What is the difference between transport and transportation ?
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How to talk about transport in English
In English, we use the verbs drive, ride, go and take to talk about travel and transport.
Although they all express travel and movement, they are used in different contexts.
Read on to learn when to use drive, ride, go and take in English, then practise in the exercises.
We’re going to Scotland next week.
We’re taking the train from London to Edinburgh.
Then we’re going to rent a car and drive around the Highlands.
My friend will drive because I don’t have my licence yet.
Next year, we want to spend 5 days cycling around the Irish countryside, because we love riding our bikes.
If we get too tired to cycle , we will ride the bus.
If we don’t say how we travelled from one place to another, we use the verb go . This allows us to talk generally about travel.
Many grammar books teach the construction go by + mode of transport, however this does not always sound natural.
To be more specific, we are more likely to use verbs such as drive, take, cycle etc.
We mostly use the verb drive to talk about car travel, for both passengers and the person controlling the car.
Remember, the word car is implied when we use the word drive , so we do not need to repeat it.
If we are referring to someone controlling a different type of motor vehicle, such as a train or a bus, we can also use the verb drive. In this case, we usually specify the type of vehicle.
We use take to talk about public transport.
Remember to use an article (the, a, or an ) when using take + public transport.
For other uses of the verb take , see our page on take vs. bring .
Some countries such as the USA also use the verb ride to talk about public transport, or to refer to a passenger in a motor vehicle.
The verb ride is also used with bikes, motorbikes and horses.
However, when talking about a pedal bike, it can be easier to simply use the verb cycle . Here the vehicle is implied.
Other Modes of Transport
The table below presents an overview of the most common verbs and modes of transport.
*with these verbs, the vehicle is generally implied, which means we don’t need to mention it in the sentence (see the examples).
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What's the difference between transport and travel ?
- (v. t.) To carry or bear from one place to another; to remove; to convey; as, to transport goods; to transport troops.
- (v. t.) To carry, or cause to be carried, into banishment, as a criminal; to banish.
- (v. t.) To carry away with vehement emotion, as joy, sorrow, complacency, anger, etc.; to ravish with pleasure or ecstasy; as, music transports the soul.
- (v.) Transportation; carriage; conveyance.
- (v.) A vessel employed for transporting, especially for carrying soldiers, warlike stores, or provisions, from one place to another, or to convey convicts to their destination; -- called also transport ship, transport vessel.
- (v.) Vehement emotion; passion; ecstasy; rapture.
- (v.) A convict transported, or sentenced to exile.
- (1) The high amino acid levels in the cells suggest that these cells act as inter-organ transporters and reservoirs of amino acids, they have a different role in their handling and metabolism from those of mammals.
- (2) Ca2+ transport was positively correlated with MR cell density.
- (3) In addition, DDT blocked succinate dehydrogenase and the cytochrome b-c span of the electron transport chain, which also secondarily reduced ATP synthesis.
- (4) The transport of potassium ions through membranes of red blood cells was examined in in bitro experiments using a CMF of 4500 oersted.
- (5) The transported pIgA was functional, as evidenced by its ability to bind to virus in an ELISA assay and to protect nonimmune mice against intranasal infection with H1N1 but not H3N2 influenza virus.
- (6) In January, Paris taxi drivers attacked an Uber car transporting two passengers from Charles de Gaulle airport.
- (7) These results suggest the involvement of SRC in opsin transport.
- (8) Plasma membranes were isolated from rat kidney and their transport properties for sodium, calcium, protons, phosphate, glucose, lactate, and phenylalanine were investigated.
- (9) Erythrocyte membrane choline transport is abnormally high in chronic renal failure.
- (10) These results indicate that both the renal brush-border and basolateral membranes possess the Na(+)-dependent dicarboxylate transport system with very similar properties but with different substrate affinity and transport capacity.
- (11) Chronic CHP administration elicited significant increase in both KD and Bmax of striatal mazindol-binding sites (labelling DA transporter complex), but no change in either D1- or D2-type DA receptors.
- (12) By the time Van Kirk returned to the US in June 1943, he had flown 58 combat and eight transport missions.
- (13) Solely infectious waste become removed hospital-intern and -extern on conditions of hygienic prevention, namely through secure packing during the transport, combustion or desinfection.
- (14) These studies also suggest at least two mechanisms for uric acid reabsorption; one sodium dependent, the other independent of sodium and water transport.
- (15) Basal and maximally insulin-stimulated rates of 3-O-methylglucose transport in adipocytes from obese and obese NIDDM subjects were reduced to 50% of the values in cells from normal subjects (P less than 0.05).
- (16) Thus, although ferric-enterochelin cannot penetrate the cell surface from outside, the complex that is formed within the envelope is transported normally into the cell.
- (17) When antibodies were bound to cell-surface DPP IV at 4 degrees C, the immune complex remained stable for more than 1 h after rewarming to 37 degrees C, despite ongoing metabolic and membrane transport processes.
- (18) Uptake studies with 22Na were performed in cultured bovine pigmented ciliary epithelial cells, in order to characterize mechanisms of Na+ transport.
- (19) Benzylpenicillin showed small inhibition against succinate transport and ticarcillin against sulfate transport.
- (20) Inhibition of fast axonal transport by an antibody specific for kinesin provides direct evidence that kinesin is involved in the translocation of membrane-bounded organelles in axons.
- (v. i.) To labor; to travail.
- (v. i.) To go or march on foot; to walk; as, to travel over the city, or through the streets.
- (v. i.) To pass by riding, or in any manner, to a distant place, or to many places; to journey; as, a man travels for his health; he is traveling in California.
- (v. i.) To pass; to go; to move.
- (v. t.) To journey over; to traverse; as, to travel the continent.
- (v. t.) To force to journey.
- (n.) The act of traveling, or journeying from place to place; a journey.
- (n.) An account, by a traveler, of occurrences and observations during a journey; as, a book of travels; -- often used as the title of a book; as, Travels in Italy.
- (n.) The length of stroke of a reciprocating piece; as, the travel of a slide valve.
- (n.) Labor; parturition; travail.
- (1) I hope this movement will continue and spread for it has within itself the power to stand up to fascism, be victorious in the face of extremism and say no to oppressive political powers everywhere.” Appearing via videolink from Tehran, and joined by London mayor Sadiq Khan and Palme d’Or winner Mike Leigh, Farhadi said: “We are all citizens of the world and I will endeavour to protect and spread this unity.” The London screening of The Salesman on Sunday evening wasintended to be a show of unity and strength against Trump’s travel ban, which attempted to block arrivals in the US from seven predominantly Muslim countries: Iran, Iraq, Libya, Sudan, Somalia, Syria and Yemen.
- (2) MI6 introduced him to the Spanish intelligence service and in 2006 he travelled to Madrid.
- (3) Younge, a former head of US cable network the Travel Channel, succeeded Peter Salmon in the role last year.
- (4) At the weekend the couple’s daughter, Holly Graham, 29, expressed frustration at the lack of information coming from the Foreign Office and the tour operator that her parents travelled with.
- (5) Thirty-six dogs were seropositive, 28 of which had not traveled to endemic areas.
- (6) The findings provide additional evidence that, for at least some cases, the likelihood of a physician's admitting a patient to the hospital is influenced by the patient's living arrangements, travel time to the physician's office, and the extent to which medical care would cause a financial hardship for the patient.
- (7) Travel around Fukushima today and there is little evidence of disaster or trauma.
- (8) Pulse-chase experiments showed that the ornithine transcarbamylase precursor and the thiolase traveled from the cytosol to the mitochondria with half-lives of less than 5 min, whereas the three fusion proteins traveled with half-lives of 10-15 min.
- (9) Federal judges who blocked the bans cited harsh rhetoric employed by Trump on the campaign trail , specifically a pledge to ban all Muslims from entering the US and support for giving priority to Christian refugees, as being reflective of the intent behind his travel ban.
- (10) For months, more than 170,000 mainly Syrian refugees travelling north from Greece have used Hungary as a thoroughfare to the safety of northern and western Europe.
- (11) Ultimate nonsurvivors of ICU admission (36 per cent) had shorter out-of-hospital times, shorter travel distances, and increased interventional support, as assessed by the Therapeutic Intervention Scoring System applied over the telephone and prior to departure at the referring hospital.
- (12) Routine vaccination of travellers to endemic areas cannot be recommended; however, for people travelling to regions with a high transmission rate vaccination should be considered.
- (13) As travelling is generally increasing, this disease might be encountered more frequently also in Europe.
- (14) Manchester United 3-1 Barcelona | match report Read more While, according to Louis van Gaal , Rojo was not on the flight because of an issue with his travel documents, the manager was unsure why Di María had failed to board the plane.
- (15) Most cases of typhoid fever in the United States occur in international travelers, with the greatest risk associated with travel to Peru, India, Pakistan, and Chile.
- (16) He knows polymer notes from travels in Australia, where they were first introduced in 1988, and he wants Britain to "move with the times" too.
- (17) It won't be worth putting away his travel bags after returning from Perth as the G20 summit in Cannes, France, beckons.
- (18) In a triple tier configuration, females concentrated 66% of their travel on the top tier.
- (19) After filming, he stayed on in the Middle East for several weeks to travel.
- (20) The findings suggest that health planning could be considerably enhanced by a better understanding of patient preferences for medical care travel behavior, the origins of these preferences, and their relationship to the use of available medical care opportunities.
Words possibly related to " transport "
Words possibly related to " travel "
- Data explorer
- Energy access
- Production & Consumption
- Electricity mix
- Fossil fuels
Passenger vehicle registrations by type, electric vehicle registrations, carbon intensity of new passenger vehicles, fuel economy of new passenger vehicles.
These interactive charts show the breakdown of new passenger vehicle registrations by type.
This is broken down by: petroleum; diesel; full hybrid (excluding plug-in hybrids); plug-in electric hybrids; and fully electric battery vehicles.
This interactive chart shows the share of new passenger vehicle registrations that are battery electric vehicles. This does not include plug-in hybrid vehicles.
This interactive chart shows the share of new passenger vehicle registrations that are battery electric plus plug-in hybrid vehicles.
This interactive chart shows the average carbon intensity of new passenger vehicles in each country.
This is measured as the average emissions of CO₂ (in grams) per kilometer travelled across all types of passenger vehicles.
This interacrive chart shows the average fuel economy of new passenger vehicles in each country.
This is measured as the average liters consumed per 100 kilometers travelled, across all types of passenger vehicles.
What share of global CO 2 emissions come from aviation?
Passenger vs. freight; domestic vs. international: where do aviation emissions come from, where in the world do people have the highest carbon footprint from flying, where in the world do people fly the most.
Flying is a highly controversial topic in climate debates. There are a few reasons for this.
The first is the disconnect between its role in our personal and collective carbon emissions. Air travel dominates a frequent traveller’s individual contribution to climate change. Yet aviation overall accounts for only 2.5% of global carbon dioxide (CO 2 ) emissions. This is because there are large inequalities in how much people fly – many do not, or cannot afford to, fly at all. 1
The second is how aviation emissions are attributed to countries. CO 2 emissions from domestic flights are counted in a country’s emission accounts. International flights are not – instead they are counted as their own category: ‘bunker fuels’. The fact that they don’t count towards the emissions of any country means there are few incentives for countries to reduce them.
It’s also important to note that unlike the most common greenhouse gases – carbon dioxide, methane or nitrous oxide – non-CO 2 forcings from aviation are not included in the Paris Agreement. This means they could be easily overlooked – especially since international aviation is not counted within any country’s emissions inventories or targets.
How much of a role does aviation play in global emissions and climate change? In this article we take a look at the key numbers that are useful to know.
Global aviation (including domestic and international; passenger and freight) accounts for:
- 1.9% of greenhouse gas emissions (which includes all greenhouse gases, not only CO 2 )
- 2.5% of CO 2 emissions
- 3.5% of ‘effective radiative forcing’ – a closer measure of its impact on warming.
The latter two numbers refer to 2018, and the first to 2016, the latest year for which such data are available.
Aviation accounts for 2.5% of global CO 2 emissions
As we will see later in this article, there are a number of processes by which aviation contributes to climate change. But the one that gets the most attention is its contribution via CO 2 emissions. Most flights are powered by jet gasoline – although some partially run on biofuels – which is converted to CO 2 when burned.
In a recent paper, researchers – David Lee and colleagues – reconstructed annual CO 2 emissions from global aviation dating back to 1940. 2 This was calculated based on fuel consumption data from the International Energy Agency (IEA), and earlier estimates from Robert Sausen and Ulrich Schumann (2000). 3
The time series of global emissions from aviation since 1940 is shown in the accompanying chart. In 2018, it’s estimated that global aviation – which includes both passenger and freight – emitted 1.04 billion tonnes of CO 2 .
This represented 2.5% of total CO 2 emissions in 2018. 4 , 5
Aviation emissions have doubled since the mid-1980s. But, they’ve been growing at a similar rate as total CO 2 emissions – this means its share of global emissions has been relatively stable: in the range of 2% to 2.5%. 6
Non-CO 2 climate impacts mean aviation accounts for 3.5% of global warming
Aviation accounts for around 2.5% of global CO 2 emissions, but it’s overall contribution to climate change is higher. This is because air travel does not only emit CO 2 : it affects the climate in a number of more complex ways.
As well as emitting CO 2 from burning fuel, planes affect the concentration of other gases and pollutants in the atmosphere. They result in a short-term increase, but long-term decrease in ozone (O 3 ); a decrease in methane (CH 4 ); emissions of water vapour; soot; sulfur aerosols; and water contrails. While some of these impacts result in warming, others induce a cooling effect. Overall, the warming effect is stronger.
David Lee et al. (2020) quantified the overall effect of aviation on global warming when all of these impacts were included. 7 To do this they calculated the so-called ‘Radiative Forcing’. Radiative forcing measures the difference between incoming energy and the energy radiated back to space. If more energy is absorbed than radiated, the atmosphere becomes warmer.
In their chart we see their estimates for the radiative forcing of the different elements. When we combine them, aviation accounts for approximately 3.5% of effective radiative forcing: that is, 3.5% of warming. Although CO 2 gets most of the attention, it accounts for less than half of this warming. Two-thirds (66%) comes from non-CO 2 forcings. Contrails – water vapor trails from aircraft exhausts – account for the largest share.
We don’t yet have the technologies to decarbonize air travel
Aviation’s contribution to climate change – 3.5% of warming, or 2.5% of CO 2 emissions – is often less than people think. It’s currently a relatively small chunk of emissions compared to other sectors.
The key challenge is that it is particularly hard to decarbonize. We have solutions to reduce emissions for many of the largest emitters – such as power or road transport – and it’s now a matter of scaling them. We can deploy renewable and nuclear energy technologies, and transition to electric cars. But we don’t have proven solutions to tackle aviation yet.
There are some design concepts emerging – Airbus, for example, have announced plans to have the first zero-emission aircraft by 2035, using hydrogen fuel cells. Electric planes may be a viable concept, but are likely to be limited to very small aircraft due to the limitations of battery technologies and capacity.
Innovative solutions may be on the horizon, but they’re likely to be far in the distance.
Appendix: Efficiency improvements means air traffic has increased more rapidly than emissions
Global emissions from aviation have increased a lot over the past half-century. However, air travel volumes increased even more rapidly.
Since 1960, aviation emissions increased almost seven-fold; since 1970 they’ve tripled. Air traffic volume – here defined as revenue passenger kilometers (RPK) traveled – increased by orders of magnitude more : almost 300-fold since 1950; and 75-fold since 1960. 8
The much slower growth in emissions means aviation efficiency has seen massive improvements. In the chart we show both the increase in global airline traffic since 1950, and aviation efficiency, measured as the quantity of CO 2 emitted per revenue passenger kilometer traveled. In 2018, approximately 125 grams of CO 2 were emitted per RPK. In 1960, this was eleven-fold higher; in 1950 it was twenty-fold higher. Aviation has seen massive efficiency improvements over the past 50 years.
These improvements have come from several sources: improvements in the design and technology of aircraft; larger aircraft sizes (allowing for more passengers per flight); and an increase in how ‘full’ passenger flights are. This last metric is termed the ‘passenger load factor’. The passenger load factor measures the actual number of kilometers traveled by paying customers (RPK) as a percentage of the available seat kilometers (ASK) – the kilometers traveled if every plane was full. If every plane was full the passenger load factor would be 100%. If only three-quarters of the seats were filled, it would be 75%.
The global passenger load factor increased from 61% in 1950 to 82% in 2018 .
Global aviation – both passenger flights and freight – emits around one billion tonnes of carbon dioxide (CO 2 ) each year. This was equivalent to around 2.4% of CO 2 emissions in 2018.
How do global aviation emissions break down?
The chart gives the answer. This data is sourced from the 2019 International Council on Clean Transportation (ICCT) report on global aviation. 9
Most emissions come from passenger flights – in 2018, they accounted for 81% of aviation’s emissions; the remaining 19% came from freight, the transport of goods.
Sixty percent of emissions from passenger flights come from international travel; the other 40% come from domestic (in-country) flights.
When we break passenger flight emissions down by travel distance, we get a (surprisingly) equal three-way split in emissions between short-haul (less than 1,500 kilometers); medium-haul (1,500 to 4,000 km); and long-haul (greater than 4,000 km) journeys.
The richest half are responsible for 90% of air travel CO 2 emissions
The global inequalities in how much people fly become clear when we compare aviation emissions across countries of different income levels. The ICCT split these emissions based on World Bank’s four income groups .
A further study by Susanne Becek and Paresh Pant (2019) compared the contribution of each income group to global air travel emissions versus its share of world population. 10 This comparison is shown in the visualization.
The ‘richest’ half of the world (high and upper-middle income countries) were responsible for 90% of air travel emissions. 11
Looking at specific income groups:
- Only 16% of the world population live in high-income countries yet the planes that take off in those countries account for almost two-thirds (62%) of passenger emissions;
- Upper-middle income countries are home to 35% of the world population, and contribute 28% of emissions;
- Lower-middle income countries are home to the largest share (40% of the world), yet emit the planes taking off there just account for 9%;
- The poorest countries – which are home to 9% of the world population – emit just 1%.
In an upcoming article we will look in more detail at the contribution of each country to global aviation emissions.
Aviation accounts for around 2.5% of global carbon dioxide (CO 2 ) emissions. But if you are someone who does fly, air travel will make up a much larger share of your personal carbon footprint.
The fact that aviation is relatively small for global emissions as a whole, but of large importance for individuals that fly is due to large inequalities in the world. Most people in the world do not take flights. There is no global reliable figure, but often cited estimates suggest that more than 80% of the global population have never flown. 12
How do emissions from aviation vary across the world? Where do people have the highest footprint from flying?
Per capita emissions from domestic flights
The first and most straightforward comparison is to look at emissions from domestic aviation – that is, flights that depart and arrive in the same country.
This is easiest to compare because domestic aviation is counted in each country’s inventory of greenhouse gas emissions. International flights, on the other hand, are not attributed to specific countries – partly because of contention as to who should take responsibility (should it be the country of departure or arrival? What about layover flights?).
In the chart here we see the average per capita emissions from domestic flights in 2018. This data is sourced from the International Council on Clean Transportation – we then used UN population estimates to calculate per capita figures. 13 , 14
We see large differences in emissions from domestic flights across the world. In the United States the average person emits around 386 kilograms of CO 2 each year from internal flights. This is followed by Australia (267 kg); Norway (209 kg); New Zealand (174 kg); and Canada (168 kg). Compare this with countries at the bottom of the table – many across Africa, Asia, and Eastern Europe in particular emit less than one kilogram per person – just 0.8 kilograms; or 0.14 kilograms in Rwanda. For very small countries where there are no internal commercial flights, domestic emissions are of course, zero.
There are some obvious factors that explain some of these cross-country differences. Firstly, countries that are richer are more likely to have higher emissions because people can afford to fly. Second, countries that have a larger land mass may have more internal flights – and indeed we see a correlation between land area and domestic flight emissions; in small countries people are more likely to travel by other means such as car or train. And third, countries that are more geographically-isolated – such as Australia and New Zealand – may have more internal travel.
Per capita emissions from international flights.
Allocating emissions from international flights is more complex. International databases report these emissions separately as a category termed ‘bunker fuels’. The term ‘bunker fuel’ is used to describe emissions which come from international transport – either aviation or shipping.
Because they are not counted towards any particular country these emissions are also not taken into account in the goals that are set by countries in international treaties like the Kyoto protocol or the Paris Agreement. 15
But if we wanted to allocate them to a particular country, how would we do it? Who do emissions from international flights belong to: the country that owns the airline; the country of departure; the country of arrival?
Let’s first take a look at how emissions would compare if we allocated them to the country of departure . This means, for example, that emissions from any flight that departs from Spain are counted towards Spain’s total. In the chart here we see international aviation emissions in per capita terms.
Some of the largest emitters per person in 2018 were Iceland (3.5 tonnes of CO 2 per person); Qatar (2.5 tonnes); United Arab Emirates (2.2 tonnes); Singapore (1.7 tonnes); and Malta (992 kilograms).
Again, we see large inequalities in emissions across the world – in many lower-income countries per capita emissions are only a few kilograms: 6 kilograms in India, 4 kilograms in Nigeria; and only 1.4 kilograms in the Democratic Republic of Congo.
Per capita emissions from international flights – adjusted for tourism
The above allocation of international aviation emissions to the country of departure raises some issues. It is not an accurate reflection of the local population of countries that rely a lot on tourism, for example. Most of the departing flights from these countries are carrying visiting tourists rather than locals.
One way to correct for this is to adjust these figures for the ratio of inbound to outbound travellers. This approach was applied in an analysis by Sola Zheng for the International Council on Clean Transportation . This attempts to distinguish between locals traveling abroad and foreign visitors traveling to that country on the same flight. 16 For example, if we calculated that Spain had 50% more incoming than outgoing travellers, we would reduce its per capita footprint from flying by 50%. If the UK had 75% more outgoing travellers than incoming, we’d increase its footprint by 75%.
We have replicated this approach and applied this adjustment to these figures by calculating the inbound:outbound tourist ratio based on flight departures and arrival data from the World Bank .
How does this affect per capita emissions from international flights? The adjusted figures are shown in the chart here.
As we would expect, countries which are tourist hotspots see the largest change. Portugal’s emissions, for example, fall from 388 to just 60 kilograms per person. Portuguese locals are responsible for much fewer travel emissions than outgoing tourists. Spanish emissions fall from 335 to 77 kilograms per person.
