS2Go app are safe the nearest TAC and to check hours, available TAS works to resolve large-scale problems that
and secure. Paying electronically is quick, easy, services, and appointment options. Or, on the affect many taxpayers. If you know of one of
and faster than mailing in a check or money or- IRS2Go app, under the Stay Connected tab, these broad issues, report it to them at IRS.gov/
der. choose the Contact Us option and click on “Lo- SAMS.
What if I can’t pay now? Go to IRS.gov/ cal Offices.”
Payments for more information about your op- TAS for Tax Professionals
tions. The Taxpayer Advocate
TAS can provide a variety of information for tax
• Apply for an online payment agreement Service (TAS) Is Here To professionals, including tax law updates and
(IRS.gov/OPA) to meet your tax obligation
in monthly installments if you can’t pay Help You guidance, TAS programs, and ways to let TAS
your taxes in full today. Once you complete What Is TAS? know about systemic problems you’ve seen in
the online process, you will receive imme- your practice.
diate notification of whether your agree- TAS is an independent organization within the
ment has been approved. IRS that helps taxpayers and protects taxpayer Low Income Taxpayer
• Use the Offer in Compromise Pre-Qualifier rights. Their job is to ensure that every taxpayer
to see if you can settle your tax debt for is treated fairly and that you know and under- Clinics (LITCs)
less than the full amount you owe. For stand your rights under the Taxpayer Bill of
more information on the Offer in Compro- Rights. LITCs are independent from the IRS. LITCs
mise program, go to IRS.gov/OIC. represent individuals whose income is below a
certain level and need to resolve tax problems
How Can You Learn About Your with the IRS, such as audits, appeals, and tax
Filing an amended return. Go to IRS.gov/ Taxpayer Rights? collection disputes. In addition, LITCs can pro-
Form1040X for information and updates.
vide information about taxpayer rights and re-
The Taxpayer Bill of Rights describes 10 basic sponsibilities in different languages for individu-
Checking the status of your amended re- rights that all taxpayers have when dealing with als who speak English as a second language.
turn. Go to IRS.gov/WMAR to track the status the IRS. Go to TaxpayerAdvocate.IRS.gov to Services are offered for free or a small fee for
of Form 1040-X amended returns. help you understand what these rights mean to eligible taxpayers. To find an LITC near you, go
Note. It can take up to 3 weeks from the you and how they apply. These are your rights. to TaxpayerAdvocate.IRS.gov/about-us/Low-
date you filed your amended return for it to Know them. Use them. Income-Taxpayer-Clinics-LITC or see IRS Pub.
show up in our system, and processing it can
take up to 16 weeks. 4134, Low Income Taxpayer Clinic List.

Publication 463 (2022) Page 37

- 38 -

Page 38 of 42  Fileid: … tions/p463/2022/a/xml/cycle02/source                                                                  14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Appendices

Appendices A-1 through A-5 show      leased a passenger automobile (in-                If any of these apply to you, use       leased the car. (See                 Leasing a Car 
the  lease  inclusion  amounts  that cluding  a  truck  and  van)  in  2018          the appendix for the year you first       in chapter 4.)
you may need to report if you first  through 2022 for 30 days or more.

Appendix A-1. Inclusion Amounts for Passenger Automobiles First Leased in 2018
        Fair Market Value                                                              Tax Year of Lease1
 Over         Not Over               1st                                           2nd 3rd                                     4th                                 5th and Later
  $50,000      $51,000                $1                                            $3                                      $5  $5                                   $6
  51,000       52,000                4                                             9                                       13  16                                   19
  52,000       53,000                7                                             15                                      22  27                                   31
  53,000       54,000                10                                            21                                      31  37                                   44
  54,000       55,000                12                                            27                                      40  48                                   56
  55,000       56,000                15                                            33                                      49  59                                   68
  56,000       57,000                18                                            39                                      58  69                                   81
  57,000       58,000                20                                            45                                      67  80                                   93
  58,000       59,000                23                                            51                                      76  91                                   105
  59,000       60,000                26                                            57                                      85  101                                  117
  60,000       62,000                30                                            66                                      98  118                                  135
  62,000       64,000                36                                            78  116                                     139                                  160
  64,000       66,000                41                                            90  134                                     160                                  185
  66,000       68,000                46                                            102 152                                     181                                  210
  68,000       70,000                52                                            114 169                                     203                                  235
  70,000       72,000                57                                            126 187                                     225                                  259
  72,000       74,000                63                                            138 205                                     246                                  284
  74,000       76,000                68                                            150 223                                     267                                  309
  76,000       78,000                74                                            162 241                                     288                                  333
  78,000       80,000                79                                            174 259                                     310                                  357
  80,000       85,000                89                                            195 290                                     347                                  401
  85,000       90,000                102                                           225 335                                     400                                  463
  90,000       95,000                116                                           255 379                                     454                                  525
  95,000       100,0002              130                                           285 423                                     508                                  586

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#REV-PROC-2018-25.