On the other hand, countries where the locals travel elsewhere see a large increase. In the UK, they almost double from 422 to 818 kilograms.
Per capita emissions from domestic and international flights
Let’s combine per capita emissions from domestic and international travel to compare the total footprint from flying.
This is shown in the interactive map [we’ve taken the adjusted international figures – you can find the combined figures without tourism-adjustment here ].
The global average emissions from aviation were 103 kilograms. The inequality in emissions across the world becomes clear when this is broken down by country.
At the top of the table lies the United Arab Emirates – each person emits close to two tonnes – 1950 kg – of CO 2 from flying each year. That’s 200 times the global average. This was followed by Singapore (1173 kilograms); Iceland (1070 kg); Finland (1000 kg); and Australia (878 kilograms).
To put this into perspective: a return flight (in economy class) from London to Dubai/United Arab Emirates would emit around one tonne of CO 2 . 17 So the two-tonne average for the UAE is equivalent to around two return trips to London.
In many countries, most people do not fly at all. The average Indian emits just 18 kilograms from aviation – this is much, much less than even a short-haul flight which confirms that most did not take a flight.
In fact, we can compare just the aviation emissions for the top countries to the total carbon footprint of citizens elsewhere. The average UAE citizen emits 1950 kilograms of CO 2 from flying. This is the same as the total CO 2 footprint of the average Indian (including everything from electricity to road transport, heating and industry). Or, to take a more extreme example, 200 times the total footprint of the average Nigerien, Ugandan or Ethiopian, which have per capita emissions of around 100 kilograms.
This again emphasises the large difference between the global average and the individual emissions of people who fly. Aviation contributes a few percent of total CO 2 emissions each year – this is not insignificant, but far from being the largest sector to tackle. Yet from the perspective of the individual, flying is often one of the largest chunks of our carbon footprint. The average rich person emits tonnes of CO 2 from flying each year – this is equivalent to the total carbon footprint of tens or hundreds of people in many countries of the world.
Domestic air travel
This interactive chart shows the average distance travelled per person through domestic air travel each year. This data is for passenger flights only and does not include freight.
What share of global domestic air travel does each country account for?
International air travel
This interactive chart shows the average distance travelled per person through international air travel each year. This data is for passenger flights only and does not include freight.
What share of global international air travel does each country account for?
Total air travel
This interactive chart shows the average distance travelled per person through domestic and international air travel each year. This data is for passenger flights only and does not include freight.
What share of global air travel does each country account for?
This interactive chart shows the total rail travel in each country, measured in passenger-kilometers per year.
This includes passenger travel only and does not include freight.
Energy intensity of transport
This chart shows the average energy intensity of transport across different modes of travel. It is measured as the average kilowatt-hours required per passenger-kilometer.
This data comes from the United States Department of Transportation’s Bureau of Transportation Statistics (BTS). The energy intensity of public transport depends on the assumptions made about the capacity of transport modes i.e. how many passengers travel on a given train or bus journey. This data thererfore reflects average capacities in the United States, but will vary from country-to-country.
CO 2 emissions from transport
Per capita transport emissions from transport, total transport emissions, co 2 emissions by mode of transport.
This interactive shows the average per capita emissions of carbon dioxide from transport each year. This includes road, train, bus and domestic air travel but does not include international aviation and shipping.
This interactive shows the emissions of carbon dioxide from transport each year. This includes road, train, bus and domestic air travel but does not include international aviation and shipping.
Transport accounts for around one-fifth of global carbon dioxide (CO 2 ) emissions [24% if we only consider CO 2 emissions from energy] . 18
How do these emissions break down? Is it cars, trucks, planes or trains that dominate?
In the chart here we see global transport emissions in 2018. This data is sourced from the International Energy Agency (IEA) .
Road travel accounts for three-quarters of transport emissions. Most of this comes from passenger vehicles – cars and buses – which contribute 45.1%. The other 29.4% comes from trucks carrying freight.
Since the entire transport sector accounts for 21% of total emissions, and road transport accounts for three-quarters of transport emissions, road transport accounts for 15% of total CO 2 emissions.
Aviation – while it often gets the most attention in discussions on action against climate change – accounts for only 11.6% of transport emissions. It emits just under one billion tonnes of CO 2 each year – around 2.5% of total global emissions [we look at the role that air travel plays in climate change in more detail in an upcoming article] . International shipping contributes a similar amount, at 10.6%.
Rail travel and freight emits very little – only 1% of transport emissions. Other transport – which is mainly the movement of materials such as water, oil, and gas via pipelines – is responsible for 2.2%.
Towards zero-carbon transport: how can we expect the sector’s CO 2 emissions to change in the future?
Transport demand is expected to grow across the world in the coming decades as the global population increases, incomes rise, and more people can afford cars, trains and flights. In its Energy Technology Perspectives report, the International Energy Agency (IEA) expects global transport (measured in passenger-kilometers) to double, car ownership rates to increase by 60%, and demand for passenger and freight aviation to triple by 2070. 19 Combined, these factors would result in a large increase in transport emissions.
But major technological innovations can help offset this rise in demand. As the world shifts towards lower-carbon electricity sources, the rise of electric vehicles offers a viable option to reduce emissions from passenger vehicles.
This is reflected in the IEA’s Energy Technology Perspective report. There it outlines its “Sustainable Development Scenario” for reaching net-zero CO2 emissions from global energy by 2070. The pathways for the different elements of the transport sector in this optimistic scenario are shown in the visualization.
We see that with electrification- and hydrogen- technologies some of these sub-sectors could decarbonize within decades. The IEA scenario assumes the phase-out of emissions from motorcycles by 2040; rail by 2050; small trucks by 2060; and although emissions from cars and buses are not completely eliminated until 2070, it expects many regions, including the European Union; United States; China and Japan to have phased-out conventional vehicles as early as 2040.
Other transport sectors will be much more difficult to decarbonize.
In a paper published in Science , Steven Davis and colleagues looked at our options across sectors to reach a net-zero emissions energy system. 20 They highlighted long-distance road freight (large trucks), aviation and shipping as particularly difficult to eliminate. The potential for hydrogen as a fuel, or battery electricity to run planes, ships and large trucks is limited by the range and power required; the size and weight of batteries or hydrogen fuel tanks would be much larger and heavier than current combustion engines. 21 , 22
So, despite falling by three-quarters in the visualized scenario, emissions from these sub-sectors would still make transport the largest contributor to energy-related emissions in 2070. To reach net-zero for the energy sector as a whole, these emissions would have to be offset by ‘negative emissions’ (e.g. the capture and storage of carbon from bioenergy or direct air capture ) from other parts of the energy system.
In the IEA’s net-zero scenario, nearly two-thirds of the emissions reductions come from technologies that are not yet commercially available. As the IEA states, “Reducing CO 2 emissions in the transport sector over the next half-century will be a formidable task.” 23
Global CO2 emissions from transport in the IEA’s Sustainable Development Scenario to 2070 24
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I took a 19-hour overnight Amtrak train. Here are 10 reasons traveling by train is better than flying.
- I took a 19-hour Amtrak train from New York to Chicago and realized there are benefits to train travel.
- I didn't have to wait in security lines or squeeze into a small seat.
- Train travel is also better for the environment.
A few weeks ago I traveled from New York to Chicago on a 19-hour Amtrak ride.
Although I ultimately didn't think the journey was worth the $550 price tag, I did notice there were many benefits to train travel, especially when compared to flying.
There were no long lines like those you see at airports.
Depending on where you're flying, you usually have to arrive at the airport two or three hours before your flight takes off to allow enough time to get through long security lines. When it comes to train travel, you don't have to go through security or wait in long lines. You can arrive minutes before the departure time and get on the train quickly.
This was my favorite part about traveling by train.
I didn't have to worry about baggage limits when taking an Amtrak train.
Most airlines are strict about carry-on baggage. You can carry on only a specific size bag and one personal item. All other luggage must be checked and weighed, and you more often than not need to pay a fee. You also have to adhere to FAA guidelines about liquids and other items.
When traveling by train I didn't have to worry about that. Amtrak allows you to carry on two bags that weigh less than 50 pounds and two personal bags that weigh less than 25 pounds. If you want to check your luggage — and if it's available on your route — your first two bags are free. Essentially, you can bring along six bags before having to shell out any extra cash.
I packed everything for a weeklong trip in a carry-on and a backpack , and I was completely worry-free.
You'll feel less trapped on a train when compared to a flight.
Whenever I'm on a plane I feel trapped. For the bulk of the trip, I'm forced to stay in my seat and can really only get up to use the bathroom. If I want to stretch my legs, there's nowhere to go. If there's an unruly passenger, there's no way to avoid them.
I found the opposite to be true for train travel. You can walk the length of the train if you need to stretch your legs, you can head to the dining car to hang out for a bit, and you can move to another car if someone is bothering you. On a train, you have options instead of just being tied to your assigned seat.
Plus, you get more legroom on a train.
Coach seats on Amtrak trains have 39 inches of legroom space, whereas planes with major airlines provide between 28 and 32 inches to squish your legs into. Beyond coach, Amtrak also offers private rooms with more space to spread out.
I booked a roomette for $550 for my journey. Amtrak roomettes measure 3 feet 6 inches by 6 feet 6 inches , and they fit two adults. Although it felt like a small room for one person, let alone two, it was still significantly better than the small seat I would get on a plane.
The dining car — and the flexibility to eat whenever you want — is one of the best parts of the Amtrak train.
On a plane, you have to wait for flight attendants to serve drinks and snacks. If you're in one of the unlucky rows, you could be one of the last people to get food. However, on Amtrak, there is a dining car and a snack car, which means you can get up whenever you want and help yourself to food.
Although I found the food to be less than desirable on the train, the dining car is still a great way to get out of your seat and get a change of scenery — something that is impossible to do on a plane.
There are amazing landscapes you would miss if you flew to your destination.
When traveling by train, you get to see beautiful landscapes. One hour you can be looking out onto endless farmland and then a few hours later you could see mountains in the distance.
When I took my 19-hour ride, I loved passing time by just staring out the window and watching the changing landscape. By comparison, all you see for most of a plane journey are clouds.
Traveling by train is a great way to slow down, especially if you're going to have a busy vacation.
When I go on vacation, I always try to find the quickest route, so I can get to my destination as soon as possible. After traveling for several hours, I usually arrive tired and jet-lagged, and then I have to force myself to keep going throughout the rest of my trip.
Though the 19 hours on the train was long, it helped me relax and ease into the vacation mindset. I arrived at my destination relaxed and calm. The train ride allowed me to approach the trip differently.
Some people may not feel ready to board a plane yet because of the coronavirus pandemic, but I thought traveling by train was a great alternative.
Although the air on planes is circulated and filtered, making it harder for viruses to spread , I still felt safer on the Amtrak train than on a plane.
Most Amtrak train stations are outside, so I was able to wait outdoors instead of waiting in line at an airport and increasing my chances of exposure to the virus.
While the CDC does not recommend long-distance train travel because of how long passengers may be within six feet of one another, I was able to book a roomette, so I was sectioned off from the majority of people on the trip, something I couldn't do on a plane.
Additionally, if someone was coughing near me on the train, I would have more freedom to get up and move away from that person, putting my mind at ease. On a plane, I would be trapped next to the person for the entire flight.
Amtrak is a great option for some people with certain health issues.
Sometimes people with a history of stroke, respiratory diseases, or who are in the later weeks of pregnancy are advised not to fly by their doctors. Train travel can be the perfect safe alternative for those people.
Traveling by train is better for the environment.
When it comes to carbon emissions and harmful greenhouse gases, planes almost always emit more than trains — usually by a lot. For example, a train between London and Madrid would produce 95 pounds of carbon dioxide, while a plane between the two cities would emit 260 pounds, according to the BBC .
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Travel expenses defined.
Members of the Armed Forces.
Main place of business or work.
No main place of business or work.
Factors used to determine tax home.
Tax Home Different From Family Home
Temporary assignment vs. indefinite assignment.
Exception for federal crime investigations or prosecutions.
Determining temporary or indefinite.
Going home on days off.
Probationary work period.
Travel expenses for another individual.
Bona fide business purpose.
Lavish or extravagant.
50% limit on meals.
50% limit may apply.
Who can use the standard meal allowance.
Use of the standard meal allowance for other travel.
Amount of standard meal allowance.
Federal government's fiscal year.
Standard meal allowance for areas outside the continental United States.
Special rate for transportation workers.
Travel for days you depart and return.
Trip Primarily for Business
Trip primarily for personal reasons.
Travel entirely for business.
Travel considered entirely for business.
Exception 1—No substantial control.
Exception 2—Outside United States no more than a week.
Exception 3—Less than 25% of time on personal activities.
Exception 4—Vacation not a major consideration.
Travel allocation rules.
Counting business days.
Day spent on business.
Certain weekends and holidays.
Nonbusiness activity on the way to or from your business destination.
Nonbusiness activity at, near, or beyond business destination.
Travel Primarily for Personal Reasons
Daily limit on luxury water travel.
Meals and entertainment.
Not separately stated.
North American area.
Deduction may depend on your type of business.
Exceptions to the Rules
Club dues and membership fees.
Gift or entertainment.
Other rules for meals and entertainment expenses.
Costs to include or exclude.
Application of 50% limit.
When to apply the 50% limit.
Taking turns paying for meals.
1—Expenses treated as compensation.
2—Employee's reimbursed expenses.
3—Self-employed reimbursed expenses.
4—Recreational expenses for employees.
6—Sale of meals.
Individuals subject to “hours of service” limits.
7—Food and beverages provided by a restaurant.
Illustration of transportation expenses.
Temporary work location.
No regular place of work.
Two places of work.
Armed Forces reservists.
Advertising display on car.
Hauling tools or instruments.
Union members' trips from a union hall.
Office in the home.
Examples of deductible transportation.
Choosing the standard mileage rate.
Standard mileage rate not allowed.
Five or more cars.
Personal property taxes.
Parking fees and tolls.
Sale, trade-in, or other disposition.
Business and personal use.
Interest on car loans.
Taxes paid on your car.
Fines and collateral.
Casualty and theft losses.
Depreciation and section 179 deductions.
Qualified nonpersonal use vehicles.
More than 50% business use requirement.
Limit on the amount of the section 179 deduction.
Limit for sport utility and certain other vehicles.
Limit on total section 179 deduction, special depreciation allowance, and depreciation deduction.
Cost of car.
Basis of car for depreciation.
When to elect.
How to elect.
Revoking an election.
Recapture of section 179 deduction.
Election not to claim the special depreciation allowance.
Placed in service.
Car placed in service and disposed of in the same year.
Methods of depreciation.
Qualified business use.
Use of your car by another person.
Business use changes.
Use for more than one purpose.
Change from personal to business use.
Effect of trade-in on basis.
Traded car used only for business.
Traded car used partly in business.
Modified Accelerated Cost Recovery System (MACRS).
MACRS depreciation chart.
Depreciation in future years.
Disposition of car during recovery period.
How to use the 2022 chart.
Trucks and vans.
Car used less than full year.
Reduction for personal use.
Section 179 deduction.
Deductions in years after the recovery period.
The recovery period.
How to treat unrecovered basis.
- Table 4-1. 2022 MACRS Depreciation Chart (Use To Figure Depreciation for 2022)
Qualified business use 50% or less in year placed in service.
Qualified business use 50% or less in a later year.
Fair market value.
Figuring the inclusion amount.
Leased car changed from business to personal use.
Leased car changed from personal to business use.
Reporting inclusion amounts.
Casualty or theft.
Depreciation adjustment when you used the standard mileage rate.
Depreciation deduction for the year of disposition.
Timely kept records.
Proving business purpose.
Allocating total cost.
If your return is examined.
Reimbursed for expenses.
Examples of Records
Both self-employed and an employee.
Reimbursement for personal expenses.
Value reported on Form W-2.
Full value included in your income.
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Related to employer.
The federal rate.
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The standard meal allowance.
Prorating the standard meal allowance on partial days of travel.
The standard mileage rate.
Fixed and variable rate (FAVR).
Reporting your expenses with a per diem or car allowance.
Allowance less than or equal to the federal rate.
Allowance more than the federal rate.
Per diem allowance more than federal rate.
Reporting your expenses under a nonaccountable plan.
How to report.
Contractor adequately accounts.
Contractor doesn’t adequately account.
Temporary 100% deduction of the full meal portion of a per diem rate or allowance.
Regular federal per diem rate method.
Federal per diem rate method.
Information on use of cars.
Standard mileage rate.
Employee business expenses other than nonentertainment meals.
Non-entertainment-related meal expenses.
“Hours of service” limits.
Allocating your reimbursement.
After you complete the form.
Limits on employee business expenses.
1. Limit on meals and entertainment.
2. Limit on total itemized deductions.
Member of a reserve component.
Officials Paid on a Fee Basis
Special rules for married persons.
Where to report.
Impairment-Related Work Expenses of Disabled Employees
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What Is TAS?
How can you learn about your taxpayer rights, what can tas do for you, how can you reach tas, how else does tas help taxpayers, tas for tax professionals, low income taxpayer clinics (litcs), appendix a-1. inclusion amounts for passenger automobiles first leased in 2018, appendix a-2. inclusion amounts for passenger automobiles first leased in 2019, appendix a-3. inclusion amounts for passenger automobiles first leased in 2020, appendix a-4. inclusion amounts for passenger automobiles first leased in 2021, appendix a-5. inclusion amounts for passenger automobiles first leased in 2022, publication 463 (2022), travel, gift, and car expenses.
For use in preparing 2022 Returns
Publication 463 - Introductory Material
For the latest information about developments related to Pub. 463, such as legislation enacted after it was published, go to IRS.gov/Pub463 .
Standard mileage rate. For 2022, the standard mileage rate for the cost of operating your car for business use is 58.5 cents (0.585) per mile from January 1–June 30 and 62.5 cents (0.625) per mile from July 1–December 31. Car expenses and use of the standard mileage rate are explained in chapter 4.
Depreciation limits on cars, trucks, and vans. The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2022, is $11,200. The first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired after September 27, 2017, and placed in service during 2022 increases to $19,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2022, the amount increases to $11,200. Depreciation limits are explained in chapter 4.
Section 179 deduction. The maximum amount you can elect to deduct for most section 179 property (including cars, trucks, and vans) you placed in service in tax years beginning in 2022 is $1,080,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,700,000. Section 179 deduction is explained in chapter 4.Also, the maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2022 is $27,000.
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Per diem rates. Current and prior per diem rates may be found on the U.S. General Services Administration (GSA) website at GSA.gov/travel/plan-book/per-diem-rates .
Temporary deduction of 100% business meals. A 100% deduction is allowed for certain business meals paid or incurred after 2020 and before 2023. See 50% Limit in chapter 2 for more information.
Temporary 100% deduction of the full meal portion of a per diem rate or allowance. A 100% deduction is allowed for certain business meals paid or incurred after 2020 and before 2023. A special rule allows this 100% deduction for the full meal portion of a per diem rate or allowance. See Exception to the 50% Limit for Meals in chapter 2 for more information.
You may be able to deduct the ordinary and necessary business-related expenses you have for:
This publication explains:
What expenses are deductible,
How to report them on your return,
What records you need to prove your expenses, and
How to treat any expense reimbursements you may receive.
You should read this publication if you are an employee or a sole proprietor who has business-related travel, non-entertainment-related meals, gift, or transportation expenses.
If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability of the vehicle in your income. However, there are exceptions if the use of the vehicle qualifies as a working condition fringe benefit (such as the use of a qualified nonpersonal use vehicle).
A working condition fringe benefit is any property or service provided to you by your employer, the cost of which would be allowable as an employee business expense deduction if you had paid for it.
A qualified nonpersonal use vehicle is one that isn’t likely to be used more than minimally for personal purposes because of its design. See Qualified nonpersonal use vehicles under Actual Car Expenses in chapter 4.
For information on how to report your car expenses that your employer didn’t provide or reimburse you for (such as when you pay for gas and maintenance for a car your employer provides), see Vehicle Provided by Your Employer in chapter 6.
Partnerships, corporations, trusts, and employers who reimburse their employees for business expenses should refer to the instructions for their required tax forms and chapter 11 of Pub. 535, Business Expenses, for information on deducting travel, meals, and entertainment expenses.
If you are an employee, you won’t need to read this publication if all of the following are true.
You fully accounted to your employer for your work-related expenses.
You received full reimbursement for your expenses.
Your employer required you to return any excess reimbursement and you did so.
There is no amount shown with a code L in box 12 of your Form W-2, Wage and Tax Statement.
If you perform services as a volunteer worker for a qualified charity, you may be able to deduct some of your costs as a charitable contribution. See Out-of-Pocket Expenses in Giving Services in Pub. 526, Charitable Contributions, for information on the expenses you can deduct.
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If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/ Help/ITA where you can find topics by using the search feature or viewing the categories listed.
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Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.
535 Business Expenses
946 How To Depreciate Property
Form (and Instructions)
Schedule A (Form 1040) Itemized Deductions
Schedule C (Form 1040) Profit or Loss From Business
Schedule F (Form 1040) Profit or Loss From Farming
2106 Employee Business Expenses
4562 Depreciation and Amortization
See How To Get Tax Help for information about getting these publications and forms.
If you temporarily travel away from your tax home, you can use this chapter to determine if you have deductible travel expenses.
This chapter discusses:
Traveling away from home,
Temporary assignment or job, and
What travel expenses are deductible.
For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job.
An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary.
You will find examples of deductible travel expenses in Table 1-1 .
Traveling Away From Home
You are traveling away from home if:
Your duties require you to be away from the general area of your tax home (defined later) substantially longer than an ordinary day's work, and
You need to sleep or rest to meet the demands of your work while away from home.
You are a railroad conductor. You leave your home terminal on a regularly scheduled round-trip run between two cities and return home 16 hours later. During the run, you have 6 hours off at your turnaround point where you eat two meals and rent a hotel room to get necessary sleep before starting the return trip. You are considered to be away from home.
You are a truck driver. You leave your terminal and return to it later the same day. You get an hour off at your turnaround point to eat. Because you aren’t off to get necessary sleep and the brief time off isn’t an adequate rest period, you aren’t traveling away from home.
If you are a member of the U.S. Armed Forces on a permanent duty assignment overseas, you aren’t traveling away from home. You can’t deduct your expenses for meals and lodging. You can’t deduct these expenses even if you have to maintain a home in the United States for your family members who aren’t allowed to accompany you overseas. If you are transferred from one permanent duty station to another, you may have deductible moving expenses, which are explained in Pub. 521, Moving Expenses.