Page 38                                                                                                                            Publication 463 (2022)

- 39 -

Page 39 of 42           Fileid: … tions/p463/2022/a/xml/cycle02/source                                                         14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Appendix A-2. Inclusion Amounts for Passenger Automobiles First Leased in 2019
      Fair Market Value                                                                 Tax Year of Lease1
 Over                  Not Over  1st                                               2nd  3rd                                    4th                                 5th and Later
  $50,000               $51,000   $0                                                $1                                      $1  $3                                    $3
  51,000                52,000    4                                                 11   15                                     20                                    23
  52,000                53,000    9                                                 20   30                                     36                                    43
  53,000                54,000    13                                                30   44                                     53                                    63
  54,000                55,000    17                                                40   58                                     70                                    83
  55,000                56,000    22                                                49   72                                     88                                    102
  56,000                57,000    26                                                59   86                                     105                                   122
  57,000                58,000    31                                                68   101                                    122                                   142
  58,000                59,000    35                                                78   115                                    139                                   161
  59,000                60,000    39                                                88   129                                    156                                   181
  60,000                62,000    46                                                102  151                                    181                                   211
  62,000                64,000    55                                                121  179                                    216                                   250
  64,000                66,000    63                                                140  208                                    251                                   289
  66,000                68,000    72                                                160  236                                    284                                   329
  68,000                70,000    81                                                179  265                                    318                                   369
  70,000                72,000    90                                                198  293                                    353                                   408
  72,000                74,000    98                                                217  322                                    387                                   448
  74,000                76,000    107                                               236  351                                    421                                   487
  76,000                78,000    116                                               255  379                                    456                                   526
  78,000                80,000    125                                               275  407                                    489                                   567
  80,000                85,000    140                                               308  458                                    549                                   635
  85,000                90,000    162                                               356  529                                    635                                   734
  90,000                95,000    184                                               404  600                                    720                                   833
  95,000                100,0002  206                                               452  671                                    806                                   931

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.

Appendix A-3. Inclusion Amounts for Passenger Automobiles First Leased in 2020
      Fair Market Value                                                                 Tax Year of Lease1
 Over                  Not Over  1st                                               2nd  3rd                                    4th                                 5th and Later
  $50,000               $51,000   $0                                                $1                                      $0  $2                                    $2
 51,000                52,000    2                                                 6                                       9   10                                    13
 52,000                53,000    5                                                 11                                      17  20                                    24
 53,000                54,000    7                                                 17                                      24  30                                    35
 54,000                55,000    10                                                22                                      32  39                                    46
 55,000                56,000    12                                                27                                      41  48                                    57
 56,000                57,000    15                                                32                                      49  58                                    68
 57,000                58,000    17                                                38                                      56  68                                    79
 58,000                59,000    19                                                44                                      64  77                                    90
 59,000                60,000    22                                                49                                      72  87                                    100
 60,000                62,000    26                                                56                                      84  102                                   117
 62,000                64,000    30                                                68                                      99  121                                   139
 64,000                66,000    35                                                78   116                                    139                                   161
 66,000                68,000    40                                                89   131                                    159                                   183
 68,000                70,000    45                                                99   148                                    177                                   205
 70,000                72,000    50                                                110  163                                    197                                   227
 72,000                74,000    55                                                121  179                                    215                                   249
 74,000                76,000    60                                                131  195                                    235                                   271
 76,000                78,000    64                                                142  211                                    254                                   293
 78,000                80,000    69                                                153  227                                    272                                   315
 80,000                85,000    78                                                172  254                                    306                                   353
 85,000                90,000    90                                                198  295                                    353                                   408
 90,000                95,000    102                                               225  334                                    401                                   463
 95,000                100,0002  114                                               252  373                                    449                                   518

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. 2020-37 (2020-33 I.R.B. 381), available at IRS.gov/irb/2020-33_IRB#REV-PROC-2020-37.

Publication 463 (2022)                                                                                                                                                   Page 39

- 40 -

Page 40 of 42         Fileid: … tions/p463/2022/a/xml/cycle02/source                                                                   14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Appendix A-4. Inclusion Amounts for Passenger Automobiles First Leased in 2021
        Fair Market Value                                                                              Tax Year of Lease1
  Over               Not Over        1st                                               2nd             3rd                             4th                          5th and Later
   $51,000                 $52,000    $0                                                $0                                   $1         $0                            $1
  52,000                  53,000     1                                                 1                                    1           2                            2
  53,000                  54,000     1                                                 2                                    2           3                            4
  54,000                  55,000     1                                                 3                                    3           5                            5
  55,000                  56,000     2                                                 3                                    5           6                            6
  56,000                  57,000     2                                                 4                                    6           7                            8
  57,000                  58,000     2                                                 5                                    7           8                            10
  58,000                  59,000     3                                                 5                                    8          10                            11
  59,000                  60,000     3                                                 6                                    9          11                            13
  60,000                  62,000     3                                                 7                                    11         13                            15
  62,000                  64,000     4                                                 9                                    13         15                            18
  64,000                  66,000     5                                                 10                                   15         18                            21
  66,000                  68,000     5                                                 12                                   17         21                            24
  68,000                  70,000     6                                                 13                                   20         23                            27
  70,000                  72,000     7                                                 14                                   22         26                            30
  72,000                  74,000     7                                                 16                                   24         29                            33
  74,000                  76,000     8                                                 18                                   26         31                            36
  76,000                  78,000     9                                                 19                                   28         34                            39
  78,000                  80,000     9                                                 21                                   30         37                            42
  80,000                  85,000     11                                                23                                   34         41                            48
  85,000                  90,000     12                                                27                                   40         47                            55
  90,000                  95,000     14                                                30                                   45         55                            62
  95,000                  100,0002   16                                                34                                   50         61                            70

 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. 2021-31 (2021-34 I.R.B. 324), available at IRS.gov/irb/2021-34_IRB#REV-PROC-2021-31.

Appendix A-5. Inclusion Amounts for Passenger Automobiles First Leased in 2022
        Fair Market Value                                                                              Tax Year of Lease1
  Over               Not Over        1st                                               2nd             3rd                             4th                          5th and Later
   $56,000                 $57,000    $1                                                $1                                   $1         $2                            $2
  57,000                  58,000     2                                                 4                                    5           7                            7
  58,000                  59,000     3                                                 7                                    9          11                            13
  59,000                  60,000     4                                                 9                                    14         16                            19
  60,000                  62,000     6                                                 13                                   20         23                            28
  62,000                  64,000     9                                                 19                                   27         34                            38
  64,000                  66,000     11                                                24                                   36         43                            50
  66,000                  68,000     14                                                30                                   43         53                            61
  68,000                  70,000     16                                                35                                   52         63                            72
  70,000                  72,000     19                                                40                                   61         72                            83
  72,000                  74,000     21                                                46                                   68         82                            95
  74,000                  76,000     24                                                51                                   77         91                            106
  76,000                  78,000     26                                                57                                   85         101                           117
  78,000                  80,000     29                                                62                                   93         111                           128
  80,000                  85,000     33                                                72              107                             128                           148
  85,000                  90,000     39                                                86              127                             152                           176
  90,000                  95,000     45                                                100             147                             177                           204
  95,000                  100,0002   52                                                113             167                             201                           233

 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. 2022-17, available at IRS.gov/pub/irs-drop/rp-22-17.pdf.

                   To help us develop a more useful index, please let us know if you have ideas for index entries.
Index              See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                                                                         Adequate accounting                     29      Expenses 12
"Hours of service" limits 12       A                                                       Independent contractors                  32   Signs, display racks, or other 
  Form 2106 34                                                                           Adequate records                     24           promotional material to be 
50% limit on meals 5               Accountable plans 29 32-                                                                                used on recipient's business 
                                   Accounting to employer                           29   Advertising:
                                                                                           Car display 14                                  premises 13

Page 40                                                                                                                                    Publication 463 (2022)