A naval officer assigned to permanent duty aboard a ship that has regular eating and living facilities has a tax home (explained next) aboard the ship for travel expense purposes.
To determine whether you are traveling away from home, you must first determine the location of your tax home.
Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.
If you have more than one regular place of business, your tax home is your main place of business. See Main place of business or work , later.
If you don’t have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. See No main place of business or work , later.
If you don’t have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you can’t claim a travel expense deduction because you are never considered to be traveling away from home.
If you have more than one place of work, consider the following when determining which one is your main place of business or work.
The total time you ordinarily spend in each place.
The level of your business activity in each place.
Whether your income from each place is significant or insignificant.
You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. You work the other 4 months in Miami, also at a seasonal job, and earn $15,000. Cincinnati is your main place of work because you spend most of your time there and earn most of your income there.
You may have a tax home even if you don’t have a regular or main place of work. Your tax home may be the home where you regularly live.
If you don’t have a regular or main place of business or work, use the following three factors to determine where your tax home is.
You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.
If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you can’t deduct travel expenses.
You are single and live in Boston in an apartment you rent. You have worked for your employer in Boston for a number of years. Your employer enrolls you in a 12-month executive training program. You don’t expect to return to work in Boston after you complete your training.
During your training, you don’t do any work in Boston. Instead, you receive classroom and on-the-job training throughout the United States. You keep your apartment in Boston and return to it frequently. You use your apartment to conduct your personal business. You also keep up your community contacts in Boston. When you complete your training, you are transferred to Los Angeles.
You don’t satisfy factor (1) because you didn’t work in Boston. You satisfy factor (2) because you had duplicate living expenses. You also satisfy factor (3) because you didn’t abandon your apartment in Boston as your main home, you kept your community contacts, and you frequently returned to live in your apartment. Therefore, you have a tax home in Boston.
You are an outside salesperson with a sales territory covering several states. Your employer's main office is in Newark, but you don’t conduct any business there. Your work assignments are temporary, and you have no way of knowing where your future assignments will be located. You have a room in your married sister's house in Dayton. You stay there for one or two weekends a year, but you do no work in the area. You don’t pay your sister for the use of the room.
You don’t satisfy any of the three factors listed earlier. You are an itinerant and have no tax home.
If you (and your family) don’t live at your tax home (defined earlier), you can’t deduct the cost of traveling between your tax home and your family home. You also can’t deduct the cost of meals and lodging while at your tax home. See Example 1 , later.
If you are working temporarily in the same city where you and your family live, you may be considered as traveling away from home. See Example 2 , later.
You are a truck driver and you and your family live in Tucson. You are employed by a trucking firm that has its terminal in Phoenix. At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. You can’t deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. This is because Phoenix is your tax home.
Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same employer in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is the same whether you are in Pittsburgh or Baltimore.
Because you spend most of your working time and earn most of your salary in Baltimore, that city is your tax home. You can’t deduct any expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family's living expenses for non-entertainment-related meals and lodging while you are living and working in Pittsburgh.
Temporary Assignment or Job
You may regularly work at your tax home and also work at another location. It may not be practical to return to your tax home from this other location at the end of each workday.
If your assignment or job away from your main place of work is temporary, your tax home doesn’t change. You are considered to be away from home for the whole period you are away from your main place of work. You can deduct your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.
However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax home and you can’t deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than 1 year, whether or not it actually lasts for more than 1 year.
If your assignment is indefinite, you must include in your income any amounts you receive from your employer for living expenses, even if they are called “travel allowances” and you account to your employer for them. You may be able to deduct the cost of relocating to your new tax home as a moving expense. See Pub. 521 for more information.
If you are a federal employee participating in a federal crime investigation or prosecution, you aren’t subject to the 1-year rule. This means you may be able to deduct travel expenses even if you are away from your tax home for more than 1 year provided you meet the other requirements for deductibility.
For you to qualify, the Attorney General (or their designee) must certify that you are traveling:
For the federal government;
In a temporary duty status; and
To investigate, prosecute, or provide support services for the investigation or prosecution of a federal crime.
You must determine whether your assignment is temporary or indefinite when you start work. If you expect an assignment or job to last for 1 year or less, it is temporary unless there are facts and circumstances that indicate otherwise. An assignment or job that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.
The following examples illustrate whether an assignment or job is temporary or indefinite.
You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Your tax home is Los Angeles. Because of a shortage of work, you took a job on a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months.
You realistically expected the job in Fresno to last 8 months. The job actually did last less than 1 year. The job is temporary and your tax home is still in Los Angeles.
The facts are the same as in Example 1 , except that you realistically expected the work in Fresno to last 18 months. The job was actually completed in 10 months.
Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. You can’t deduct any travel expenses you had in Fresno because Fresno became your tax home.
The facts are the same as in Example 1 , except that you realistically expected the work in Fresno to last 9 months. After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months).
Initially, you realistically expected the job in Fresno to last for only 9 months. However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for 1 year or less. You can deduct only your travel expenses for the first 8 months. You can’t deduct any travel expenses you had after that time because Fresno became your tax home when the job became indefinite.
If you go back to your tax home from a temporary assignment on your days off, you aren’t considered away from home while you are in your hometown. You can’t deduct the cost of your meals and lodging there. However, you can deduct your travel expenses, including meals and lodging, while traveling between your temporary place of work and your tax home. You can claim these expenses up to the amount it would have cost you to stay at your temporary place of work.
If you keep your hotel room during your visit home, you can deduct the cost of your hotel room. In addition, you can deduct your expenses of returning home up to the amount you would have spent for meals had you stayed at your temporary place of work.
If you take a job that requires you to move, with the understanding that you will keep the job if your work is satisfactory during a probationary period, the job is indefinite. You can’t deduct any of your expenses for meals and lodging during the probationary period.
What Travel Expenses Are Deductible?
Once you have determined that you are traveling away from your tax home, you can determine what travel expenses are deductible.
You can deduct ordinary and necessary expenses you have when you travel away from home on business. The type of expense you can deduct depends on the facts and your circumstances.
Table 1-1 summarizes travel expenses you may be able to deduct. You may have other deductible travel expenses that aren’t covered there, depending on the facts and your circumstances.
If you have one expense that includes the costs of non-entertainment-related meals, entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of non-entertainment-related meals, and entertainment and the cost of other services. You must have a reasonable basis for making this allocation. For example, you must allocate your expenses if a hotel includes one or more meals in its room charge.
If a spouse, dependent, or other individual goes with you (or your employee) on a business trip or to a business convention, you generally can’t deduct their travel expenses.
You can deduct the travel expenses of someone who goes with you if that person:
Is your employee,
Has a bona fide business purpose for the travel, and
Would otherwise be allowed to deduct the travel expenses.
If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. A business associate is someone with whom you could reasonably expect to actively conduct business. A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor.
A bona fide business purpose exists if you can prove a real business purpose for the individual's presence. Incidental services, such as typing notes or assisting in entertaining customers, aren’t enough to make the expenses deductible.
Table 1-1. Travel Expenses You Can Deduct
You drive to Chicago on business and take your spouse with you. Your spouse isn’t your employee. Your spouse occasionally types notes, performs similar services, and accompanies you to luncheons and dinners. The performance of these services doesn’t establish that your spouse’s presence on the trip is necessary to the conduct of your business. Your spouse’s expenses aren’t deductible.
You pay $199 a day for a double room. A single room costs $149 a day. You can deduct the total cost of driving your car to and from Chicago, but only $149 a day for your hotel room. If both you and your spouse use public transportation, you can only deduct your fare.
You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. Meal and entertainment expenses are discussed in chapter 2 .
You can't deduct expenses for meals that are lavish or extravagant. An expense isn't considered lavish or extravagant if it is reasonable based on the facts and circumstances. Meal expenses won't be disallowed merely because they are more than a fixed dollar amount or because the meals take place at deluxe restaurants, hotels, or resorts.
You can figure your meal expenses using either of the following methods.
If you are reimbursed for the cost of your meals, how you apply the 50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. If you aren’t reimbursed, the 50% limit applies even if the unreimbursed meal expense is for business travel. Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans.
You can use the actual cost of your meals to figure the amount of your expense before reimbursement and application of the 50% deduction limit. If you use this method, you must keep records of your actual cost.
Standard Meal Allowance
Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. The set amount varies depending on where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . If you use the standard meal allowance, you must still keep records to prove the time, place, and business purpose of your travel. See the recordkeeping rules for travel in chapter 5 .
The term “incidental expenses” means fees and tips given to porters, baggage carriers, hotel staff, and staff on ships.
Incidental expenses don’t include expenses for laundry, cleaning and pressing of clothing, lodging taxes, costs of telegrams or telephone calls, transportation between places of lodging or business and places where meals are taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings.
You can use an optional method (instead of actual cost) for deducting incidental expenses only. The amount of the deduction is $5 a day. You can use this method only if you didn’t pay or incur any meal expenses. You can’t use this method on any day that you use the standard meal allowance. This method is subject to the proration rules for partial days. See Travel for days you depart and return , later, in this chapter.
The incidental-expenses-only method isn’t subject to the 50% limit discussed below.
If you use the standard meal allowance method for non-entertainment-related meal expenses and you aren’t reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only 50% of the standard meal allowance. If you are reimbursed under an accountable plan and you are deducting amounts that are more than your reimbursements, you can deduct only 50% of the excess amount. The 50% Limit is discussed in more detail in chapter 2, and accountable and nonaccountable plans are discussed in chapter 6.
You can use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses.
You can use the standard meal allowance to figure your meal expenses when you travel in connection with investment and other income-producing property. You can also use it to figure your meal expenses when you travel for qualifying educational purposes. You can’t use the standard meal allowance to figure the cost of your meals when you travel for medical or charitable purposes.
The standard meal allowance is the federal M&IE rate. For travel in 2022, the rate for most small localities in the United States is $59 per day.
Most major cities and many other localities in the United States are designated as high-cost areas, qualifying for higher standard meal allowances.
If you travel to more than one location in one day, use the rate in effect for the area where you stop for sleep or rest. If you work in the transportation industry, however, see Special rate for transportation workers , later.
Per diem rates are listed by the federal government's fiscal year, which runs from October 1 to September 30. You can choose to use the rates from the 2021 fiscal year per diem tables or the rates from the 2022 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. See Transition Rules , later.
The standard meal allowance rates above don’t apply to travel in Alaska, Hawaii, or any other location outside the continental United States. The Department of Defense establishes per diem rates for Alaska, Hawaii, Puerto Rico, American Samoa, Guam, Midway, the Northern Mariana Islands, the U.S. Virgin Islands, Wake Island, and other non-foreign areas outside the continental United States. The Department of State establishes per diem rates for all other foreign areas.
You can use a special standard meal allowance if you work in the transportation industry. You are in the transportation industry if your work:
Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck; and
Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates.
Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year.
For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). You can do so by one of two methods.
Method 1: You can claim 3 / 4 of the standard meal allowance.
Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice.
You are employed in New Orleans as a convention planner. In March, your employer sent you on a 3-day trip to Washington, DC, to attend a planning seminar. You left your home in New Orleans at 10 a.m. on Wednesday and arrived in Washington, DC, at 5:30 p.m. After spending 2 nights there, you flew back to New Orleans on Friday and arrived back home at 8 p.m. Your employer gave you a flat amount to cover your expenses and included it with your wages.
Under Method 1 , you can claim 2½ days of the standard meal allowance for Washington, DC: 3 / 4 of the daily rate for Wednesday and Friday (the days you departed and returned), and the full daily rate for Thursday.
Under Method 2 , you could also use any method that you apply consistently and that is in accordance with reasonable business practice. For example, you could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days.
Travel in the United States
The following discussion applies to travel in the United States. For this purpose, the United States includes the 50 states and the District of Columbia. The treatment of your travel expenses depends on how much of your trip was business related and on how much of your trip occurred within the United States. See Part of Trip Outside the United States , later.
You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses. These expenses include the travel costs of getting to and from your business destination and any business-related expenses at your business destination.
You work in Atlanta and take a business trip to New Orleans in May. Your business travel totals 900 miles round trip. On your way home, you stop in Mobile to visit your parents. You spend $2,165 for the 9 days you are away from home for travel, non-entertainment-related meals, lodging, and other travel expenses. If you hadn’t stopped in Mobile, you would have been gone only 6 days, and your total cost would have been $1,633.50. You can deduct $1,633.50 for your trip, including the cost of round-trip transportation to and from New Orleans. The deduction for your non-entertainment-related meals is subject to the 50% limit on meals mentioned earlier.
If your trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses you have while at your destination that are directly related to your business.
A trip to a resort or on a cruise ship may be a vacation even if the promoter advertises that it is primarily for business. The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, won’t change what is really a vacation into a business trip.
Part of Trip Outside the United States
If part of your trip is outside the United States, use the rules described later in this chapter under Travel Outside the United States for that part of the trip. For the part of your trip that is inside the United States, use the rules for travel in the United States. Travel outside the United States doesn’t include travel from one point in the United States to another point in the United States. The following discussion can help you determine whether your trip was entirely within the United States.
If you travel by public transportation, any place in the United States where that vehicle makes a scheduled stop is a point in the United States. Once the vehicle leaves the last scheduled stop in the United States on its way to a point outside the United States, you apply the rules under Travel Outside the United States , later.
You fly from New York to Puerto Rico with a scheduled stop in Miami. Puerto Rico isn’t considered part of the United States for purposes of travel. You return to New York nonstop. The flight from New York to Miami is in the United States, so only the flight from Miami to Puerto Rico is outside the United States. Because there are no scheduled stops between Puerto Rico and New York, all of the return trip is outside the United States.
Travel by private car in the United States is travel between points in the United States, even though you are on your way to a destination outside the United States.
You travel by car from Denver to Mexico City and return. Your travel from Denver to the border and from the border back to Denver is travel in the United States, and the rules in this section apply. The rules below under Travel Outside the United States apply to your trip from the border to Mexico City and back to the border.
Travel Outside the United States
If any part of your business travel is outside the United States, some of your deductions for the cost of getting to and from your destination may be limited. For this purpose, the United States includes the 50 states and the District of Columbia.
How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related.
Travel Entirely for Business or Considered Entirely for Business
You can deduct all your travel expenses of getting to and from your business destination if your trip is entirely for business or considered entirely for business.
If you travel outside the United States and you spend the entire time on business activities, you can deduct all of your travel expenses.
Even if you didn’t spend your entire time on business activities, your trip is considered entirely for business if you meet at least one of the following four exceptions.
Your trip is considered entirely for business if you didn’t have substantial control over arranging the trip. The fact that you control the timing of your trip doesn’t, by itself, mean that you have substantial control over arranging your trip.
You don’t have substantial control over your trip if you:
Are an employee who was reimbursed or paid a travel expense allowance, and
Aren’t related to your employer, or
Aren’t a managing executive.
“Related to your employer” is defined later in chapter 6 under Per Diem and Car Allowances .
A “managing executive” is an employee who has the authority and responsibility, without being subject to the veto of another, to decide on the need for the business travel.
A self-employed person generally has substantial control over arranging business trips.
Your trip is considered entirely for business if you were outside the United States for a week or less, combining business and nonbusiness activities. One week means 7 consecutive days. In counting the days, don’t count the day you leave the United States, but do count the day you return to the United States.
You traveled to Brussels primarily for business. You left Denver on Tuesday and flew to New York. On Wednesday, you flew from New York to Brussels, arriving the next morning. On Thursday and Friday, you had business discussions, and from Saturday until Tuesday, you were sightseeing. You flew back to New York, arriving Wednesday afternoon. On Thursday, you flew back to Denver.
Although you were away from your home in Denver for more than a week, you weren’t outside the United States for more than a week. This is because the day you depart doesn’t count as a day outside the United States.
You can deduct your cost of the round-trip flight between Denver and Brussels. You can also deduct the cost of your stay in Brussels for Thursday and Friday while you conducted business. However, you can’t deduct the cost of your stay in Brussels from Saturday through Tuesday because those days were spent on nonbusiness activities.
Your trip is considered entirely for business if:
You were outside the United States for more than a week, and
You spent less than 25% of the total time you were outside the United States on nonbusiness activities.
You flew from Seattle to Tokyo, where you spent 14 days on business and 5 days on personal matters. You then flew back to Seattle. You spent 1 day flying in each direction.
Because only 5 / 21 (less than 25%) of your total time abroad was for nonbusiness activities, you can deduct as travel expenses what it would have cost you to make the trip if you hadn’t engaged in any nonbusiness activity. The amount you can deduct is the cost of the round-trip plane fare and 16 days of non-entertainment-related meals (subject to the 50% Limit ), lodging, and other related expenses.
Your trip is considered entirely for business if you can establish that a personal vacation wasn’t a major consideration, even if you have substantial control over arranging the trip.
Travel Primarily for Business
If you travel outside the United States primarily for business but spend some of your time on other activities, you generally can’t deduct all of your travel expenses. You can only deduct the business portion of your cost of getting to and from your destination. You must allocate the costs between your business and other activities to determine your deductible amount. See Travel allocation rules , later.
If your trip outside the United States was primarily for business, you must allocate your travel time on a day-to-day basis between business days and nonbusiness days. The days you depart from and return to the United States are both counted as days outside the United States.
To figure the deductible amount of your round-trip travel expenses, use the following fraction. The numerator (top number) is the total number of business days outside the United States. The denominator (bottom number) is the total number of business and nonbusiness days of travel.
Your business days include transportation days, days your presence was required, days you spent on business, and certain weekends and holidays.
Count as a business day any day you spend traveling to or from a business destination. However, if because of a nonbusiness activity you don’t travel by a direct route, your business days are the days it would take you to travel a reasonably direct route to your business destination. Extra days for side trips or nonbusiness activities can’t be counted as business days.
Count as a business day any day your presence is required at a particular place for a specific business purpose. Count it as a business day even if you spend most of the day on nonbusiness activities.
If your principal activity during working hours is the pursuit of your trade or business, count the day as a business day. Also, count as a business day any day you are prevented from working because of circumstances beyond your control.
Count weekends, holidays, and other necessary standby days as business days if they fall between business days. But if they follow your business meetings or activity and you remain at your business destination for nonbusiness or personal reasons, don’t count them as business days.
Your tax home is New York City. You travel to Quebec, where you have a business appointment on Friday. You have another appointment on the following Monday. Because your presence was required on both Friday and Monday, they are business days. Because the weekend is between business days, Saturday and Sunday are counted as business days. This is true even though you use the weekend for sightseeing, visiting friends, or other nonbusiness activity.
If, in Example 1 , you had no business in Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days.
If you stopped for a vacation or other nonbusiness activity either on the way from the United States to your business destination, or on the way back to the United States from your business destination, you must allocate part of your travel expenses to the nonbusiness activity.
The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends.
You determine the nonbusiness portion of that expense by multiplying it by a fraction. The numerator (top number) of the fraction is the number of nonbusiness days during your travel outside the United States, and the denominator (bottom number) is the total number of days you spend outside the United States.
You live in New York. On May 4, you flew to Paris to attend a business conference that began on May 5. The conference ended at noon on May 14. That evening, you flew to Dublin where you visited with friends until the afternoon of May 21, when you flew directly home to New York. The primary purpose for the trip was to attend the conference.
If you hadn’t stopped in Dublin, you would have arrived home the evening of May 14. You don’t meet any of the exceptions that would allow you to consider your travel entirely for business. May 4 through May 14 (11 days) are business days and May 15 through May 21 (7 days) are nonbusiness days.
You can deduct the cost of your non-entertainment-related meals (subject to the 50% Limit ), lodging, and other business-related travel expenses while in Paris.
You can’t deduct your expenses while in Dublin. You also can’t deduct 7 / 18 of what it would have cost you to travel round trip between New York and Dublin.
You paid $750 to fly from New York to Paris, $400 to fly from Paris to Dublin, and $700 to fly from Dublin back to New York. Round-trip airfare from New York to Dublin would have been $1,250.
You figure the deductible part of your air travel expenses by subtracting 7 / 18 of the round-trip airfare and other expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7 / 18 = $486) from your total expenses in traveling from New York to Paris to Dublin and back to New York ($750 + $400 + $700 = $1,850).
Your deductible air travel expense is $1,364 ($1,850 − $486).
If you had a vacation or other nonbusiness activity at, near, or beyond your business destination, you must allocate part of your travel expenses to the nonbusiness activity.
The part you must allocate is the amount it would have cost you to travel between the point where travel outside the United States begins and your business destination and a return to the point where travel outside the United States ends.
None of your travel expenses for nonbusiness activities at, near, or beyond your business destination are deductible.
Assume that the dates are the same as in the previous example but that instead of going to Dublin for your vacation, you fly to Venice, Italy, for a vacation.
You can’t deduct any part of the cost of your trip from Paris to Venice and return to Paris. In addition, you can’t deduct 7 / 18 of the airfare and other expenses from New York to Paris and back to New York.
You can deduct 11 / 18 of the round-trip plane fare and other travel expenses from New York to Paris, plus your non-entertainment-related meals (subject to the 50% Limit ), lodging, and any other business expenses you had in Paris. (Assume these expenses total $4,939.) If the round-trip plane fare and other travel-related expenses (such as food during the trip) are $1,750, you can deduct travel costs of $1,069 ( 11 / 18 × $1,750), plus the full $4,939 for the expenses you had in Paris.
You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States.
If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is a nondeductible personal expense. However, if you spend some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business.
The university from which you graduated has a continuing education program for members of its alumni association. This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the world. However, none of the conferences are directed toward specific occupations or professions. It is up to each participant to seek out specialists and organizational settings appropriate to their occupational interests.
Three-hour sessions are held each day over a 5-day period at each of the selected overseas facilities where participants can meet with individual practitioners. These sessions are composed of a variety of activities including workshops, mini-lectures, roleplaying, skill development, and exercises. Professional conference directors schedule and conduct the sessions. Participants can choose those sessions they wish to attend.
You can participate in this program because you are a member of the alumni association. You and your family take one of the trips. You spend about 2 hours at each of the planned sessions. The rest of the time you go touring and sightseeing with your family. The trip lasts less than 1 week.
Your travel expenses for the trip aren’t deductible since the trip was primarily a vacation. However, registration fees and any other incidental expenses you have for the five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. These expenses should be specifically stated in your records to ensure proper allocation of your deductible business expenses.
Luxury Water Travel
If you travel by ocean liner, cruise ship, or other form of luxury water transportation for business purposes, there is a daily limit on the amount you can deduct. The limit is twice the highest federal per diem rate allowable at the time of your travel. (Generally, the federal per diem is the amount paid to federal government employees for daily living expenses when they travel away from home within the United States for business purposes.)
The highest federal per diem rate allowed and the daily limit for luxury water travel in 2022 are shown in the following table.
You are a travel agent and traveled by ocean liner from New York to London, England, on business in May. Your expense for the 6-day cruise was $6,200. Your deduction for the cruise can’t exceed $4,320 (6 days × $720 daily limit).
If your expenses for luxury water travel include separately stated amounts for meals or entertainment, those amounts are subject to the 50% limit on non-entertainment-related meals and entertainment before you apply the daily limit. For a discussion of the 50% Limit , see chapter 2.
In the previous example, your luxury water travel had a total cost of $6,200. Of that amount, $3,700 was separately stated as non-entertainment-related meals and $1,000 was separately stated as entertainment. Considering that you are self-employed, you aren’t reimbursed for any of your travel expenses. You figure your deductible travel expenses as follows.
If your meal or entertainment charges aren’t separately stated or aren’t clearly identifiable, you don’t have to allocate any portion of the total charge to meals or entertainment.
The daily limit on luxury water travel (discussed earlier) doesn’t apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship. See Cruise Ships , later, under Conventions.
You can deduct your travel expenses when you attend a convention if you can show that your attendance benefits your trade or business. You can’t deduct the travel expenses for your family.
If the convention is for investment, political, social, or other purposes unrelated to your trade or business, you can’t deduct the expenses.
The convention agenda or program generally shows the purpose of the convention. You can show your attendance at the convention benefits your trade or business by comparing the agenda with the official duties and responsibilities of your position. The agenda doesn’t have to deal specifically with your official duties and responsibilities; it will be enough if the agenda is so related to your position that it shows your attendance was for business purposes.
Conventions Held Outside the North American Area
You can’t deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless:
The meeting is directly related to the active conduct of your trade or business, and
It is as reasonable to hold the meeting outside the North American area as within the North American area. See Reasonableness test , later.
The North American area includes the following locations.
The following factors are taken into account to determine if it was as reasonable to hold the meeting outside the North American area as within the North American area.
The purpose of the meeting and the activities taking place at the meeting.
The purposes and activities of the sponsoring organizations or groups.
The homes of the active members of the sponsoring organizations and the places at which other meetings of the sponsoring organizations or groups have been or will be held.
Other relevant factors you may present.
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.
The convention, seminar, or meeting is directly related to the active conduct of your trade or business.
The cruise ship is a vessel registered in the United States.
All of the cruise ship's ports of call are in the United States or in territories of the United States.
You attach to your return a written statement signed by you that includes information about:
The total days of the trip (not including the days of transportation to and from the cruise ship port),
The number of hours each day that you devoted to scheduled business activities, and
A program of the scheduled business activities of the meeting.
You attach to your return a written statement signed by an officer of the organization or group sponsoring the meeting that includes:
A schedule of the business activities of each day of the meeting, and
The number of hours you attended the scheduled business activities.
2. Meals and Entertainment
You can no longer take a deduction for any expense related to activities generally considered entertainment, amusement, or recreation. You can continue to deduct 50% of the cost of business meals if you (or your employee) are present and the food or beverages aren't considered lavish or extravagant. You can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023. See IRS.gov/Newsroom/IRS-Provides-Guidance-on-Per-Diem-Rates-and-the-Temporary-100-Percent-Deduction-for-Food-or-Beverages-From-Restaurants for additional information.
Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Entertainment may also include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families.
Your kind of business may determine if a particular activity is considered entertainment. For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally isn’t considered entertainment. This is because fashion shows are typical in your business. But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show is generally considered entertainment.
If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. You must have a reasonable basis for making this allocation. For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge.
In general, entertainment expenses are nondeductible. However, there are a few exceptions to the general rule, including:
Entertainment treated as compensation on your originally filed tax returns (and treated as wages to your employees);
Recreational expenses for employees such as a holiday party or a summer picnic;
Expenses related to attending business meetings or conventions of certain exempt organizations such as business leagues, chambers of commerce, professional associations, etc.; and
Entertainment sold to customers. For example, if you run a nightclub, your expenses for the entertainment you furnish to your customers, such as a floor show, aren’t subject to the nondeductible rules.
Examples of Nondeductible Entertainment
Generally, you can't deduct any expense for an entertainment event. This includes expenses for entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips.
Generally, you can’t deduct any expense for the use of an entertainment facility. This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection.
An entertainment facility is any property you own, rent, or use for entertainment. Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort.
You can’t deduct dues (including initiation fees) for membership in any club organized for business, pleasure, recreation, or other social purposes.
This rule applies to any membership organization if one of its principal purposes is either:
To conduct entertainment activities for members or their guests; or
To provide members or their guests with access to entertainment facilities, discussed later.
The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You can’t deduct dues paid to:
Golf and athletic clubs,
Hotel clubs, and
Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions.
Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift.
As discussed above, entertainment expenses are generally nondeductible. However, you may continue to deduct 50% of the cost of business meals if you (or an employee) is present and the food or beverages are not considered lavish or extravagant. You can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.
Food and beverages that are provided during entertainment events are not considered entertainment if purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.
Any allowed expense must be ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your business. An expense doesn't have to be required to be considered necessary. Expenses must not be lavish or extravagant. An expense isn't considered lavish or extravagant if it is reasonable based on the facts and circumstances.
For each example, assume that the food and beverage expenses are ordinary and necessary expenses under section 162(a) paid or incurred during the tax year in carrying on a trade or business and are not lavish or extravagant under the circumstances. Also assume that the taxpayer and the business contact are not engaged in a trade or business that has any relation to the entertainment activity.
Taxpayer A invites B, a business contact, to a baseball game. A purchases tickets for A and B to attend the game. While at the game, A buys hot dogs and drinks for A and B. The baseball game is entertainment as defined in Regulations section 1.274-11(b)(1)(i) and, thus, the cost of the game tickets is an entertainment expense and is not deductible by A. The cost of the hot dogs and drinks, which are purchased separately from the game tickets, is not an entertainment expense and is not subject to the section 274(a)(1) disallowance. Therefore, A may deduct 50% of the expenses associated with the hot dogs and drinks purchased at the game.
Taxpayer C invites D, a business contact, to a basketball game. C purchases tickets for C and D to attend the game in a suite, where they have access to food and beverages. The cost of the basketball game tickets, as stated on the invoice, includes the food and beverages. The basketball game is entertainment as defined in Regulations section 1.274-11(b)(1)(i) and, thus, the cost of the game tickets is an entertainment expense and is not deductible by C. The cost of the food and beverages, which are not purchased separately from the game tickets, is not stated separately on the invoice. Thus, the cost of the food and beverages is also an entertainment expense that is subject to the section 274(a)(1) disallowance. Therefore, C may not deduct any of the expenses associated with the basketball game.
Assume the same facts as in Example 2 , except that the invoice for the basketball game tickets separately states the cost of the food and beverages. As in Example 2 , the basketball game is entertainment as defined in Regulations section 1.274-2(b)(1)(i) and, thus, the cost of the game tickets, other than the cost of the food and beverages, is an entertainment expense and is not deductible by C. However, the cost of the food and beverages, which is stated separately on the invoice for the game tickets, is not an entertainment expense and is not subject to the section 274(a)(1) disallowance. Therefore, C may deduct 50% of the expenses associated with the food and beverages provided at the game.
In general, you can deduct only 50% of your business-related meal expenses, unless an exception applies. However, you can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023. See IRS.gov/Newsroom/IRS-Provides-Guidance-on-Per-Diem-Rates-and-the-Temporary-100-Percent-Deduction-for-Food-or-Beverages-From-Restaurants for additional information. (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal expenses. See Individuals subject to hours of service limits , later.)
The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.
Examples of meals might include:
Meals while traveling away from home (whether eating alone or with others) on business, or
Meal at a business convention or business league meeting.
Figure A. Does the 50% Limit Apply to Your Expenses?
There are exceptions to these rules. See Exceptions to the 50% Limit for Meals , later.
Figure A. Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions
Summary: This is a flowchart used to determine if employees and self-employed persons need to put a 50% limit on their business expense deductions.
This is the starting of the flowchart.
Were your meal and entertainment expenses reimbursed? (Count only reimbursements your employer didn’t include in box 1 of your Form W-2. If self-employed, count only reimbursements from clients or customers that aren’t included on Form 1099-MISC, Miscellaneous Income.)
If an employee, did you adequately account to your employer under an accountable plan? If self-employed, did you provide the payer with adequate records? (See Chapter 6.)
Did your expenses exceed the reimbursement?
Your meal and entertainment expenses are NOT subject to the limitations. However, since the reimbursement wasn’t treated as wages or as other taxable income, you can’t deduct the expenses.
Your nonentertainment meal expenses ARE subject to the 50% limit. Your entertainment expenses are nondeductible.
This is the ending of the flowchart.
Please click here for the text description of the image.
Taxes and tips relating to a business meal are included as a cost of the meal and are subject to the 50% limit. However, the cost of transportation to and from the meal is not treated as part of the cost and would not be subject to the limit.
The 50% limit on meal expenses applies if the expense is otherwise deductible and isn’t covered by one of the exceptions discussed later. Figure A can help you determine if the 50% limit applies to you.
The 50% limit also applies to certain meal expenses that aren’t business related. It applies to meal expenses you have for the production of income, including rental or royalty income. It also applies to the cost of meals included in deductible educational expenses.
The 50% limit will apply after determining the amount that would otherwise qualify for a deduction. You first have to determine the amount of meal expenses that would be deductible under the other rules discussed in this publication.
If a group of business acquaintances takes turns picking up each others' meal checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense.
You spend $200 (including tax and tip) for a business meal. If $110 of that amount isn’t allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Your deduction can’t be more than $45 (50% (0.50) × $90).
You purchase two tickets to a concert for $200 for you and your client. Your deduction is zero because no deduction is allowed for entertainment expenses.
Exception to the 50% Limit for Meals
Your meal expense isn’t subject to the 50% limit if the expense meets one of the following exceptions.
In general, expenses for goods, services, and facilities, to the extent the expenses are treated by the taxpayer, with respect to entertainment, amusement, or recreation, as compensation to an employee and as wages to the employee for tax purposes.
If you are an employee, you aren’t subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.
If you are self-employed, your deductible meal expenses aren’t subject to the 50% limit if all of the following requirements are met.
You have these expenses as an independent contractor.
Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform.
You provide adequate records of these expenses to your customer or client. (See chapter 5 .)
In this case, your client or customer is subject to the 50% limit on the expenses.
You are a self-employed attorney who adequately accounts for meal expenses to a client who reimburses you for these expenses. You aren’t subject to the limitation on meal expenses. If the client can deduct the expenses, the client is subject to the 50% limit.
If you (as an independent contractor) have expenses for meals related to providing services for a client but don’t adequately account for and seek reimbursement from the client for those expenses, you are subject to the 50% limit on non-entertainment-related meals and the entertainment-related meal expenses are nondeductible to you.
You aren't subject to the 50% limit for expenses for recreational, social, or similar activities (including facilities) such as a holiday party or a summer picnic.
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 example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.
You aren’t subject to the 50% limit if you actually sell meals to the public. For example, if you run a restaurant, your expense for the food you furnish to your customers isn’t subject to the 50% limit.
You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. The percentage is 80%.
Individuals subject to the Department of Transportation's “hours of service” limits include the following persons.
Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.
Interstate truck operators and bus drivers who are under Department of Transportation regulations.
Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations.
Certain merchant mariners who are under Coast Guard regulations.
You can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023. See 50% Limit above and IRS.gov/Newsroom/IRS-Provides-Guidance-on-Per-Diem-Rates-and-the-Temporary-100-Percent-Deduction-for-Food-or-Beverages-From-Restaurants for additional information.
If you give gifts in the course of your trade or business, you may be able to deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.
You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.
If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule doesn’t apply if you have a bona fide, independent business connection with that family member and the gift isn’t intended for the customer's eventual use.
If you and your spouse both give gifts, both of you are treated as one taxpayer. It doesn’t matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.
You sell products to Local Company. You and your spouse gave Local Company three gourmet gift baskets to thank them for their business. They paid $80 for each gift basket, or $240 total. Three of Local Company's executives took the gift baskets home for their families' use. You and your spouse have no independent business relationship with any of the executives' other family members. They can deduct a total of $75 ($25 limit × 3) for the gift baskets.
Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit.
A cost is incidental only if it doesn’t add substantial value to the gift. For example, the cost of gift wrapping is an incidental cost. However, the purchase of an ornamental basket for packaging fruit isn’t an incidental cost if the value of the basket is substantial compared to the value of the fruit.
The following items aren’t considered gifts for purposes of the $25 limit.
An item that costs $4 or less and:
Has your name clearly and permanently imprinted on the gift, and
Is one of a number of identical items you widely distribute. Examples include pens, desk sets, and plastic bags and cases.
Signs, display racks, or other promotional material to be used on the business premises of the recipient.
Figure B. When Are Transportation Expenses Deductible?
Most employees and self-employed persons can use this chart. (Don’t use this chart if your home is your principal place of business. See Office in the home , later.)
Figure B. When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1.162-1(a); RR 55–109; RR 94–47
Summary: This illustration depicts the rules used to determine if transportation expenses are deductible.
The image then lists definitions for words used in the graphic:
Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift.
This chapter discusses expenses you can deduct for business transportation when you aren’t traveling away from home , as defined in chapter 1. These expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost of driving and maintaining your car.
Transportation expenses include the ordinary and necessary costs of all of the following.
Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Tax home is defined in chapter 1.
Visiting clients or customers.
Going to a business meeting away from your regular workplace.
Getting from your home to a temporary workplace when you have one or more regular places of work. These temporary workplaces can be either within the area of your tax home or outside that area.
Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. However, there may be exceptions to this general rule. You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Also, daily transportation expenses can be deducted if (1) you have one or more regular work locations away from your residence; or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance.
Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. You may want to refer to it when deciding whether you can deduct your transportation expenses.
If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance.
If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise.
If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment isn’t temporary, regardless of whether it actually lasts for more than 1 year.
If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. It won’t be treated as temporary after the date you determine it will last more than 1 year.
If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. You may have deductible travel expenses, as discussed in chapter 1 .
If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area.
Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area.
You can’t deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.
If you work at two places in 1 day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. However, if for some personal reason you don’t go directly from one location to the other, you can’t deduct more than the amount it would have cost you to go directly from the first location to the second.
Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. You can’t deduct them.
A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work .
You usually can’t deduct the expense if the reserve meeting is held on a day on which you don’t work at your regular job. In this case, your transportation is generally a nondeductible commuting expense. However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work.
If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses.
If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. These expenses are discussed in chapter 1 .
If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules in chapter 6.
You can’t deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You can’t deduct commuting expenses no matter how far your home is from your regular place of work. You can’t deduct commuting expenses even if you work during the commuting trip.
You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities don’t change the trip from personal to business. You can’t deduct your commuting expenses.
Fees you pay to park your car at your place of business are nondeductible commuting expenses. You can, however, deduct business-related parking fees when visiting a customer or client.
Putting display material that advertises your business on your car doesn’t change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still can’t deduct your expenses for those uses.
You can’t deduct the cost of using your car in a nonprofit car pool. Don’t include payments you receive from the passengers in your income. These payments are considered reimbursements of your expenses. However, if you operate a car pool for a profit, you must include payments from passengers in your income. You can then deduct your car expenses (using the rules in this publication).
Hauling tools or instruments in your car while commuting to and from work doesn’t make your car expenses deductible. However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car).
If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located.
If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. (See Pub. 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business.)
The following examples show when you can deduct transportation expenses based on the location of your work and your home.
You regularly work in an office in the city where you live. Your employer sends you to a 1-week training session at a different office in the same city. You travel directly from your home to the training location and return each day. You can deduct the cost of your daily round-trip transportation between your home and the training location.
Your principal place of business is in your home. You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business.
You have no regular office, and you don’t have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.
If you use your car for business purposes, you may be able to deduct car expenses. You can generally use one of the two following methods to figure your deductible expenses.
Actual car expenses.
The cost of using your car as an employee, whether measured using actual expenses or the standard mileage rate, will no longer be allowed to be claimed as an unreimbursed employee travel expense as a miscellaneous itemized deduction due to the suspension of miscellaneous itemized deductions that are subject to the 2% floor under section 67(a). The suspension applies to tax years beginning after December 2017 and before January 2026. Deductions for expenses that are deductible in determining adjusted gross income are not suspended. For example, Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials are allowed to deduct unreimbursed employee travel expenses as an adjustment to total income on Schedule 1 (Form 1040), line 12.
If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. See Leasing a Car , later.
In this publication, “car” includes a van, pickup, or panel truck. For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses , later.
Standard Mileage Rate
For 2022, the standard mileage rate for the cost of operating your car for business use is 58.5 cents (0.585) per mile from January 1–June 30 and 62.5 cents (0.625) per mile from July 1–December 31.
You can generally use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. See chapter 6 for more information on reimbursements .
If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.
If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997.
You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You can’t revoke the choice. However, in later years, you can switch from the standard mileage rate to the actual expenses method. If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation for the car’s remaining estimated useful life, subject to depreciation limits (discussed later).
For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation , later.
You can’t use the standard mileage rate if you:
Use five or more cars at the same time (such as in fleet operations);
Claimed a depreciation deduction for the car using any method other than straight line for the car’s estimated useful life;
Used the Modified Accelerated Cost Recovery System (MACRS) (as discussed later under Depreciation Deduction );
Claimed a section 179 deduction (discussed later) on the car;
Claimed the special depreciation allowance on the car; or
Claimed actual car expenses after 1997 for a car you leased.
You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above.
If you own or lease five or more cars that are used for business at the same time, you can’t use the standard mileage rate for the business use of any car. However, you may be able to deduct your actual expenses for operating each of the cars in your business. See Actual Car Expenses , later, for information on how to figure your deduction.
You aren’t using five or more cars for business at the same time if you alternate using (use at different times) the cars for business.
The following examples illustrate the rules for when you can and can’t use the standard mileage rate for five or more cars.
A salesperson owns three cars and two vans that they alternate using for calling on their customers. They can use the standard mileage rate for the business mileage of the three cars and the two vans because they don’t use them at the same time.
You and your employees use your four pickup trucks in your landscaping business. During the year, you traded in two of your old trucks for two newer ones. You can use the standard mileage rate for the business mileage of all six of the trucks you owned during the year.
You own a repair shop and an insurance business. You and your employees use your two pickup trucks and van for the repair shop. You alternate using your two cars for the insurance business. No one else uses the cars for business purposes. You can use the standard mileage rate for the business use of the pickup trucks, the van, and the cars because you never have more than four vehicles used for business at the same time.
You own a car and four vans that are used in your housecleaning business. Your employees use the vans, and you use the car to travel to various customers. You can’t use the standard mileage rate for the car or the vans. This is because all five vehicles are used in your business at the same time. You must use actual expenses for all vehicles.
If you are an employee, you can’t deduct any interest paid on a car loan. This applies even if you use the car 100% for business as an employee.
However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). You can’t deduct the part of the interest expense that represents your personal use of the car.
If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 5c state and local personal property taxes on motor vehicles. You can take this deduction even if you use the standard mileage rate or if you don’t use the car for business.
If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), or Schedule F (Form 1040). If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040).
In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses.)
If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. See Disposition of a Car , later.
Actual Car Expenses
If you don’t use the standard mileage rate, you may be able to deduct your actual car expenses.
Actual car expenses include:
If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Continue to keep records, as explained later in chapter 5 .
If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.
You are a contractor and drive your car 20,000 miles during the year: 12,000 miles for business use and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense.
If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. You can’t use the standard mileage rate. See Vehicle Provided by Your Employer in chapter 6.
If you are an employee, you can’t deduct any interest paid on a car loan. This interest is treated as personal interest and isn’t deductible. If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate.
If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Enter the amount paid on Schedule A (Form 1040), line 5c.
Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later.
You can’t deduct fines you pay or collateral you forfeit for traffic violations.
If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. See Pub. 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car.
Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Because the benefits last longer than 1 year, you generally can’t deduct a capital expense. However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later.
Generally, there are limits on these deductions. Special rules apply if you use your car 50% or less in your work or business.
You can claim a section 179 deduction and use a depreciation method other than straight line only if you don’t use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service.
If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you can’t use the standard mileage rate on that car in any future year.
For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its unloaded gross vehicle weight (for trucks and vans, gross vehicle weight) must not be more than 6,000 pounds. A car includes any part, component, or other item physically attached to it or usually included in the purchase price.
A car doesn’t include:
An ambulance, hearse, or combination ambulance-hearse used directly in a business;
A vehicle used directly in the business of transporting persons or property for pay or hire; or
A truck or van that is a qualified nonpersonal use vehicle.
These are vehicles that by their nature aren’t likely to be used more than a minimal amount for personal purposes. They include trucks and vans that have been specially modified so that they aren’t likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles.
See Depreciation Deduction , later, for more information on how to depreciate your vehicle.
Section 179 Deduction
You can elect to recover all or part of the cost of a car that is qualifying section 179 property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. If you elect the section 179 deduction, you must reduce your depreciable basis in the car by the amount of the section 179 deduction.
You can claim the section 179 deduction only in the year you place the car in service. For this purpose, a car is placed in service when it is ready and available for a specifically assigned use in a trade or business. Even if you aren’t using the property, it is in service when it is ready and available for its specifically assigned use.
A car first used for personal purposes can’t qualify for the deduction in a later year when its use changes to business.
In 2021, you bought a new car and used it for personal purposes. In 2022, you began to use it for business. Changing its use to business use doesn’t qualify the cost of your car for a section 179 deduction in 2022. However, you can claim a depreciation deduction for the business use of the car starting in 2022. See Depreciation Deduction , later.
You must use the property more than 50% for business to claim any section 179 deduction. If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. The result is the cost of the property that can qualify for the section 179 deduction.
You purchased a new car in April 2022 for $24,500 and used it 60% for business. Based on your business usage, the total cost of your car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% (0.60) business use). But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later.
There are limits on:
The amount of the section 179 deduction;
The section 179 deduction for sport utility and certain other vehicles; and
The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property.
For tax years beginning in 2022, the total amount you can elect to deduct under section 179 generally can’t be more than $1,080,000.