- 41 -

Page 41 of 42               Fileid: … tions/p463/2022/a/xml/cycle02/source                                     14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Airline clubs 10                   Disabled employees:                 Interest on car loans  15
Allocating costs  5 26,              Impairment-related work           Itinerants 3                            R
Allowance                                expenses  35
                                                                                                               Recordkeeping 
  (See Reimbursements)             Documentary evidence   25           L                                        requirements   24 28-
Armed forces:                                                                                                   Adequate records   24
  Assigned overseas    3           E                                   Leasing a car, truck, or van    22, 
                                                                         23                                     Daily business mileage and 
Assistance (See Tax help)          Employer-provided vehicles       15 Luxury water travel  9                     expense log (Table 6-2)   26
Athletic clubs 10                    Reporting requirements      28                                             Destroyed records  25
                                   Entertainment expenses        13    M                                        How to prove expenses 
                                                                                                                  (Table 5-1) 26
B                                    50% limit:                        MACRS (Modified Accelerated              Incomplete records  25
Basis of car 17                          Determination of                Cost Recovery System)         19       Reimbursed expenses    26
(See also Depreciation of car)              applicability (Figure        2022 chart (Table 4-1)   22            Sampling to prove 
Bona fide business purpose     5            A)  11
Business travel   6                  Entertainment, defined      10    Main place of business or                  expenses   25
                                                                         work    3                              Separating and combining 
  Outside U.S.    7                  Form 2106    34                   Married taxpayers:                         expenses   25 26, 
Business use of car   15           Estimates of expenses  24             Performing artists 35                  Three-year period of 
  More-than-50%-use test.    18    Exceptions to the 50% Limit      12 Meal expenses   5                          retention  26
  Qualified business use    18     Excess reimbursements                 50% limit  11                          Weekly travel expense and 
                                     (See Reimbursements)
                                                                            Determination of                      entertainment record 
C                                                                                applicability (Figure            (Table 6-3) 27
                                   F
Canceled checks:                                                                 A) 11                         Regular federal method:
  As evidence of business          Fair market value of car      23         Exceptions  12                      Introduction 33
   expenses       25               Farmers:                              Actual cost method   5                 Transition rules 33
Car expenses   14 23-                Form 1040, Schedule F       28      Form 2106   34                        Reimbursements    29 33-
  Actual expenses    15            Federal crime investigations or       Major cities with higher               Accountable plans  29
  Allowances for   30 32-            prosecutions:                          allowances  6                       Excess   32
  Business and personal use    15    Federal employees engaged           Standard meal allowance       5 6,  ,  Form 2106   34
  Combining expenses      25             in 4                               30                                  Nonaccountable plans   32
  Disposition of car 23            Federal rate for per diem     6 30, Meals and Entertainment                  Nondeductible expenses   29
  Fixed and variable rate (FAVR)   Fee-basis officials 35                expenses    10
   allowance      30               Fees you pay   14                   Mileage rate (See Standard               Personal expenses  28
  Form 2106   33                   Fixed and variable rate (FAVR)        mileage rate)                          Recordkeeping    26
  Leasing a car, truck, or van 22,   allowance    30                   Military (See Armed forces)              Reporting (Table 6-1)  31
   23                              Form 1040, Schedule C         28    Missing children, photographs            Unclaimed   28
  Mileage rate (See Standard       Form 1040, Schedule F  28             of 2                                  Reporting requirements   28
   mileage rate)                   Form 2106    17 28 32 33, , ,       Modified Accelerated Cost                Per diem or car allowance 30
                                                                         Recovery System                        Reimbursements    29 33-
  Taxes paid on car   15           Form 4562    28                       (MACRS)     19                        Reservists:
  Traffic tickets 15               Form 4797    21                       2022 chart (Table 4-1)   22            Transportation expenses  14
Car pools 14                       Form W-2:                                                                    Traveling more than 100 miles 
Car rentals 23                       Employer-provided vehicles     28 N                                          from home   34
  Form 2106   34                     Reimbursement of personal                                                 Returning excess 
Car, defined  16                         expenses  28                  Nonaccountable plans     32              reimbursements     32
Car, truck, or van rentals  22 23,   Statutory employees  28
Casualty and theft losses:                                             O                                       S
  Cars 15                          G                                   Office in the home   14                 Section 179 deduction:
   Depreciation     24             Gifts 10 13,                        Officials paid on fee basis  34          Amended return   17
Club dues 10                         $25 limit  13                     Overseas travel:                         Deduction  16
Commuting expenses        14         Combining for recordkeeping         Conventions   9                        Limits 16
Conventions   9                          purposes  26                    Meal allowance   6                    Self-employed persons   12
Country clubs  10                    Reporting requirements      28      Part of trip outside U.S. 7            Reporting requirements  28
Cruise ships  9                    Golf clubs  10                                                              Spouse, expenses for  5
                                                                       P                                       Standard meal allowance   5 6,  , 
D                                  H                                   Parking fees  14 15,                     30
Daily business mileage and         Hauling tools  14                   Per diem allowances    30 32-           Standard mileage rate 2 14 30, , 
  expense log (Table 6-2)     26   High-low method:                      Defined   29                           Depreciation adjustment for 
Depreciation of car   16             Introduction  33                    Federal rate for 30                      using   24
(See also Section 179                Transition rules 33               Per diem rates:                          Form 2106   33
   deductions)                     High-low rate method   30             High-cost localities 33               Statutory employees  28
  Adjustment for using standard    Home office  14                       High-low method    33
   mileage rate     24                                                                                         T
  Basis 17                         Hotel clubs  10                       Regular federal method    33
   Sales taxes     15                                                    Standard rate for unlisted            Tables and figures 26
   Unrecovered basis       21      I                                        localities 33                       50% limit determination (Figure 
                                                                         Transition rules 33                      A)   11
  Casualty or theft, effect 24     Identity theft 36                   Performing artists 35                    Maximum depreciation 
  Deduction   16 24,               Impairment-related work             Personal property taxes     15             deduction for cars placed in 
  Excess depreciation   21           expenses     35                                                              service prior to 2018 
  Modified Accelerated Cost        Incidental expenses:                Personal trips  7
   Recovery System                   Defined   6                         Outside U.S.  8                          table   20
   (MACRS)        19                 Gifts  13                         Placed in service, cars  17              Maximum depreciation 
                                                                                                                  deduction for Passenger 
  Trade-in, effect  18 24,           No meals, incidentals only     6  Probationary work period     4             Automobiles (Including 
  Trucks and vans    20            Income-producing property        28 Proving business purpose        25         Trucks and Vans) acquired 
Depreciation of Car:               Incomplete records  25              Public transportation:                     after September 27, 2017, 
  Section 179 deduction    20      Indefinite job assignment     4       Outside of U.S. travel 7                 and placed in service during 
                                   Independent contractors       32    Publications (See Tax help)                2018 or later  20