If the cost of your section 179 property placed in service in tax years beginning in 2022 is over $2,700,000, you must reduce the $1,080,000 dollar limit (but not below zero) by the amount of cost over $2,700,000. If the cost of your section 179 property placed in service during tax years beginning in 2022 is $3,780,000 or more, you can’t take a section 179 deduction.
The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year.
If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service.
If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. You must allocate the dollar limit (after any reduction) between you.
For more information on the above section 179 deduction limits, see Pub. 946, How To Depreciate Property.
You cannot elect to deduct more than $27,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax years beginning in 2022. This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways that isn’t subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $27,000 limit doesn’t apply to any vehicle:
Designed to have a seating capacity of more than nine persons behind the driver's seat;
Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and isn’t readily accessible directly from the passenger compartment; or
That has an integral enclosure, fully enclosing the driver compartment and load carrying device, doesn’t have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2022, is $11,200. The first-year limit on depreciation, special depreciation allowance, and section 179 deduction for vehicles acquired after September 27, 2017, and placed in service during 2022 increases to $19,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2022, the amount increases to $11,200. The limit is reduced if your business use of the vehicle is less than 100%. See Depreciation Limits , later, for more information.
In the earlier example under More than 50% business use requirement , you had a car with a cost (for purposes of the section 179 deduction) of $14,700. However, based on your business usage of the car, the total of your section 179 deduction, special depreciation allowance, and depreciation deductions is limited to $11,520 ($19,200 limit x 60% (0.60) business use) because the car was acquired after September 27, 2017, and placed in service during 2022.
For purposes of the section 179 deduction, the cost of the car doesn’t include any amount figured by reference to any other property held by you at any time. For example, if you buy a car as a replacement for a car that was stolen or that was destroyed in a casualty loss, and you use section 1033 to determine the basis in your replacement vehicle, your cost for purposes of the section 179 deduction doesn’t include your adjusted basis in the relinquished car. In that case, your cost includes only the cash you paid.
The amount of the section 179 deduction reduces your basis in your car. If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. The resulting amount is the basis in your car you use to figure your depreciation deduction.
If you want to take the section 179 deduction, you must make the election in the tax year you place the car in service for business or work.
Employees use Form 2106, Employee Business Expenses, to make the election and report the section 179 deduction. All others use Form 4562, Depreciation and Amortization, to make an election.
File the appropriate form with either of the following.
Your original tax return filed for the year the property was placed in service (whether or not you file it timely).
An amended return filed within the time prescribed by law. An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. The amended return must also include any resulting adjustments to taxable income.
An election (or any specification made in the election) to take a section 179 deduction for 2022 can only be revoked with the Commissioner's approval.
To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Any section 179 deduction claimed on the car is included in figuring the excess depreciation. For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. For more information on recapture of a section 179 deduction, see Pub. 946.
If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). For information on the disposition of a car, see Disposition of a Car , later. For more information on recapture of a section 179 deduction, see Pub. 946.
Special Depreciation Allowance
You may be able to claim the special depreciation allowance for your car, truck, or van if it is qualified property and was placed in service in 2022. The allowance for 2022 is an additional depreciation deduction for 100% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS) if the vehicle was acquired after September 27, 2017, and placed in service during 2022. Further, while it applies to a new vehicle, it also applies to a used vehicle only if the vehicle meets the used property requirements. For more information on the used property requirements, see section 168(k)(2)(E)(ii). To qualify for the allowance, more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction , later).
The first-year limit on the depreciation deduction, special depreciation allowance, and section 179 deduction for vehicles acquired before September 28, 2017, and placed in service during 2022, is $11,200. Your combined section 179 depreciation, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for vehicles acquired after September 27, 2017, and placed in service during 2022 is $19,200. If you elect not to claim a special depreciation allowance for a vehicle placed in service in 2022, the amount is $11,200. See Depreciation Limits , later in this chapter.
To be qualified property, the car (including the truck or van) must meet all of the following tests.
You acquired the car after September 27, 2017, but only if no written binding contract to acquire the car existed before September 28, 2017.
You acquired the car new or used.
You placed the car in service in your trade or business before January 1, 2027.
You used the car more than 50% in a qualified business use during the tax year.
You can elect not to claim the special depreciation allowance for your car, truck, or van that is qualified property. If you make this election, it applies to all 5-year property placed in service during the year.
To make this election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property in that class of property.
If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car.
You generally need to know the following things about the car you intend to depreciate.
Your basis in the car.
The date you place the car in service.
The method of depreciation and recovery period you will use.
Your basis in a car for figuring depreciation is generally its cost. This includes any amount you borrow or pay in cash, other property, or services.
Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). However, in some situations, you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). For one of these situations, see Exception under Methods of depreciation , later.
If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Additional rules concerning basis are discussed later in this chapter under Unadjusted basis .
You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Depreciation begins when the car is placed in service for use in your work or business or for the production of income.
For purposes of figuring depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion.
If you place a car in service and dispose of it in the same tax year, you can’t claim any depreciation deduction for that car.
Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery (MACRS) discussed later in this chapter.
If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you can’t depreciate your car under the MACRS rules. You must use straight line depreciation over the estimated remaining useful life of the car. The amount you depreciate can’t be more than the depreciation limit that applies for that year. See Depreciation Limits , later.
To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. The rate per mile varies depending on the year(s) you used the standard mileage rate. For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car , later.
This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . You must use your adjusted basis in your car to figure your depreciation deduction. For additional information on the straight line method of depreciation, see Pub. 946.
Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car.
If your business use is 50% or less, you must use the straight line method to depreciate your car. This is explained later under Car Used 50% or Less for Business .
A qualified business use is any use in your trade or business. It doesn’t include use for the production of income (investment use), or use provided under lease to, or as compensation to, a 5% owner or related person. However, you do combine your business and investment use to figure your depreciation deduction for the tax year.
Don’t treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions.
It is directly connected with your business.
It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income).
It results in a payment of fair market rent. This includes any payment to you for the use of your car.
If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business , later.
If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. You do this on the basis of mileage. Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose.
If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. In this case, you figure the percentage of business use for the year as follows.
Determine the percentage of business use for the period following the change. Do this by dividing business miles by total miles driven during that period.
Multiply the percentage in (1) by a fraction. The numerator (top number) is the number of months the car is used for business, and the denominator (bottom number) is 12.
You use a car only for personal purposes during the first 6 months of the year. During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Your business use for the year is 40% (80% (0.80) × 6 / 12 ).
The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. The maximum amount you can claim depends on the year in which you placed your car in service. You have to reduce the maximum amount if you did not use the car exclusively for business. See Depreciation Limits , later.
You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts.
To figure your unadjusted basis, begin with your car's original basis, which is generally its cost. Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, and alternative motor vehicle credit.
See Form 8910, Alternative Motor Vehicle Credit, for information on the alternative motor vehicle credit.
If you acquired the car by gift or inheritance, see Pub. 551, Basis of Assets, for information on your basis in the car.
A major improvement to a car is treated as a new item of 5-year recovery property. It is treated as placed in service in the year the improvement is made. It doesn’t matter how old the car is when the improvement is added. Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) can’t be more than the depreciation limit that applies for that year. See Depreciation Limits , later.
If you traded one car (the “old car”) for another car (the “new car”) in 2022, you must treat the transaction as a disposition of the old car and the purchase of the new car. You must treat the old car as disposed of at the time of the trade-in. The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car’s use had been for business purposes) plus any additional amount you paid for the new car. You then figure your depreciation deduction for the new car beginning with the date you placed it in service. You must also complete Form 2106, Part II, Section D. This method is explained later, beginning at Effect of trade-in on basis .
The discussion that follows applies to trade-ins of cars in 2022, where the election was made to treat the transaction as a disposition of the old car and the purchase of the new car. For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2022, for which the election wasn’t made, see Pub. 946 and Regulations section 1.168(i)-6(d)(3).
Like‐kind exchanges completed after December 31, 2017, are generally limited to exchanges of real property not held primarily for sale. Regulations section 1.168(i)-6 doesn't reflect this change in law.
If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car.
You trade in a car that has an adjusted basis of $5,000 for a new car. In addition, you pay cash of $20,000 for the new car. Your original basis of the new car is $25,000 (your $5,000 adjusted basis in the old car plus the $20,000 cash paid). Your unadjusted basis is $25,000 unless you claim the section 179 deduction, special depreciation allowance, or have other increases or decreases to your original basis, discussed under Unadjusted basis , earlier.
If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. (This adjustment isn’t used, however, when you determine the gain or loss on the later disposition of the new car. See Pub. 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car.)
To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Then subtract from that total the excess, if any, of:
The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over
The total of the amounts actually allowed as depreciation during those years.
MACRS is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income.
The maximum amount you can deduct is limited, depending on the year you placed your car in service. See Depreciation Limits , later.
Under MACRS, cars are classified as 5-year property. You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year.
For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Pub. 946.
You can use one of the following methods to depreciate your car.
The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction.
The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction.
The straight line method (SL) over a 5-year recovery period.
Before choosing a method, you may wish to consider the following facts.
Using the straight line method provides equal yearly deductions throughout the recovery period.
Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year.
A 2022 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Using this table will make it easy for you to figure the 2022 depreciation deduction for your car. A similar chart appears in the Instructions for Form 2106.
You must use the Depreciation Tables in Pub. 946 rather than the 2022 MACRS Depreciation Chart in this publication if any one of the following three conditions applies to you.
You file your return on a fiscal year basis.
You file your return for a short tax year (less than 12 months).
During the year, all of the following conditions apply.
You placed some property in service from January through September.
You placed some property in service from October through December.
Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year.
If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. However, you can’t continue to use the chart if your basis in your car is adjusted because of a casualty. In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. See Figuring the Deduction Without Using the Tables in chapter 4 of Pub. 946.
If you dispose of the car before the last year of the recovery period, you are generally allowed a half-year of depreciation in the year of disposition. This rule applies unless the mid-quarter convention applies to the vehicle being disposed of. See Depreciation deduction for the year of disposition under Disposition of a Car , later, for information on how to figure the depreciation allowed in the year of disposition.
To figure your depreciation deduction for 2022, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. If you prefer to figure your depreciation deduction without the help of the chart, see Pub. 946.
You bought a used truck in February 2021 to use exclusively in your landscape business. You paid $9,200 for the truck with no trade-in. You didn’t claim any section 179 deduction, the truck didn’t qualify for the special depreciation allowance, and you chose to use the 200% DB method to get the largest depreciation deduction in the early years.
You used the MACRS Depreciation Chart in 2021 to find your percentage. The unadjusted basis of the truck equals its cost because you used it exclusively for business. You multiplied the unadjusted basis of the truck, $9,200, by the percentage that applied, 20%, to figure your 2021 depreciation deduction of $1,840.
In 2022, you used the truck for personal purposes when you repaired your parent’s cabin. Your records show that the business use of the truck was 90% in 2022. You used Table 4-1 to find your percentage. Reading down the first column for the date placed in service and across to the 200% DB column, you locate your percentage, 32%. You multiply the unadjusted basis of the truck, $8,280 ($9,200 cost × 90% (0.90) business use), by 32% (0.32) to figure your 2022 depreciation deduction of $2,650.
There are limits on the amount you can deduct for depreciation of your car, truck, or van. The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. The maximum amount you can deduct each year depends on the date you acquired the passenger automobile and the year you place the passenger automobile in service. These limits are shown in the following tables for 2022.
Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) Acquired Before September 28, 2017, and Placed in Service During 2018–2022
Maximum depreciation deduction for passenger automobiles (including trucks and vans) acquired after september 27, 2017, and placed in service during 2018 or later, maximum depreciation deduction for cars placed in service prior to 2018.
For tax years prior to 2018, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less.
Maximum Depreciation Deduction for Trucks and Vans Placed in Service Prior to 2018
The depreciation limits aren’t reduced if you use a car for less than a full year. This means that you don’t reduce the limit when you either place a car in service or dispose of a car during the year. However, the depreciation limits are reduced if you don’t use the car exclusively for business and investment purposes. See Reduction for personal use next.
The depreciation limits are reduced based on your percentage of personal use. If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year.
The section 179 deduction is treated as a depreciation deduction. If you acquired a passenger automobile (including trucks and vans) after September 27, 2017, and placed it in service in 2022, use it only for business, and choose the section 179 deduction, the special depreciation allowance and depreciation deduction for that vehicle for 2022 is limited to $19,200.
On September 4, 2022, you bought and placed in service a used car for $15,000. You used it 80% for your business, and you choose to take a section 179 deduction for the car. The car isn’t qualified property for purposes of the special depreciation allowance.
Before applying the limit, you figure your maximum section 179 deduction to be $12,000. This is the cost of your qualifying property (up to the maximum $1,080,000 amount) multiplied by your business use ($15,000 × 80% (0.80)).
You then figure that your section 179 deduction for 2022 is limited to $8,960 (80% of $11,200). You then figure your unadjusted basis of $3,040 (($15,000 × 80% (0.80)) − $8,960) for determining your depreciation deduction. You have reached your maximum depreciation deduction for 2022. For 2023, you will use your unadjusted basis of $3,040 to figure your depreciation deduction.
If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends.
This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use.
For 5-year property, your recovery period is 6 calendar years. A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year.
Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. You determine your unrecovered basis in the 7th year after you placed the car in service.
If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. For example, no deduction is allowed for a year you use your car 100% for personal purposes.
In April 2016, you bought and placed in service a car you used exclusively in your business. The car cost $31,500. You didn’t claim a section 179 deduction or the special depreciation allowance for the car. You continued to use the car 100% in your business throughout the recovery period (2016 through 2021). For those years, you used the MACRS Depreciation Chart (200% DB method), the Maximum Depreciation Deduction for Cars Placed in Service Prior to 2018 table and the Maximum Depreciation Deduction for Passenger Automobiles (Including Trucks and Vans) Acquired Before September 28, 2017, and Placed in Service During 2018–2022 table, earlier, for the applicable tax year to figure your depreciation deductions during the recovery period. Your depreciation deductions were subject to the depreciation limits, so you will have unrecovered basis at the end of the recovery period as shown in the following table.
At the end of 2021, you had an unrecovered basis in the car of $14,626 ($31,500 – $16,874). If you continued to use the car 100% for business in 2022 and later years, you can claim a depreciation deduction equal to the lesser of $1,875 or your remaining unrecovered basis.
If your business use of the car was less than 100% during any year, your depreciation deduction would be less than the maximum amount allowable for that year. However, in determining your unrecovered basis in the car, you would still reduce your original basis by the maximum amount allowable as if the business use had been 100%. For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $10,124 ($16,874 × 60% (0.60)), but you still would have to reduce your basis by $16,874 to determine your unrecovered basis.
Table 4-1. 2022 MACRS Depreciation Chart (Use To Figure Depreciation for 2022)
Car used 50% or less for business.
If you use your car 50% or less for qualified business use (defined earlier under Depreciation Deduction ) either in the year the car is placed in service or in a later year, special rules apply. The rules that apply in these two situations are explained in the following paragraphs. (For this purpose, “car” was defined earlier under Actual Car Expenses and includes certain trucks and vans.)
If you use your car 50% or less for qualified business use, the following rules apply.
You can’t take the section 179 deduction.
You can’t take the special depreciation allowance.
You must figure depreciation using the straight line method over a 5-year recovery period. You must continue to use the straight line method even if your percentage of business use increases to more than 50% in a later year.
Instead of making the computation yourself, you can use column (c) of Table 4-1 to find the percentage to use.
In May 2022, you bought and placed in service a car for $17,500. You used it 40% for your consulting business. Because you didn’t use the car more than 50% for business, you can’t take any section 179 deduction or special depreciation allowance, and you must use the straight line method over a 5-year recovery period to recover the cost of your car.
You deduct $700 in 2022. This is the lesser of:
$700 (($17,500 cost × 40% (0.40) business use) × 10% (0.10) recovery percentage (from column (c) of Table 4-1 )), or
$1,264 ($3,160 maximum limit × 40% (0.40) business use).
If you use your car more than 50% in qualified business use in the tax year it is placed in service but the business use drops to 50% or less in a later year, you can no longer use an accelerated depreciation method for that car.
For the year the business use drops to 50% or less and all later years in the recovery period, you must use the straight line depreciation method over a 5-year recovery period. In addition, for the year your business use drops to 50% or less, you must recapture (include in your gross income) any excess depreciation (discussed later). You also increase the adjusted basis of your car by the same amount.
In June 2019, you purchased a car for exclusive use in your business. You met the more-than-50%-use test for the first 3 years of the recovery period (2019 through 2021) but failed to meet it in the fourth year (2022). You determine your depreciation for 2022 using 20% (from column (c) of Table 4-1 ). You will also have to determine and include in your gross income any excess depreciation, discussed next.
You must include any excess depreciation in your gross income and add it to your car's adjusted basis for the first tax year in which you don’t use the car more than 50% in qualified business use. Use Form 4797, Sales of Business Property, to figure and report the excess depreciation in your gross income.
Excess depreciation is:
The amount of the depreciation deductions allowable for the car (including any section 179 deduction claimed and any special depreciation allowance claimed) for tax years in which you used the car more than 50% in qualified business use, minus
The amount of the depreciation deductions that would have been allowable for those years if you hadn’t used the car more than 50% in qualified business use for the year you placed it in service. This means the amount of depreciation figured using the straight line method.
In September 2018, you bought a car for $20,500 and placed it in service. You didn’t claim the section 179 deduction or the special depreciation allowance. You used the car exclusively in qualified business use for 2018, 2019, 2020, and 2021. For those years, you used the appropriate MACRS Depreciation Chart to figure depreciation deductions totaling $13,185 ($3,160 for 2018, $5,100 for 2019, $3,050 for 2020, and $1,875 for 2021) under the 200% DB method.
During 2022, you used the car 30% for business and 70% for personal purposes. Since you didn’t meet the more-than-50%-use test, you must switch from the 200% DB depreciation method to the straight line depreciation method for 2022, and include in gross income for 2022 your excess depreciation determined as follows.
In 2022, using Form 4797, you figure and report the $2,110 excess depreciation you must include in your gross income. Your adjusted basis in the car is also increased by $2,110. Your 2022 depreciation is $1,230 ($20,500 (unadjusted basis) × 30% (0.30) (business-use percentage) × 20% (0.20) (from column (c) of Table 4-1 on the line for Jan. 1–Sept. 30, 2018)). However, your depreciation deduction is limited to $563 ($1,875 x 30% (0.30) business use).
Leasing a Car
If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. This section explains how to figure actual expenses for a leased car, truck, or van.
If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You can’t deduct any part of a lease payment that is for personal use of the vehicle, such as commuting.
You must spread any advance payments over the entire lease period. You can’t deduct any payments you make to buy a car, truck, or van even if the payments are called “lease payments.”
If you lease a car, truck, or van for 30 days or more, you may have to reduce your lease payment deduction by an “inclusion amount,” explained next.
If you lease a car, truck, or van that you use in your business for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the vehicle. To do this, you don’t add an amount to income. Instead, you reduce your deduction for your lease payment. (This reduction has an effect similar to the limit on the depreciation deduction you would have on the vehicle if you owned it.)
The inclusion amount is a percentage of part of the fair market value of the leased vehicle multiplied by the percentage of business and investment use of the vehicle for the tax year. It is prorated for the number of days of the lease term in the tax year.
The inclusion amount applies to each tax year that you lease the vehicle if the fair market value (defined next) when the lease began was more than the amounts shown in the following tables.
All vehicles are subject to a single inclusion amount threshold for passenger automobiles leased and put into service in 2022. You may have an inclusion amount for a passenger automobile if:
Passenger Automobiles (Including Trucks and Vans)
For years prior to 2018, see the inclusion tables below. You may have an inclusion amount for a passenger automobile if:
Cars (Except for Trucks and Vans)
Trucks and Vans
Fair market value is the price at which the property would change hands between a willing buyer and seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Sales of similar property around the same date may be helpful in figuring the fair market value of the property.
Figure the fair market value on the first day of the lease term. If the capitalized cost of a car is specified in the lease agreement, use that amount as the fair market value.
Inclusion amounts for tax years 2018–2022 are listed in Appendices A-1 through A-5 for passenger vehicles (including trucks and vans). If the fair market value of the vehicle is $100,000 or less, use the appropriate appendix (depending on the year you first placed the vehicle in service) to determine the inclusion amount. If the fair market value is more than $100,000, see the revenue procedure(s) identified in the footnote of that year’s appendix for the inclusion amount.
For each tax year during which you lease the car for business, determine your inclusion amount by following these three steps.
Locate the appendix that applies to you. To find the inclusion amount, do the following.
Find the line that includes the fair market value of the car on the first day of the lease term.
Go across the line to the column for the tax year in which the car is used under the lease to find the dollar amount. For the last tax year of the lease, use the dollar amount for the preceding year.
Prorate the dollar amount from (1b) for the number of days of the lease term included in the tax year.
Multiply the prorated amount from (2) by the percentage of business and investment use for the tax year. This is your inclusion amount.
On January 17, 2022, you leased a car for 3 years and placed it in service for use in your business. The car had a fair market value of $62,500 on the first day of the lease term. You use the car 75% for business and 25% for personal purposes during each year of the lease. Assuming you continue to use the car 75% for business, you use Appendix A-5 to arrive at the following inclusion amounts for each year of the lease. For the last tax year of the lease, 2025, you use the amount for the preceding year.
2024 is a leap year and includes an extra calendar day, February 29, 2024.
For each year of the lease that you deduct lease payments, you must reduce your deduction by the inclusion amount figured for that year.
If you lease a car for business use and, in a later year, change it to personal use, follow the rules explained earlier under Figuring the inclusion amount . For the tax year in which you stop using the car for business, use the dollar amount for the previous tax year. Prorate the dollar amount for the number of days in the lease term that fall within the tax year.
On August 16, 2021, you leased a car with a fair market value of $64,500 for 3 years. You used the car exclusively in your data processing business. On November 5, 2022, you closed your business and went to work for a company where you aren’t required to use a car for business. Using Appendix A-4 , you figured your inclusion amount for 2021 and 2022 as shown in the following table and reduced your deductions for lease payments by those amounts.
If you lease a car for personal use and, in a later year, change it to business use, you must determine the car's fair market value on the date of conversion. Then figure the inclusion amount using the rules explained earlier under Figuring the inclusion amount . Use the fair market value on the date of conversion.
In March 2020, you leased a truck for 4 years for personal use. On June 1, 2022, you started working as a self-employed advertising consultant and started using the leased truck for business purposes. Your records show that your business use for June 1 through December 31 was 60%. To figure your inclusion amount for 2022, you obtained an appraisal from an independent car leasing company that showed the fair market value of your 2020 truck on June 1, 2022, was $57,650. Using Appendix A-5 , you figured your inclusion amount for 2022 as shown in the following table.
For information on reporting inclusion amounts, employees should see Car rentals under Completing Forms 2106 in chapter 6. Sole proprietors should see the Instructions for Schedule C (Form 1040), and farmers should see the Instructions for Schedule F (Form 1040).
Disposition of a Car
If you dispose of your car, you may have a taxable gain or a deductible loss. The portion of any gain that is due to depreciation (including any section 179 deduction, clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), and special depreciation allowance) that you claimed on the car will be treated as ordinary income. However, you may not have to recognize a gain or loss if you dispose of the car because of a casualty or theft.
This section gives some general information about dispositions of cars. For information on how to report the disposition of your car, see Pub. 544.
Like‐kind exchanges completed after December 31, 2017, are generally limited to exchanges of real property not held primarily for sale.
For a casualty or theft, a gain results when you receive insurance or other reimbursement that is more than your adjusted basis in your car. If you then spend all of the proceeds to acquire replacement property (a new car or repairs to the old car) within a specified period of time, you don’t recognize any gain. Your basis in the replacement property is its cost minus any gain that isn’t recognized. See Pub. 547 for more information.
When you trade in an old car for a new one, the transaction is considered a like-kind exchange. Generally, no gain or loss is recognized. (For exceptions, see chapter 1 of Pub. 544.) In a trade-in situation, your basis in the new property is generally your adjusted basis in the old property plus any additional amount you pay. (See Unadjusted basis , earlier.)
If you used the standard mileage rate for the business use of your car, depreciation was included in that rate. The rate of depreciation that was allowed in the standard mileage rate is shown in the Rate of Depreciation Allowed in Standard Mileage Rate table, later. You must reduce your basis in your car (but not below zero) by the amount of this depreciation.
If your basis is reduced to zero (but not below zero) through the use of the standard mileage rate, and you continue to use your car for business, no adjustment (reduction) to the standard mileage rate is necessary. Use the full standard mileage rate (58.5 cents (0.585) per mile from January 1–June 30 and 62.5 cents (0.625) per mile from July 1–December 31 for 2022) for business miles driven.
Rate of Depreciation Allowed in Standard Mileage Rate
In 2017, you bought and placed in service a car for exclusive use in your business. The car cost $25,500. From 2017 through 2022, you used the standard mileage rate to figure your car expense deduction. You drove your car 14,100 miles in 2017, 16,300 miles in 2018, 15,600 miles in 2019, 16,700 miles in 2020, 15,100 miles in 2021, and 14,900 miles in 2022. The depreciation portion of your car expense deduction is figured as follows.
If you deduct actual car expenses and you dispose of your car before the end of the recovery period (years 2 through 5), you are allowed a reduced depreciation deduction in the year of disposition.
Use the depreciation tables in Pub. 946 to figure the reduced depreciation deduction for a car disposed of in 2022.
The depreciation amounts computed using the depreciation tables in Pub. 946 for years 2 through 5 that you own your car are for a full year’s depreciation. Years 1 and 6 apply the half-year or mid-quarter convention to the computation 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 must be divided by 2. If the mid-quarter convention applies, multiply the full year’s depreciation by the percentage from the following table for the quarter that you disposed of the car.
If the car is subject to the Depreciation Limits , discussed earlier, reduce (but do not increase) the computed depreciation to this amount. See Sale or Other Disposition Before the Recovery Period Ends in chapter 4 of Pub. 946 for more information.
If you deduct travel, gift, or transportation expenses, you must be able to prove (substantiate) certain elements of expense. This chapter discusses the records you need to keep to prove these expenses.
How To Prove Expenses
Table 5-1 is a summary of records you need to prove each expense discussed in this publication. You must be able to prove the elements listed across the top portion of the chart. You prove them by having the information and receipts (where needed) for the expenses listed in the first column.
You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You must generally prepare a written record for it to be considered adequate. This is because written evidence is more reliable than oral evidence alone. However, if you prepare a record on a computer, it is considered an adequate record.
What Are Adequate Records?
You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.
You must generally have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.
Documentary evidence isn’t needed if any of the following conditions apply.
You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. ( Accountable plans and per diem allowances are discussed in chapter 6.)
Your expense, other than lodging, is less than $75.
You have a transportation expense for which a receipt isn’t readily available.
Documentary evidence will ordinarily be considered adequate if it shows the amount, date, place, and essential character of the expense.
For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information.
The name and location of the hotel.
The dates you stayed there.
Separate amounts for charges such as lodging, meals, and telephone calls.
A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information.
The name and location of the restaurant.
The number of people served.
The date and amount of the expense.
A canceled check, together with a bill from the payee, ordinarily establishes the cost. However, a canceled check by itself doesn’t prove a business expense without other evidence to show that it was for a business purpose.
You don‘t have to record information in your account book or other record that duplicates information shown on a receipt as long as your records and receipts complement each other in an orderly manner.
You don’t have to record amounts your employer pays directly for any ticket or other travel item. However, if you charge these items to your employer, through a credit card or otherwise, you must keep a record of the amounts you spend.
You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence. A timely kept record has more value than a statement prepared later when there is generally a lack of accurate recall.
You don’t need to write down the elements of every expense on the day of the expense. If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely kept record.
If you give your employer, client, or customer an expense account statement, it can also be considered a timely kept record. This is true if you copy it from your account book, diary, log, statement of expense, trip sheets, or similar record.
You must generally provide a written statement of the business purpose of an expense. However, the degree of proof varies according to the circumstances in each case. If the business purpose of an expense is clear from the surrounding circumstances, then you don’t need to give a written explanation.
If you are a sales representative who calls on customers on an established sales route, you don’t have to give a written explanation of the business purpose for traveling that route. You can satisfy the requirements by recording the length of the delivery route once, the date of each trip at or near the time of the trips, and the total miles you drove the car during the tax year. You could also establish the date of each trip with a receipt, record of delivery, or other documentary evidence.
You don’t need to put confidential information relating to an element of a deductible expense (such as the place, business purpose, or business relationship) in your account book, diary, or other record. However, you do have to record the information elsewhere at or near the time of the expense and have it available to fully prove that element of the expense.
What if I Have Incomplete Records?
If you don’t have complete records to prove an element of an expense, then you must prove the element with:
Your own written or oral statement containing specific information about the element, and
Other supporting evidence that is sufficient to establish the element.
If the element is the description of a gift, or the cost, time, place, or date of an expense, the supporting evidence must be either direct evidence or documentary evidence. Direct evidence can be written statements or the oral testimony of your guests or other witnesses setting forth detailed information about the element. Documentary evidence can be receipts, paid bills, or similar evidence.
If the element is either the business relationship of your guests or the business purpose of the amount spent, the supporting evidence can be circumstantial rather than direct. For example, the nature of your work, such as making deliveries, provides circumstantial evidence of the use of your car for business purposes. Invoices of deliveries establish when you used the car for business.
Table 5-1. How To Prove Certain Business Expenses
You can keep an adequate record for parts of a tax year and use that record to prove the amount of business or investment use for the entire year. You must demonstrate by other evidence that the periods for which an adequate record is kept are representative of the use throughout the tax year.
You use your car to visit the offices of clients, meet with suppliers and other subcontractors, and pick up and deliver items to clients. There is no other business use of the car, but you and your family use the car for personal purposes. You keep adequate records during the first week of each month that show that 75% of the use of the car is for business. Invoices and bills show that your business use continues at the same rate during the later weeks of each month. Your weekly records are representative of the use of the car each month and are sufficient evidence to support the percentage of business use for the year.
You can satisfy the substantiation requirements with other evidence if, because of the nature of the situation in which an expense is made, you can’t get a receipt. This applies if all the following are true.
You were unable to obtain evidence for an element of the expense or use that completely satisfies the requirements explained earlier under What Are Adequate Records .
You are unable to obtain evidence for an element that completely satisfies the two rules listed earlier under What if I Have Incomplete Records .
You have presented other evidence for the element that is the best proof possible under the circumstances.
If you can’t produce a receipt because of reasons beyond your control, you can prove a deduction by reconstructing your records or expenses. Reasons beyond your control include fire, flood, and other casualties.
Table 5-2. Daily Business Mileage and Expense Log Name:
Separating and combining expenses.
This section explains when expenses must be kept separate and when expenses can be combined.
Each separate payment is generally considered a separate expense. For example, if you entertain a customer or client at dinner and then go to the theater, the dinner expense and the cost of the theater tickets are two separate expenses. You must record them separately in your records.
You can make one daily entry in your record for reasonable categories of expenses. Examples are taxi fares, telephone calls, or other incidental travel costs. Nonentertainment meals should be in a separate category. You can include tips for meal-related services with the costs of the meals.
Expenses of a similar nature occurring during the course of a single event are considered a single expense.
You can account for several uses of your car that can be considered part of a single use, such as a round trip or uninterrupted business use, with a single record. Minimal personal use, such as a stop for lunch on the way between two business stops, isn’t an interruption of business use.
You make deliveries at several different locations on a route that begins and ends at your employer's business premises and that includes a stop at the business premises between two deliveries. You can account for these using a single record of miles driven.
You don’t always have to record the name of each recipient of a gift. A general listing will be enough if it is evident that you aren’t trying to avoid the $25 annual limit on the amount you can deduct for gifts to any one person. For example, if you buy a large number of tickets to local high school basketball games and give one or two tickets to each of many customers, it is usually enough to record a general description of the recipients.
If you can prove the total cost of travel or entertainment but you can’t prove how much it cost for each person who participated in the event, you may have to allocate the total cost among you and your guests on a pro rata basis. To do so, you must establish the number of persons who participated in the event.
If your return is examined, you may have to provide additional information to the IRS. This information could be needed to clarify or to establish the accuracy or reliability of information contained in your records, statements, testimony, or documentary evidence before a deduction is allowed.
THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM
How long to keep records and receipts.
You must keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support your deduction (or an item of income) for 3 years from the date you file the income tax return on which the deduction is claimed. A return filed early is considered filed on the due date. For a more complete explanation of how long to keep records, see Pub. 583, Starting a Business and Keeping Records.
You must keep records of the business use of your car for each year of the recovery period. See More-than-50%-use test in chapter 4 under Depreciation Deduction.
Employees who give their records and documentation to their employers and are reimbursed for their expenses generally don’t have to keep copies of this information. However, you may have to prove your expenses if any of the following conditions apply.
You claim deductions for expenses that are more than reimbursements.
Your expenses are reimbursed under a nonaccountable plan.
Your employer doesn’t use adequate accounting procedures to verify expense accounts.
You are related to your employer as defined under Per Diem and Car Allowances in chapter 6.
Table 5-2 and Table 5-3 are examples of worksheets that can be used for tracking business expenses.
6. How To Report
This chapter explains where and how to report the expenses discussed in this publication. It discusses reimbursements and how to treat them under accountable and nonaccountable plans. It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. The chapter ends with illustrations of how to report travel, gift, and car expenses on Forms 2106.
Where To Report
This section provides general information on where to report the expenses discussed in this publication.
You must report your income and expenses on Schedule C (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. You don’t use Form 2106.
If you claim car or truck expenses, you must provide certain information on the use of your vehicle. You provide this information on Schedule C (Form 1040) or Form 4562.
If you file Schedule C (Form 1040):
Report your travel expenses, except meals, on line 24a;
Report your deductible non-entertainment-related meals (actual cost or standard meal allowance) on line 24b;
Report your gift expenses and transportation expenses, other than car expenses, on line 27a; and
Report your car expenses on line 9. Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization.
If you file Schedule F (Form 1040), do the following.
Report your car expenses on line 10. Attach Form 4562 and provide information on the use of your car in Part V of Form 4562.
Report all other business expenses discussed in this publication on line 32. You can only include 50% of your non-entertainment-related meals on that line. However, you can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023.
If you are both self-employed and an employee, you must keep separate records for each business activity. Report your business expenses for self-employment on Schedule C (Form 1040), or Schedule F (Form 1040), as discussed earlier. Report your business expenses for your work as an employee on Form 2106, as discussed next.
If you are an employee, you must generally complete Form 2106 to deduct your travel and transportation expenses.
You are an employee deducting expenses attributable to your job.
You weren’t reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 aren’t considered reimbursements).
If you claim car expenses, you use the standard mileage rate.
For more information on how to report your expenses on Form 2106, see Completing Form 2106 , later.
If you didn’t receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the special rules discussed later don’t apply to you, don’t complete Form 2106.
If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040). Don’t complete Form 2106.
Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers.
If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. You can’t deduct personal expenses.
If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity.
For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. See Pub. 527, Residential Rental Property, for more information on the rental of real estate.
Vehicle Provided by Your Employer
If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. You can’t use the standard mileage rate.
Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). Your employer must separately state the amount if 100% of the annual lease value was included in your income. If you are unsure of the amount included on your Form W-2, ask your employer.
You may be able to deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. On your 2022 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation; and box 14.
To claim your expenses, complete Form 2106, Part II, Sections A and C. Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. Complete the rest of the form.
If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. Don’t enter this value on your Form 2106 because it isn’t deductible.
If you paid any actual costs (that your employer didn’t provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. Examples of costs that you may have are gas, oil, and repairs. Complete Form 2106, Part II, Sections A and C. Enter your actual costs on line 23 of Section C and leave line 25 blank. Complete the rest of the form.
This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication.
If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan.
This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. It also covers rules for independent contractors.
You aren’t reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. In this situation, you have no reimbursement or allowance arrangement, and you don’t have to read this section on reimbursements. Instead, see Completing Form 2106 , later, for information on completing your tax return.
A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. Arrangements include per diem and car allowances.
A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging and M&IE when you are away from home on business. (The term “incidental expenses” is defined in chapter 1 under Standard Meal Allowance. ) A car allowance is an amount your employer gives you for the business use of your car.
Your employer should tell you what method of reimbursement is used and what records you must provide.
If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Reimbursements treated as paid under an accountable plan, as explained next, aren’t reported as pay. Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. See Pub. 15 (Circular E), Employer's Tax Guide, for information on employee pay.
To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules.
Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.
You must adequately account to your employer for these expenses within a reasonable period of time.
You must return any excess reimbursement or allowance within a reasonable period of time.
Adequate accounting and returning excess reimbursements are discussed later.
An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer.
The definition of reasonable period of time depends on the facts and circumstances of your situation. However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time.
You receive an advance within 30 days of the time you have an expense.
You adequately account for your expenses within 60 days after they were paid or incurred.
You return any excess reimbursement within 120 days after the expense was paid or incurred.
You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement.
If you meet the three rules for accountable plans, your employer shouldn’t include any reimbursements in your income in box 1 of your Form W-2. If your expenses equal your reimbursements, you don’t complete Form 2106. You have no deduction since your expenses and reimbursements are equal.
Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later).
If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. See Reasonable period of time , earlier, and Returning Excess Reimbursements , later.
You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which would be allowable as employee business expense deductions and some of which would not. The reimbursements you receive for the nondeductible expenses don’t meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan.
Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you aren’t away from home. The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan.
One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses.) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. See Per Diem and Car Allowances , later.
You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. This includes amounts you charged to your employer by credit card or other method. You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. You must pay back the amount of any reimbursement or other expense allowance for which you don’t adequately account or that is more than the amount for which you accounted.
Per Diem and Car Allowances
If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply.
Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.
The allowance is similar in form to and not more than the federal rate (defined later).
You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time.
You aren’t related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.
You are related to your employer if:
Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant;
Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock; or
Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer.
The federal rate can be figured using any one of the following methods.
For per diem amounts:
The regular federal per diem rate.
The high-low rate.
For car expenses:
A fixed and variable rate (FAVR).
The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging and M&IE (or M&IE only) while they are traveling away from home in a particular area. The rates are different for different localities. Your employer should have these rates available. You can also find federal per diem rates at GSA.gov/travel/plan-book/per-diem-rates .
The standard meal allowance is the federal M&IE rate. For travel in 2022, the rate for most small localities in the United States is $59 per day. Most major cities and many other localities qualify for higher rates. You can find this information at GSA.gov/travel/plan-book/per-diem-rates .
You receive an allowance only for M&IE when your employer does one of the following.
Provides you with lodging (furnishes it in kind).
Reimburses you, based on your receipts, for the actual cost of your lodging.
Pays the hotel, motel, etc., directly for your lodging.
Doesn’t have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck.
Figures the allowance on a basis similar to that used in figuring your compensation, such as number of hours worked or miles traveled.
This is a simplified method of figuring the federal per diem rate for travel within the continental United States. It eliminates the need to keep a current list of the per diem rates for each city.
Under the high-low method, the per diem amount for travel during January through September of 2022 is $296 (which includes $74 for M&IE) for certain high-cost locations. All other areas have a per diem amount of $202 (which includes $64 for M&IE). For more information, see Notice 2021-52, which can be found at IRS.gov/irb/2021-38_IRB#NOT-2021-52 .
The standard meal allowance is for a full 24-hour day of travel. If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. This rule also applies if your employer uses the regular federal per diem rate or the high-low rate.
You can use either of the following methods to figure the federal M&IE for that day.
For the day you depart, add 3 / 4 of the standard meal allowance amount for that day.
For the day you return, add 3 / 4 of the standard meal allowance amount for the preceding day.
Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a.m. of one day to 5 p.m. of the next day as being no more than the federal rate. This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate.
This is a set rate per mile that you can use to figure your deductible car expenses. For 2022, the standard mileage rate for the cost of operating your car for business use is 58.5 cents (0.585) per mile from January 1–June 30 and 62.5 cents (0.625) per mile from July 1–December 31.
This is an allowance your employer may use to reimburse your car expenses. Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc.) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc.). If your employer chooses to use this method, your employer will request the necessary records from you.
If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting.
Whether the allowance or your actual expenses were more than the federal rate.
If your allowance is less than or equal to the federal rate, the allowance won’t be included in box 1 of your Form W-2. You don’t need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.
However, if your actual expenses are more than your allowance, you can complete Form 2106. If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you don’t have to prove that amount.
In April, a member of a reserve component of the Armed Forces takes a 2-day business trip to Denver. The federal rate for Denver is $278 ($199 lodging + $79 M&IE) per day. As required by their employer's accountable plan, they account for the time (dates), place, and business purpose of the trip. Their employer reimburses them $278 a day ($556 total) for living expenses. Their living expenses in Denver aren’t more than $278 a day.
Their employer doesn’t include any of the reimbursement on their Form W-2 and they don’t deduct the expenses on their return.
In June, a fee-basis local government official takes a 2-day business trip to Boston. Their employer uses the high-low method to reimburse employees. Since Boston is a high-cost area, they are given an advance of $296 (which includes $74 for M&IE) a day ($592 total) for their lodging and M&IE. Their actual expenses totaled $700.
Since their $700 of expenses are more than their $592 advance, they include the excess expenses when they itemize their deductions. They complete Form 2106 (showing all of their expenses and reimbursements). They must also allocate their reimbursement between their meals and other expenses as discussed later under Completing Form 2106 .
A fee-basis state government official drives 5,000 miles during January through June 2022 and 5,000 miles during July through December 2022 for business. Under their employer's accountable plan, they account for the time (dates), place, and business purpose of each trip. Their employer pays them a mileage allowance of 40 cents (0.40) a mile.
Since their $6,050 expense figured under the standard mileage rate ((5,000 miles x 58.5 cents (0.585) per mile) + (5,000 miles x 62.5 cents (0.625) per mile)) is more than their $4,000 reimbursement (10,000 miles × 40 cents (0.40)), they itemize their deductions to claim the excess expense. They complete Form 2106 (showing all their expenses and reimbursements) and enter $2,050 ($6,050 − $4,000) as an itemized deduction.
If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate under code L in box 12 of your Form W-2. This amount isn’t taxable. However, the excess allowance will be included in box 1 of your Form W-2. You must report this part of your allowance as if it were wage income.
If your actual expenses are less than or equal to the federal rate, you don’t complete Form 2106 or claim any of your expenses on your return.
However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. You must report on Form 2106 your reimbursements up to the federal rate (as shown under code L in box 12 of your Form W-2) and all your expenses. You should be able to prove these amounts to the IRS.
A performing artist lives and works in Austin. In July, their employer sent them to Albuquerque for 4 days on business. Their employer paid the hotel directly for their lodging and reimbursed them $80 a day ($320 total) for M&IE. Their actual meal expenses weren’t more than the federal rate for Albuquerque, which is $69 per day.
Table 6-1. Reporting Travel, Nonentertainment Meal, Gift, and Car Expenses and Reimbursements
Their employer included the $44 that was more than the federal rate (($80 − $69) × 4) in box 1 of their Form W-2. Their employer shows $276 ($69 a day × 4) under code L in box 12 of their Form W-2. This amount isn’t included in their income. They don’t have to complete Form 2106; however, they must include the $44 in their gross income as wages (by reporting the total amount shown in box 1 of their Form W-2).
A performing artist also lives in Austin and works for the same employer as in Example 1 . In May, the employer sent them to San Diego for 4 days and paid the hotel directly for their hotel bill. The employer reimbursed them $75 a day for their M&IE. The federal rate for San Diego is $74 a day.
They can prove that their actual non-entertainment-related meal expenses totaled $380. Their employer's accountable plan won’t pay more than $75 a day for travel to San Diego, so they don’t give their employer the records that prove that they actually spent $380. However, they do account for the time (dates), place, and business purpose of the trip. This is their only business trip this year.
They were reimbursed $300 ($75 × 4 days), which is $4 more than the federal rate of $296 ($74 × 4 days). The employer includes the $4 as income on their employee’s Form W-2 in box 1. The employer also enters $296 under code L in box 12 of the employee’s Form W-2.
They complete Form 2106 to figure their deductible expenses. They enter the total of their actual expenses for the year ($380) on Form 2106. They also enter the reimbursements that weren’t included in their income ($296). Their total deductible expense, before the 50% limit, is $96. Since their meals consisted of food and beverages that were provided by a restaurant and paid or incurred after 2020 and before 2023, they can deduct 100% of their meal expenses. They will include the $96 as an itemized deduction.