Publication 463 (2022)                                                                                                                 Page 41

- 42 -

Page 42 of 42         Fileid: … tions/p463/2022/a/xml/cycle02/source                      14:42 - 1-Feb-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Tables and figures (Cont.)
Maximum depreciation           Tax help 35                    Form 2106  34                Transportation workers' 
deduction for Passenger        Tax home, determination of 3  Transportation workers 6 12,  expenses    6
Automobiles (Including         Temporary job assignments  4  Travel advance 29 32,        Two places of work 14
Trucks and Vans) acquired      Temporary work location    13 (See also Reimbursements)
before September 28, 2017,                                   Travel expenses 3 10-        U
and placed in service during   Tickets:
2018–2022   20                 Traffic violations 15          Another individual          Unclaimed reimbursements         28
Modified Accelerated Cost      Tools:                         accompanying taxpayer    5
Recovery System (MACRS)        Hauling tools   14             Away from home   3 4,       Unions:
2022 chart (Table 4-1)    22   Trade-in of car 18 24,         Deductible 4 10,             Trips from union hall to place of 
                                                                                           work  14
Proving expenses               Traffic tickets 15             Summary of (Table 1-1)   5  Unrecovered basis of car       21
(Table 5-1) 26                 Transients 3                   Defined  3
Reporting reimbursements       Transition rules 33            Going home on days off  4
(Table 6-1) 31                                                In U.S.  6                  V
Transportation expenses,       Example:
determination of deductibility      High-low method    33     Lodging  6                  Volunteers 2
(Figure B) 13                  High-low method    33          Luxury water travel 9
Travel expenses, determination Regular federal method  33     Outside U.S. 7              W
of deductibility (Table 1-1) 5 Transportation expenses    13  Travel to family home 4     Weekly travel expense and 
Weekly travel expense and      Car expenses     14 23-       Trucks and vans:              entertainment record 
entertainment record           Deductible (Figure B)   13     Depreciation 20              (Table 6-3) 27
(Table 6-3) 27                 five or more cars  15          Transportation workers 12

Page 42                                                                                          Publication 463 (2022)

PDF file checksum: 632005799

(Plugin #1/9.12/13.0)