A fee-basis state government official drives 5,000 miles during January through June 2022 and 5,000 miles during July through December 2022 for business. Under their employer's accountable plan, they get reimbursed 65 cents (0.65) a mile, which is more than the standard mileage rate. Their total reimbursement is $6,500.
Their employer must include the reimbursement amount up to the standard mileage rate, $6,050 ((5,000 miles x 58.5 cents (0.585) per mile) + (5,000 miles x 62.5 cents (0.625) per mile)), under code L in box 12 of the employee’s Form W-2. That amount isn’t taxable. Their employer must also include $450 ($6,500 − $6,050) in box 1 of the employee's Form W-2. This is the reimbursement that is more than the standard mileage rate.
If their expenses are equal to or less than the standard mileage rate, they wouldn’t complete Form 2106. If their expenses are more than the standard mileage rate, they would complete Form 2106 and report their total expenses and reimbursement (shown under code L in box 12 of their Form W-2). They would then claim the excess expenses as an itemized deduction.
Returning Excess Reimbursements
Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. Excess reimbursement means any amount for which you didn’t adequately account within a reasonable period of time. For example, if you received a travel advance and you didn’t spend all the money on business-related expenses or you don’t have proof of all your expenses, you have an excess reimbursement.
Adequate accounting and reasonable period of time were discussed earlier in this chapter.
You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time.
If you don’t adequately account for or don't return any excess advance within a reasonable period of time, the amount you don’t account for or return will be treated as having been paid under a nonaccountable plan (discussed later).
If you don’t prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproven amount of the travel advance within a reasonable period of time. If you don’t do this, the unproven amount will be considered paid under a nonaccountable plan (discussed later).
If your employer's accountable plan pays you an allowance that is higher than the federal rate, you don’t have to return the difference between the two rates for the period you can prove business-related travel expenses. However, the difference will be reported as wages on your Form W-2. This excess amount is considered paid under a nonaccountable plan (discussed later).
Your employer sends you on a 5-day business trip to Phoenix in March 2022 and gives you a $400 ($80 × 5 days) advance to cover your M&IE. The federal per diem for M&IE for Phoenix is $69. Your trip lasts only 3 days. Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you didn’t travel. For the 3 days you did travel, you don’t have to return the $33 difference between the allowance you received and the federal rate for Phoenix (($80 − $69) × 3 days). However, the $33 will be reported on your Form W-2 as wages.
A nonaccountable plan is a reimbursement or expense allowance arrangement that doesn’t meet one or more of the three rules listed earlier under Accountable Plans .
In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan.
Excess reimbursements you fail to return to your employer.
Reimbursement of nondeductible expenses related to your employer's business. See Reimbursement of nondeductible expenses , earlier, under Accountable Plans.
If you aren’t sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer.
Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. Your employer will report the total in box 1 of your Form W-2.
You must complete Form 2106 and itemize your deductions to deduct your expenses for travel, transportation, or non-entertainment-related meals. Your meal and entertainment expenses will be subject to the 50% Limit discussed in chapter 2. However, you can deduct 100% of business meals if the meals are food and beverages provided by a restaurant, and paid or incurred after 2020 and before 2023.
Your employer gives you $1,000 a month ($12,000 total for the year) for your business expenses. You don’t have to provide any proof of your expenses to your employer, and you can keep any funds that you don’t spend.
You are a performing artist and are being reimbursed under a nonaccountable plan. Your employer will include the $12,000 on your Form W-2 as if it were wages. If you want to deduct your business expenses, you must complete Form 2106 and itemize your deductions.
You are paid $2,000 a month by your employer. On days that you travel away from home on business, your employer designates $50 a day of your salary as paid to reimburse your travel expenses. Because your employer would pay your monthly salary whether or not you were traveling away from home, the arrangement is a nonaccountable plan. No part of the $50 a day designated by your employer is treated as paid under an accountable plan.
Rules for Independent Contractors and Clients
This section provides rules for independent contractors who incur expenses on behalf of a client or customer. The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers.
You are considered an independent contractor if you are self-employed and you perform services for a customer or client.
Accounting to Your Client
If you received a reimbursement or an allowance for travel, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. If you don’t account to your client for these expenses, you must include any reimbursements or allowances in income. You must keep adequate records of these expenses whether or not you account to your client for these expenses.
If you don’t separately account for and seek reimbursement for meal and entertainment expenses in connection with providing services for a client, you are subject to the 50% limit on those expenses. See 50% Limit in chapter 2.
As a self-employed person, you adequately account by reporting your actual expenses. You should follow the recordkeeping rules in chapter 5 .
For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter.
Required Records for Clients or Customers
If you are a client or customer, you generally don’t have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. However, you must keep records if:
You reimburse the contractor for entertainment expenses incurred on your behalf, and
The contractor adequately accounts to you for these expenses.
If the contractor adequately accounts to you for non-entertainment-related meal expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Use your records as proof for a deduction on your tax return. If non-entertainment-related meal expenses are accounted for separately, you are subject to the 50% limit on meals. However, you can deduct 100% of business meals if the meals are food and beverages provided by a restaurant, and paid or incurred after 2020 and before 2023. If the contractor adequately accounts to you for reimbursed amounts, you don’t have to report the amounts on an information return.
If the contractor doesn’t adequately account to you for allowances or reimbursements of non-entertainment-related meal expenses, you don’t have to keep records of these items. You aren’t subject to the 50% limit on meals in this case. You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year.
How To Use Per Diem Rate Tables
This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year.
The Two Substantiation Methods
IRS Notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. Notice 2021-52, available at IRS.gov/irb/2021-38_IRB#NOT-2021-52 , lists the high-cost localities that are eligible for $296 (which includes $74 for meals and incidental expenses (M&IE)) per diem, effective October 1, 2021. For travel on or after October 1, 2021, all other localities within the continental United States (CONUS) are eligible for $202 (which includes $64 for M&IE) per diem under the high-low method.
Notice 2022-44, available at IRS.gov/irb/2022-41_IRB#NOT-2022-44 , lists the high-cost localities that are eligible for $297 (which includes $74 for M&IE) per diem, effective October 1, 2022. For travel on or after October 1, 2022, the per diem for all other localities increased to $204 (which includes $64 for M&IE).
A 100% deduction is allowed for certain business meals paid or incurred after 2020 and before 2023. A special rule allows this 100% deduction for the full meal portion of a per diem rate or allowance. See 50% Limit in chapter 2 and IRS.gov/Newsroom/IRS-Provides-Guidance-on-Per-Diem-Rates-and-the-Temporary-100-Percent-Deduction-for-Food-or-Beverages-From-Restaurants for additional information.
Regular federal per diem rates are published by the General Services Administration (GSA). Both tables include the separate rate for M&IE for each locality. The rates listed for FY2022 at GSA.gov/travel/plan-book/per-diem-rates are effective October 1, 2021, and those listed for FY2023 are effective October 1, 2022. The standard rate for all locations within CONUS not specifically listed for FY2022 is $155 ($96 for lodging and $59 for M&IE). For FY2023, this rate increases to $157 ($98 for lodging and $59 for M&IE).
The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally, October 1) through December 31. During this period, you may generally change to the new rates or finish out the year with the rates you had been using.
If you use the high-low substantiation method, when new rates become effective (generally, October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. However, you must continue using the high-low method for the rest of the calendar year (through December 31). If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year.
The new rates and localities for the high-low method are included each year in a notice that is generally published in mid to late September. You can find the notice in the weekly Internal Revenue Bulletin (IRB) at IRS.gov/IRB , or visit IRS.gov and enter “Special Per Diem Rates” in the search box.
New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates.
The new federal CONUS per diem rates are published each year, generally early in September. Go to GSA.gov/travel/plan-book/per-diem-rates .
Completing Form 2106
For tax years beginning after 2017, the Form 2106 will be used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.
This section briefly describes how employees complete Forms 2106. Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. The instructions for the forms have more information on completing them.
If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, column A.
If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. The information relates to the following items.
Date placed in service.
Mileage (total, business, commuting, and other personal mileage).
Percentage of business use.
Use of other vehicles.
Whether you have evidence to support the deduction.
Whether or not the evidence is written.
If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. In addition, on Part I, line 2, you can deduct parking fees and tolls that apply to the business use of the car. See Standard Mileage Rate in chapter 4 for information on using this rate.
If you claim a deduction based on actual car expenses, you must complete Form 2106, Part II, Section C. In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim.
If you are still using a car that is fully depreciated, continue to complete Section C. Since you have no depreciation deduction, enter zero on line 28. In this case, don’t complete Section D.
If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount , as described in chapter 4. If so, you can show your car expenses and any inclusion amount as follows.
Figure the inclusion amount without taking into account your business-use percentage for the tax year.
Report the inclusion amount from (1) on Form 2106, Part II, line 24b.
Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount figured in (1)).
Show your transportation expenses that didn’t involve overnight travel on Form 2106, line 2, column A. Also include on this line business expenses you have for parking fees and tolls. Don’t include expenses of operating your car or expenses of commuting between your home and work.
Show your other employee business expenses on Form 2106, lines 3 and 4, column A. Don’t include expenses for nonentertainment meals on those lines. Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications.
Show the full amount of your expenses for nonentertainment business-related meals on Form 2106, line 5, column B. Include meals while away from your tax home overnight and other business meals. See the Meals Deduction From Restaurants Worksheet in the 2022 Instructions for Form 2106 for reporting information.
If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to hours of service limits in chapter 2), use 80% instead of 50% for meals while away from your tax home.
Enter on Form 2106, line 7, the amounts your employer (or third party) reimbursed you that weren’t reported to you in box 1 of your Form W-2. This includes any amount reported under code L in box 12 of Form W-2.
If you were reimbursed under an accountable plan and want to deduct excess expenses that weren’t reimbursed, you may have to allocate your reimbursement. This is necessary when your employer pays your reimbursement in the following manner.
Pays you a single amount that covers non-entertainment-related meals and/or entertainment, as well as other business expenses.
Doesn’t clearly identify how much is for deductible non-entertainment-related meals.
Your employer paid you an expense allowance of $12,000 this year under an accountable plan. The $12,000 payment consisted of $5,000 for airfare and $7,000 for non-entertainment-related meals, and car expenses. Your employer didn’t clearly show how much of the $7,000 was for the cost of deductible non-entertainment-related meals. You actually spent $14,000 during the year ($5,500 for airfare, $4,500 for non-entertainment-related meals, and $4,000 for car expenses).
Since the airfare allowance was clearly identified, you know that $5,000 of the payment goes in column A, line 7, of Form 2106. To allocate the remaining $7,000, you use the worksheet from the Instructions for Form 2106. Your completed worksheet follows.
Reimbursement Allocation Worksheet (Keep for your records.)
If you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later.
Your employee business expenses may be subject to either of the limits described next. They are figured in the following order on the specified form.
Certain non-entertainment-related meal expenses are subject to a 50% limit. However, you can deduct 100% of business meals if the meals are food and beverages provided by a restaurant and paid or incurred after 2020 and before 2023. Generally, entertainment expenses are nondeductible if paid or incurred after December 2017. If you are an employee, you figure this limit on line 9 of Form 2106. See the Meals Deduction From Restaurants Worksheet in the 2022 Instructions for Form 2106 for reporting information. (See 50% Limit in chapter 2.)
Limitations on itemized deductions are suspended for tax years beginning after 2017 and before tax year January 2026, per section 68(g).
This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. For tax years beginning after 2017, they are the only taxpayers who can use Form 2106.
Armed Forces Reservists Traveling More Than 100 Miles From Home
If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging and M&IE) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. See Per Diem and Car Allowances , earlier, for more information.
You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service.
If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106. Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.
You can’t deduct expenses of travel that doesn’t take you more than 100 miles from home as an adjustment to gross income.
Certain fee-basis officials can claim their employee business expenses on Form 2106.
Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction.
If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.
Expenses of Certain Performing Artists
If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income. To qualify, you must meet all of the following requirements.
During the tax year, you perform services in the performing arts as an employee for at least two employers.
You receive at least $200 each from any two of these employers.
Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.
Your adjusted gross income isn’t more than $16,000 before deducting these business expenses.
If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. However, requirement (4) applies to your and your spouse's combined adjusted gross income.
If you meet all of the above requirements, you should first complete Form 2106. Then you include your performing-arts-related expenses from Form 2106, line 10, in the total on Schedule 1 (Form 1040), line 12.
If you don’t meet all of the above requirements, you don’t qualify to deduct your expenses as an adjustment to gross income.
If you are an employee with a physical or mental disability, your impairment-related work expenses aren’t subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. After you complete Form 2106, enter your impairment-related work expenses from Form 2106, line 10, on Schedule A (Form 1040), line 16, and identify the type and amount of this expense on the line next to line 16.
Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work.
You are disabled if you have:
A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed; or
A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.
You can deduct impairment-related expenses as business expenses if they are:
Necessary for you to do your work satisfactorily;
For goods and services not required or used, other than incidentally, in your personal activities; and
Not specifically covered under other income tax laws.
You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your expenses for the reader as business expenses.
You are deaf. You must use a sign language interpreter during meetings while you are at work. The interpreter's services are used only for your work. You can deduct your expenses for the interpreter as business expenses.
How To Get Tax Help
If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.
After receiving all your wage and earnings statements (Form W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.
Go to IRS.gov to see your options for preparing and filing your return online or in your local community, if you qualify, which include the following.
Free File. This program lets you prepare and file your federal individual income tax return for free using brand-name tax-preparation-and-filing software or Free File fillable forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.
VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/VITA , download the free IRS2Go app, or call 800-906-9887 for information on free tax return preparation.
TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE , download the free IRS2Go app, or call 888-227-7669 for information on free tax return preparation.
MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource.
For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax ).
Also, the IRS offers Free Fillable Forms, which can be completed online and then filed electronically regardless of income.
Go to IRS.gov/Tools for the following.
The Earned Income Tax Credit Assistant ( IRS.gov/EITCAssistant ) determines if you’re eligible for the earned income credit (EIC).
The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.
The Tax Withholding Estimator ( IRS.gov/W4app ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.
The First Time Homebuyer Credit Account Look-up ( IRS.gov/HomeBuyer ) tool provides information on your repayments and account balance.
The Sales Tax Deduction Calculator ( IRS.gov/SalesTax ) figures the amount you can claim if you itemize deductions on Schedule A (Form 1040).
Go to IRS.gov/Help : A variety of tools to help you get answers to some of the most common tax questions.
Go to IRS.gov/ITA : The Interactive Tax Assistant, a tool that will ask you questions and, based on your input, provide answers on a number of tax law topics.
Go to IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax changes and interactive links to help you find answers to your questions.
You may also be able to access tax law information in your electronic filing software.
There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:
Primarily responsible for the overall substantive accuracy of your return,
Required to sign the return, and
Required to include their preparer tax identification number (PTIN).
Although the tax preparer always signs the return, you're ultimately responsible for providing all the information required for the preparer to accurately prepare your return. Anyone paid to prepare tax returns for others should have a thorough understanding of tax matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.
Go to IRS.gov/Coronavirus for links to information on the impact of the coronavirus, as well as tax relief available for individuals and families, small and large businesses, and tax-exempt organizations.
The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement, and Form W-2c, Corrected Wage and Tax Statement.
Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.
The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, Spanish, and ASL.
The IRS Video portal ( IRSVideos.gov ) contains video and audio presentations for individuals, small businesses, and tax professionals.
You can find information on IRS.gov/MyLanguage if English isn’t your native language.
The IRS is committed to serving our multilingual customers by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), other IRS offices, and every VITA/TCE return site. OPI Service is accessible in more than 350 languages.
Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/LetUsHelp
Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats.
Plain Text File (TXT).
Braille Ready File (BRF).
Go to Disaster Assistance and Emergency Relief for Individuals and Businesses to review the available disaster tax relief.
Go to IRS.gov/Forms to view, download, or print all of the forms, instructions, and publications you may need. Or, you can go to IRS.gov/OrderForms to place an order.
You can also download and view popular tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .
Note. IRS eBooks have been tested using Apple's iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.
Go to IRS.gov/Account to securely access information about your federal tax account.
View the amount you owe and a breakdown by tax year.
See payment plan details or apply for a new payment plan.
Make a payment or view 5 years of payment history and any pending or scheduled payments.
Access your tax records, including key data from your most recent tax return, and transcripts.
View digital copies of select notices from the IRS.
Approve or reject authorization requests from tax professionals.
View your address on file or manage your communication preferences.
This tool lets your tax professional submit an authorization request to access your individual taxpayer IRS online account . For more information, go to IRS.gov/TaxProAccount .
The fastest way to receive a tax refund is to file electronically and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refunds. If you don’t have a bank account, go to IRS.gov/DirectDeposit for more information on where to find a bank or credit union that can open an account online.
The quickest way to get a copy of your tax transcript is to go to IRS.gov/Transcripts . Click on either "Get Transcript Online" or "Get Transcript by Mail" to order a free copy of your transcript. If you prefer, you can order your transcript by calling 800-908-9946.
Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.
The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.
Go to IRS.gov/IdentityTheft , the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.
Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .
Go to IRS.gov/Refunds .
Download the official IRS2Go app to your mobile device to check your refund status.
Call the automated refund hotline at 800-829-1954.
Note. The IRS can’t issue refunds before mid-February for returns that claimed the EIC or the additional child tax credit (ACTC). This applies to the entire refund, not just the portion associated with these credits.
Go to IRS.gov/Payments for information on how to make a payment using any of the following options.
IRS Direct Pay : Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.
Debit or Credit Card : Choose an approved payment processor to pay online or by phone.
Electronic Funds Withdrawal : Schedule a payment when filing your federal taxes using tax return preparation software or through a tax professional.
Electronic Federal Tax Payment System : Best option for businesses. Enrollment is required.
Check or Money Order : Mail your payment to the address listed on the notice or instructions.
Cash : You may be able to pay your taxes with cash at a participating retail store.
Same-Day Wire : You may be able to do same-day wire from your financial institution. Contact your financial institution for availability, cost, and cut-off times.
Note. The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick, easy, and faster than mailing in a check or money order.
Go to IRS.gov/Payments for more information about your options.
Apply for an online payment agreement ( IRS.gov/OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.
Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .
Go to IRS.gov/Form1040X for information and updates.
Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.
Note. It can take up to 3 weeks from the date you filed your amended return for it to show up in our system, and processing it can take up to 16 weeks.
Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.
You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that is scheduled to begin providing translations in 2023. You will continue to receive communications, including notices and letters in English until they are translated to your preferred language.
Keep in mind, many questions can be answered on IRS.gov without visiting an IRS Taxpayer Assistance Center (TAC). Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”
The Taxpayer Advocate Service (TAS) Is Here To Help You
TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights .
The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your family, or your business;
You face (or your business is facing) an immediate threat of adverse action; or
You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
TAS has offices in every state, the District of Columbia, and Puerto Rico . Your local advocate’s number is in your local directory and at TaxpayerAdvocate.IRS.gov/Contact-Us . You can also call them at 877-777-4778.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, report it to them at IRS.gov/SAMS .
TAS can provide a variety of information for tax professionals, including tax law updates and guidance, TAS programs, and ways to let TAS know about systemic problems you’ve seen in your practice.
LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee for eligible taxpayers. To find an LITC near you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List .
Publication 463 - Additional Material
Appendices A-1 through A-5 show the lease inclusion amounts that you may need to report if you first leased a passenger automobile (including a truck and van) in 2018 through 2022 for 30 days or more.
If any of these apply to you, use the appendix for the year you first leased the car. (See Leasing a Car in chapter 4.)
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What Are Transportation Expenses?
- How They Work
- Supply Chain
Transportation Expenses: Definition, How They Work, and Taxation
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
The term transportation expense refers to specific costs incurred by an employee or self-employed taxpayer who travels for business purposes. Transportation expenses are a subset of travel expenses, which include all of the costs associated with business travel such as taxi fare, fuel, parking fees, lodging, meals, tips, cleaning, shipping, and telephone charges that employees may incur and claim for reimbursement from their employers. Some transportation expenses may be eligible for a tax deduction on an employee's tax return .
- Transportation expenses are a subset of travel expenses that refer specifically to the cost of business transportation by car, plane, train, etc.
- Expenses such as fuel, parking fees, lodging, meals, and telephone charges incurred by employees can be claimed as transportation expenses.
- These expenses may be deducted for tax purposes subject to the appropriate restrictions and guidelines.
How Transportation Expenses Work
Transportation expenses are any costs related to business travel by company employees. An employee who travels for a business trip is generally able to claim the cost of travel, hotel, food, and any other related expense as a transportation expense. These costs may also include those associated with traveling to a temporary workplace from home under some circumstances. For instance, an employee whose travel area is not limited to their tax home can generally claim that travel as a transportation expense.
These expenses, though, are narrower in scope. They only refer to the use of or cost of maintaining a car used for business or transport by rail, air, bus, taxi, or any other means of conveyance for business purposes. These expenses may also refer to deductions for businesses and self-employed individuals when filing tax returns . Commuting to and from the office, however, does not count as a transportation expense.
The cost of commuting is not considered a deductible transportation expense.
Transportation expenses may only qualify for tax deductions if they are directly related to the primary business for which an individual works. For example, if a traveler works in the same business or trade at one or more regular work locations that are away from home such as a construction worker, it is considered a transportation expense.
Similarly, if a traveler has no set workplace but mostly works in the same metropolitan area they live in, they may claim a travel expense if they travel to a worksite outside of their metro area. On the other hand, claiming transportation costs when you have not actually done any traveling for the business is not allowed and can be viewed as a form of tax fraud .
Taxpayers must keep good records in order to claim travel expenses. Receipts and other evidence must be submitted when claiming travel-related reimbursable or tax-deductible expenses.
According to the Internal Revenue Service (IRS) travel or transportation expenses are defined as being: "...the ordinary and necessary expenses of traveling away from home for your business, profession, or job." And it further defines "traveling away from home" as duties that "...require you to be away from the general area of your tax home substantially longer than an ordinary day's work, and you need to sleep or rest to meet the demands of your work while away from home."
The IRS provides guidelines for transportation expenses, deductibility, depreciation, conditions, exceptions , reimbursement rates, and more in Publication 463 . The publication sets the per-mile reimbursement rate for operating your personal car for business. Travelers who use their vehicles for work can claim 58.5 cents per mile for the 2022 tax year , increasing to 62.5 cents for the remaining six months. That's up from 56 cents eligible for 2021. The IRS' determined rate treated as depreciation for the business standard mileage is 26 cents as of Jan. 1, 2021.
Internal Revenue Service. " Topic No. 511 Business Travel Expenses ."
Internal Revenue Service. " 2022 Standard Mileage Rates ," Pages 3-4.
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Rail travel is cleaner than driving or flying, but will Americans buy in?
Executive Director of the Center for Railway Research and Education, Michigan State University
Andreas Hoffrichter is employed by Michigan State University in the Center for Railway Research and Education and is researching low and zero-emission railway motive power technologies. The Center receives grants from state governments to investigate alternative motive power technologies.
Michigan State University provides funding as a founding partner of The Conversation US.
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Transportation represents a large portion – about 29 percent – of U.S. emissions, and the share has been rising in recent years . Rail proponents often argue that investment in trains and public transportation is a key part of making transportation cleaner , and indeed, the Green New Deal calls for greatly expanding high-speed rail .
I’m a scholar of rail , and it’s clear to me that the quickest way to decrease greenhouse gases from transportation is to travel by train and move goods by rail instead of on the road or by air.
To explain why, it’s worth comparing rail to other modes of transportation on energy consumption and emissions, and to look at some of the developments that can make rail more widely used in the U.S. and less reliant on fossil fuels.
Energy and emissions profiles
Transportation by rail is a major part of the transportation system in most countries, including in the U.S., which has the longest freight railway system in the world with approximately 140,000 miles. Rail passenger services are essential in many areas, primarily in population centers such as New York and Chicago, and intercity rail has a significant market share in some corridors, such as the Northeast. Rail also offers long-distance routes connecting many smaller communities with each other and the large metropolitan areas in the country.
Data show that rail has a significantly lower energy footprint than trucks and passenger cars. Rail transport, with hard steel wheels on steel rail, has lower resistance to motion than road transportation. And the convoy formation of individual rail cars into trains also adds to its better energy and environmental performance.
A common measure for transportation capacity is ton-miles for freight and passenger-miles for passengers to indicate that a ton of freight is moved for one mile and for passenger systems that a passenger is moved for one mile.
Freight rail accounts for about one-third of the ton-miles and consumes only about 2 percent of the transportation energy in the U.S. The higher efficiency can be illustrated this way: On average, freight railroads move a ton of cargo for around 479 miles on a gallon of fuel , which is about 11 times more energy-efficient than trucks on a ton-mile basis.
Passenger rail is around three times more efficient than a car on a passenger-mile basis at current occupancy levels. The lower energy consumption leads to lower greenhouse emissions .
How US and European rail differ
Often there is the perception that the U.S. lags behind other countries when it comes to rail, but in many cases that is not true. The country has, arguably, the best freight rail system in the world, which is owned, operated and financed by private companies. Passenger service in specific corridors is comparable with the European counterparts: for example, in the Northeast. On long-distance routes and in less densely populated areas, however, there are often empty seats on Amtrak trains.
The primary difference between Europe and North America could be summarized like this: In America there is a freight rail system with some passenger, while in Europe there is a passenger rail system with some freight – the emphasis is different.
A further difference is that the rail network is private in the U.S. and operated to yield a profit, while in most other countries the rail infrastructure is owned by the government (similar to the freeway system in the U.S.) and heavily subsidized.
To compete with air for passenger transportation
Running passenger and freight trains on the same lines is possible but poses many challenges, as the characteristics of the two train types are very different; freight trains tend to be long, heavy and comparatively slow, while passenger trains are short, fast and comparatively light. If there are not too many trains on a line, this mixed traffic can be managed, but if there are a lot of trains, then separate infrastructure is the way forward.
When journey times are less than four hours , people usually prefer to travel by train instead of alternative options, such as air or road. For many corridors in the U.S. it would be necessary to upgrade existing lines or to build new infrastructure to achieve competitive journey times.
For the high-speed rail projects in California , which the state recently decided to scale back , and Texas , where trains would be able to travel at speeds of 200 miles per hour or more, those states are building new infrastructure. Higher-speed options often allow existing rail tracks to be upgraded to accommodate speeds of around 110 miles per hour to around 125 miles per hour, and such projects are being implemented in Florida and the Midwest .
Routes to better environmental performance
The majority of trains in the U.S. are diesel-electric, where a diesel engine runs a generator , supplying electric traction motors that turn the wheels. However, electricity can also be supplied by the grid to trains via wayside infrastructure, and this option accounts for about 4.5 percent of rail energy, more than for any other mode, with the majority being used in transit and commuter operation, and some intercity rail . Therefore, when the electricity generation mix becomes less greenhouse gas-intensive, those rail systems automatically follow.
For the lines where wayside electrification is not economically feasible – imagine routes that are long, such as Chicago to Los Angeles – or where traffic is relatively low, rail will continue to rely on on-board electric power generation.
Rail is developing options to reduce emissions for lines without wayside electrification too, with advanced diesel engine technologies , and exploration of less polluting energy options, including natural gas. Florida East Coast Railway has converted the majority of their locomotives to liquefied natural gas .
Having batteries to supply power to trains can significantly reduce or fully avoid conventional wayside electrification, decreasing cost and visual impact as no overhead wires are necessary on the right-of-way. These are suitable for relatively short distances and where power demand is low, such as light rail and streetcars. Detroit’s QLine , for example, operates 60 percent on battery power, or “off-wire.”
Hydrogen fuel cell applications to rail, often referred to as hydrail, enable long range with a lower environmental footprint than diesel, and such trains for regional passenger service are already in operation in Germany . In the U.S., the technology is being investigated by some passenger and transit railways, including in North Carolina , and its use for freight rail is being explored as well.
Even without these advances, rail is already more environmentally friendly than road or air. Dramatically expanding rail use, particularly passenger service, will require government investment in more frequent service on existing lines, starting service to areas that don’t have access to rail currently, reducing journey times and building out a larger passenger rail network.
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Transportation Vs Transit: What’s The Difference?
It can be confusing trying to figure out which transportation mode to choose, especially if you’re not familiar with all the options. In this article, we’ll break down the differences between transportation vs transit, and help you decide which is right for you.
What is Transportation?
Transportation is the movement of people, goods, and information from one place to another. It includes both surface transportation like cars and buses, and transportation infrastructures like roads, bridges, and airports. Transit is a type of transportation that uses public transit systems to move people within a city or metropolitan area. Transit systems vary in how often they run, the number of stops they make, and the types of services they offer.
What is the difference between Transportation and Transit?
The main difference between transportation and transit is that transit focuses on moving people within a city or metropolitan area while transportation moves people between different places. For example, car transportation moves people from their homes to their workplaces while transit moves people within a city or metropolitan area.
What is Transit?
If you’re looking for an answer to the age-old question, “what is transit?”, you’ve come to the right place. Transit is a mode of transportation that relies on public transportation systems and services to get people where they need to go. In contrast, transportation refers to everything else in life – from cars and trucks to bikes and buses. Here’s a breakdown of the key differences between these two modes of travel:
Transportation vs Transit: What’s The Difference?
1. Transportations involve using cars and trucks while transit relies on public transportation.
2. Cars and trucks can only transport people one at a time, while transit systems can transport many passengers at once.
3. Car trips tend to be longer than transit trips, which can be problematic for families with small children or elderly relatives who may not be able to walk long distances.
4. Transportation is often expensive, while transit can be relatively affordable depending on the type of system used.
5. Transportation often leaves people feeling stressed out and exhausted, while transit can be a more pleasant experience overall.
Why Use Transportation Over Transit?
When it comes to getting around town, there are two main types of transportation: transportation and transit. While they share some similarities, each has its own advantages and disadvantages that should be taken into account before making a decision.
Let’s take a look at why using transportation over transit can be a better option for certain situations. First, transportation is more reliable than transit. This means that you’re likely to get where you’re going on time, regardless of the route you take. Furthermore, roads in most cities are well-maintained and safe, which means that you won’t have to worry about getting stranded or having your car broken into.
Second, transportation usually costs less than transit. This is due to the fact that transportation options such as driving or biking are often cheaper than alternatives such as taking the bus or train. Plus, you can use transportation to get to places you might not be able to reach by transit – such as rural areas or small towns.
Finally, when using transportation, you’re able to customize your experience depending on the vehicle you’re using and the location you’re traveling to. For example, if you’re driving a car, you can choose between routes that will take
The Advantages of Using Transportation Over Transit
When it comes to transportation, there are two main options available to people: transportation and transit. While they both have their benefits and disadvantages, there is a clear difference between the two. In this blog section, we will explore the advantages of using transportation over transit.
The first advantage of using transportation is that it is more efficient. If a person uses public transportation, they may have to wait for a long time for the bus or train to arrive. This can be frustrating if you are in a hurry. On the other hand, if someone uses transportation, they can simply walk to the bus stop or train station and wait for the bus or train. This is much more efficient than using public transit.
Another advantage of using transportation is that it is more predictable. With public transit, you never know when the bus or train will arrive. This can be very frustrating if you are waiting for a bus that has been scheduled to arrive at a specific time. Transportation also tends to be more reliable than public transit. This means that you are less likely to have to wait long periods of time for your bus or train to arrive.
One last advantage of using transportation over public transit is that it
The Disadvantages of Using Transportation Over Transit
When it comes to transportation, there are pros and cons to both options. But which one is better for you?
Transportation is traditionally thought of as a way to get from one place to another quickly. However, transit can also be used as a way to get around town. For example, you can use transit to go from your home to your job, or from your job to shopping areas.
There are many different types of transportation available, but the two most common are transportation and transit. Here’s a quick comparison of the two:
Transportation: Pros -Can be used for getting around town quickly -Variety of options available, including cars, buses, trains, and planes -Can be expensive -Can be environmentally harmful due to emissions and reliance on fossil fuels Transit: Pros -Allows you to explore your surroundings -Allows you to connect with different parts of town -Is more affordable than transportation
What is the difference between transportation and transit?
Transportation is the use of any means of moving people or goods from one place to another, while transit is a specific type of transportation used mainly in urban areas.
While both transportation and transit can be used for getting around town, there are some key differences between the two. For one, transportation usually refers to methods that use fossil fuels like cars and trucks, while transit tends to rely more on public transportation. Additionally, transit services are generally more accessible for those who are not able to drive, whereas transportation services are available to everyone.
Another important difference between transportation and transit is their purpose. While both can serve as modes of transportation, transit is typically designed for shorter trips that are within the same municipality or district. Transportation, on the other hand, is designed for longer trips that may involve crossing different municipalities or districts.
What are the different types of transportation?
Transportation can be broken down into two categories: transportation and transit. Transportation refers to any mode of getting from one place to another, such as walking, biking, driving, taking the bus, train, or airplane. Transit refers to any form of public transportation that allows passengers to move between points within a city or municipality.
There are many different types of transportation, and each has its own advantages and disadvantages. Let’s take a look at the main types of transportation and their advantages and disadvantages:
Driving is the most common type of transportation, and it has many advantages. Driving is fast, efficient, and convenient. You can go where you want without worrying about traffic congestion or parking issues. Driving also has some disadvantages: it is dangerous if you’re not careful, it is expensive to own a car, and it is environmentally harmful.
Biking is another popular mode of transportation. It has several advantages over driving: it is exercise-friendly, it is cheaper than driving, it is faster than driving in some cases, and it is less dangerous than driving. Bike lanes can make biking even more convenient and safe. Bike riding also has some disadvantages: biking can be uncomfortable if the weather is hot
What are the different types of transit?
Transportation refers to all the means of getting from one place to another. The most common forms of transportation are cars, buses, trains, and planes. Transit refers to the use of these forms of transportation for moving people between specific points. There are three main types of transit: transportation, transit, and transport.
Why is transit important?
Transportation is important because it allows people to get around without having to use their own vehicle. Transportation includes walking, biking, taking the bus or train, and driving. Transit is important because it allows people to get around without having to use their own vehicle. Transit includes riding on buses or trains, as well as taking the boat or bike ferry.
One of the main reasons that transit is important is that it helps reduce greenhouse gas emissions. According to the EPA, transportation accounts for about one-fifth of all US greenhouse gas emissions. By comparison, the transportation sector’s share of US GDP was about 17% in 2012. Reducing our reliance on transportation means reducing our impact on climate change.
Another reason that transit is important is that it can be more affordable than using a car. For example, a monthly pass for the subway in New York City costs $116 compared to $375 for a car rental in the city. Additionally, transit can be more environmentally friendly than driving a car. For example, riding a bike instead of driving uses less energy and creates less pollution than driving a car.
How can I use transit to save money?
There is a lot of confusion about the difference between transportation and transit. In this article, we will try to clear up some of the common confusion and help you figure out which option is best for your needs.
Transportation includes all modes of getting around, such as cars, buses, trains, planes, and bicycles. Transit includes only public transportation services. You can use transit to commute to work or school, or to travel within a city.
The main difference between transportation and transit is that with transportation, you’re using one mode of transport to get from one place to another. With transit, you’re using multiple modes of transport to get around town. For example, if you’re using transit to commute to work, you may also use it to go shopping and visit friends on the way. Transit can be more cost-effective than transportation in some cases because it uses less gas and oil.
To make the most efficient use of your money when choosing transit over transportation, keep these tips in mind:
1) Know what you need before you start shopping for options. Do you need short trips within a city or are long trips necessary? If short trips are necessary, you may be better off using transit than transportation.
2) Consider how much you’re willing to pay per trip. Do you want a monthly pass or do you want to buy single tickets?
3) Use online resources to compare prices and services. Many transit agencies offer online tools that allow you to compare fares and schedules between different transit systems.
4) Use transit if it’s an option that works best for your schedule and lifestyle. If you can’t get out of bed on time or you have a lot of errands to run, using transportation may be the best option for you. If you can make use of transit, it can be a cheaper and more environmentally friendly way to get around town.
When it comes to transportation, most of us tend to think in terms of cars and roads. But what about other forms of transportation? Do they offer any advantages over cars when it comes to getting around town? In this article, we will take a look at the different types of transportation available and see which one might be best suited for you. Hopefully, after reading this article, you will have a better idea of what kind of transportation is right for you.
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Difference Between Traffic and Transportation
Table of contents, key differences.
Primary focus, nature of description, expansion of meaning, compare with definitions, transportation, common curiosities, can traffic refer to online activities, what does traffic commonly refer to, does traffic always indicate congestion, is air traffic the same as air transportation, can traffic refer to trade, can traffic be controlled, how does transportation differ from traffic, do both traffic and transportation concerns lead to urban planning decisions, what are common forms of transportation, can transportation be international, is public transportation the same as public traffic, how is web traffic measured, what's a common challenge in transportation, can traffic influence transportation policies, are logistics and transportation the same, share your discovery.
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Russian Words: Travel and Transportation
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Russians love to travel and discover new places. As Russia is the largest country in the world, long distances don't scare Russian adventurers. Use the vocabulary lists below to learn the essential Russian words and phrases related to travel and transportation.
Modes of Transportation
Russian cities usually have good transport systems. Rail and coach travel is popular and convenient, and many Russians like to travel by car, too.
At the Airport
Larger cities in Russia have their own airports. There are many airlines in Russia, with Aeroflot being the biggest and one of the oldest airlines.
When traveling to Russia, keep in mind that hotels require a passport at the time of check-in.
Many Russians travel abroad for their vacation. The Black Sea coast is also popular with Russian holidaymakers.
- Russian Words: Around the House
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Public transport is pretty cheap in Moscow, and you can get around by metro (subway), bus, tram, taxi...The most popular and convenient method of travel is the metro. Tickets are very cheap and are purchased at the metro stations, at the window labeled with the word "KACCA". You can buy tickets for various numbers of journeys - from 1 to 60 journeys. Once you have purchased your ticket you go through the turnstiles (press your card up against the small circle - it will also show the number of rides left) and then down to the platform. Or you can now buy a stored value plastic card called "Troika" at metro station. There will be a discount of the fare when you use the card. This "unified" card can be used in any form of public transportation - Metro or surface, and if used for both in one trip - that is a transfer from one form to another - within 15 minutes or so, offer a significant, further discount. You can either top up the card at the metro counter or, much more preferable to avoid lines, using the machines at the station which accept both coins and notes. Be reminded that Since any remaining value stored in the card may not be refunded. you may want to calculate the amount you would use around the end of journey. The metro trains arrive around every 2 minutes during peak times and the time gap between trains extends to about 5 minutes later at night. While being a convenient method of travel, the metro does get very crowded, especially at rush hour, and you'll often find yourself packed in like sardines! That said, the metro is very efficient and many of the stations are works of art in themselves. Some of the best known ones include Komsomolskaya - with its chandeliers, Kievskaya , with its beautiful artwork, and Mayakovskaya , with its marble decor and mosaics on the ceiling. For more information, see the following TripAdvisor Inside Pages How to Use the Metro ; Moscow Metro: Underground Palace .
One other note: beware the (wildly) swinging glass doors...both entering an exiting, these things can swing back pretty far and hard, so make sure you are ready to "catch" the door if someone has gone through right before you!
Other methods of transport include trams and buses. While you can normally buy tickets for these in advance, at metro stations where as above you can use the same, unified "Troika" store value card, and kiosks adjacent to (some by an ever decreasing number of) bus stops and ask for 'avtoboos beelyet' and they can be bought from the driver for a couple of roubles more. There is a powerful tool to plan your route via public transport. It situates at yandex.maps The interface is in Russian only but it's very simple.
Another option is to get a taxi. There are taxi firms in Moscow which you may wish to use when going a longer distance (e.g from the city centre to the airport), or, for much cheaper fares, there are taxi apps including Uber, YandexTaxi, and Gett. Note that is no longer legal for private ("gypsy") taxis to give you a quick ride as had been the case for decades. But, given the much lower ruble, and use of apps, fares in Moscow are extremely reasonable compared to other major world cities. Also, keep in mind rush hours - taxis may seem convenient at times, but during rush hour can turn a trio you could make via Metro and on foot from 15 minutes into an hour!
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The economic consequences of the Israel-Hamas war
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What did Hamas hope to achieve by its attack on Israel of October 7? The answer was surely to set the region aflame. More narrowly, it was to provoke the response we see, with inevitable consequences for Israel’s global reputation and the prospects for peace in the region. The strategy, in other words, is to make martyrs of the people of Gaza in a greater cause. Alas, it is working.
The way this unfolds will have implications for human lives, the regional balance of power and perhaps even global peace. But it also has implications for the global economy, which has been battered by a series of shocks over the past four years: Covid-19, the post-Covid inflation, the Russia-Ukraine war and now this. How big a shock then will this latest horror prove to be?
This is more than a matter of dollars and cents. According to a “special focus” chapter of the World Bank’s most recent Commodity Markets Outlook , on the “Potential Near-Term Implications of the Conflict in the Middle East”, the number of people suffering from severe food insecurity jumped by more than 200mn between 2019 and 2021. The Russia-Ukraine war must have made this considerably worse, though the facts are not yet available. This is partly because of its direct effect on food prices and partly because of higher energy prices. Another big jump in energy prices would make this worse.
So, how big might the implications be? This depends on the answer to two further questions. How severely and how far might the war and its political ramifications spread? In addition, what might be the consequences for the global economy, largely (but not exclusively) via energy markets?
Fortunately, Gideon Rachman has recently addressed the first question. He reminds us that the first world war began as a conflict between Austria and Serbia, both allies of greater powers. In this case, Israel might be viewed as a proxy for the US and Hamas and Hizbollah as proxies for Iran (which might turn out to be a proxy for Russia or even China). A chain of disastrous events might, he notes, spread to the Gulf itself. It could even lead to conflict among superpowers. Moreover, we can add, the region’s regimes might be destabilised by popular anger over failure to help Gaza. It is worth remembering that the hugely damaging 1973 oil embargo was not a direct outcome of war, but a political response of Arab oil producers.
If the war were to spread, would it matter? Yes, definitely. The region is far and away the world’s most important energy-producer: according to the 2023 Statistical Review of World Energy , it contains 48 per cent of global proved reserves and produced 33 per cent of the world’s oil in 2022. Moreover, according to the US Energy Information Administration , a fifth of world oil supply passed through the Strait of Hormuz, at the bottom of the Gulf, in 2018. This is the chokepoint of global energy supplies.
The World Bank also notes that past energy shocks have been significantly costly. Iraq’s invasion of Kuwait in 1990 raised average oil prices three months afterwards by 105 per cent, the Arab oil embargo of 1973-74 raised them by 52 per cent and the Iranian revolution of 1978 raised them by 48 per cent.
So far, however, the effects on oil prices of the Hamas attacks on Israel and the war in Gaza have been modest. In real terms, oil prices in September were close to their mean since 1970. In all, there is little dramatic to be seen so far. In addition, adds the report, oil has become less important and oil markets less vulnerable since the 1970s: oil intensity of global output has declined by close to 60 per cent since then; sources of supply have also diversified; strategic reserves are bigger; and the creation of the International Energy Agency has improved co-ordination.
Nevertheless, oil remains a vital transportation fuel. Liquid natural gas from the Gulf is also an important part of global supplies of natural gas. Big disruptions to these supplies would have a powerful impact on energy prices, global output and the overall price level, notably in foodstuffs.
The bank envisages scenarios with small, medium and big disruptions to supplies: the first would, it assumes, reduce supply by up to 2mn barrels a day (about 2 per cent of world supply), the second would reduce it by 3-5mn barrels a day and the last would reduce it by 6-8mn barrels a day. Corresponding oil prices are estimated at $93-$102, $109-$121 and $141-157, respectively. The last would bring real prices towards their historic peaks. If the Strait were to be closed, the outcomes would be far worse. We are still in the fossil fuel era. A conflict in the world’s biggest oil-supplying region could be very damaging.
The best way to think about this is to emphasise the uncertainty. The great probability is that the conflict will be contained. If so, the economic effects will stay insignificant. But it is possible that it will spread and so become far more serious. Civil unrest might also force governments in the region to consider embargoes. Hamas might wish the region to be aflame. But that is certainly not going to be in the interests of the billions of people who want to get on with their lives as best they can. It is up to policymakers in the region and outside to avoid the sorts of mistakes that have proved devastating in the past.
Right now, the big question is what Israel is going to do. I understand the outrage Israelis feel over the brutal assault and their determination to eliminate Hamas. But is that feasible by any military means? What is their political end game? What, if any, is the strategy for reaching an accommodation with the Palestinians? Above all, how wise will it turn out to behave just as Hamas so evidently wanted?
Comment & Analysis
Military briefing: How Hamas fights
The tactics behind Israel’s ground offensive
America, Iran and the threat of a wider war in the Middle East
The Israel-Hamas conflict in maps
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