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1040 ez download 4. 1040 ez download   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. 1040 ez download Resident aliens are generally taxed in the same way as U. 1040 ez download S. 1040 ez download citizens. 1040 ez download Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. 1040 ez download S. 1040 ez download trade or business and how it is taxed. 1040 ez download Topics - This chapter discusses: Income that is effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download Income that is not effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download Interrupted period of residence. 1040 ez download Expatriation tax. 1040 ez download Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. 1040 ez download Resident Aliens Resident aliens are generally taxed in the same way as U. 1040 ez download S. 1040 ez download citizens. 1040 ez download This means that their worldwide income is subject to U. 1040 ez download S. 1040 ez download tax and must be reported on their U. 1040 ez download S. 1040 ez download tax return. 1040 ez download Income of resident aliens is subject to the graduated tax rates that apply to U. 1040 ez download S. 1040 ez download citizens. 1040 ez download Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. 1040 ez download S. 1040 ez download citizens. 1040 ez download Nonresident Aliens A nonresident alien's income that is subject to U. 1040 ez download S. 1040 ez download income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). 1040 ez download The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. 1040 ez download These are the same rates that apply to U. 1040 ez download S. 1040 ez download citizens and residents. 1040 ez download Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. 1040 ez download If you were formerly a U. 1040 ez download S. 1040 ez download citizen or resident alien, these rules may not apply. 1040 ez download See Expatriation Tax, later, in this chapter. 1040 ez download Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. 1040 ez download Whether you are engaged in a trade or business in the United States depends on the nature of your activities. 1040 ez download The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. 1040 ez download Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. 1040 ez download Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. 1040 ez download For more information, see Services Performed for Foreign Employer in chapter 3. 1040 ez download Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. 1040 ez download Students and trainees. 1040 ez download   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. 1040 ez download A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. 1040 ez download The taxable part of any scholarship or fellowship grant that is U. 1040 ez download S. 1040 ez download source income is treated as effectively connected with a trade or business in the United States. 1040 ez download Business operations. 1040 ez download   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. 1040 ez download Partnerships. 1040 ez download   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. 1040 ez download Beneficiary of an estate or trust. 1040 ez download   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. 1040 ez download Trading in stocks, securities, and commodities. 1040 ez download   If your only U. 1040 ez download S. 1040 ez download business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. 1040 ez download S. 1040 ez download resident broker or other agent, you are not engaged in a trade or business in the United States. 1040 ez download   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. 1040 ez download   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. 1040 ez download   This discussion does not apply if you have a U. 1040 ez download S. 1040 ez download office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. 1040 ez download Trading for a nonresident alien's own account. 1040 ez download   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. 1040 ez download S. 1040 ez download business activity. 1040 ez download This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. 1040 ez download   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. 1040 ez download This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. 1040 ez download Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . 1040 ez download Effectively Connected Income If you are engaged in a U. 1040 ez download S. 1040 ez download trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. 1040 ez download This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. 1040 ez download Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. 1040 ez download In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. 1040 ez download For a discussion of these rules, see Foreign Income , later. 1040 ez download Investment Income Investment income from U. 1040 ez download S. 1040 ez download sources that may or may not be treated as effectively connected with a U. 1040 ez download S. 1040 ez download trade or business generally falls into the following three categories. 1040 ez download Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. 1040 ez download ). 1040 ez download Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. 1040 ez download Timber, coal, or domestic iron ore with a retained economic interest. 1040 ez download Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. 1040 ez download Patents transferred before October 5, 1966. 1040 ez download Original issue discount obligations. 1040 ez download Capital gains (and losses). 1040 ez download Use the two tests, described next, to determine whether an item of U. 1040 ez download S. 1040 ez download source income falling in one of the three categories above and received during the tax year is effectively connected with your U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. 1040 ez download If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. 1040 ez download Asset-use test. 1040 ez download   This test usually applies to income that is not directly produced by trade or business activities. 1040 ez download Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. 1040 ez download   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. 1040 ez download Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. 1040 ez download Business-activities test. 1040 ez download   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. 1040 ez download The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. 1040 ez download Under this test, if the conduct of the U. 1040 ez download S. 1040 ez download trade or business was a material factor in producing the income, the income is considered effectively connected. 1040 ez download Personal Service Income You usually are engaged in a U. 1040 ez download S. 1040 ez download trade or business when you perform personal services in the United States. 1040 ez download Personal service income you receive in a tax year in which you are engaged in a U. 1040 ez download S. 1040 ez download trade or business is effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. 1040 ez download Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. 1040 ez download The income may be paid to you in the form of cash, services, or property. 1040 ez download If you are engaged in a U. 1040 ez download S. 1040 ez download trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. 1040 ez download However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. 1040 ez download Pensions. 1040 ez download   If you were a nonresident alien engaged in a U. 1040 ez download S. 1040 ez download trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. 1040 ez download This is true whether or not you are engaged in a U. 1040 ez download S. 1040 ez download trade or business in the year you receive the retirement pay. 1040 ez download Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. 1040 ez download You had a fixed place of business in the United States involved in earning the income. 1040 ez download At least 90% of your U. 1040 ez download S. 1040 ez download source transportation income is attributable to regularly scheduled transportation. 1040 ez download “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. 1040 ez download “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. 1040 ez download This definition applies to both scheduled and chartered air transportation. 1040 ez download If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. 1040 ez download See Transportation Tax, later, in this chapter. 1040 ez download Business Profits and Losses and Sales Transactions All profits or losses from U. 1040 ez download S. 1040 ez download sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. 1040 ez download For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. 1040 ez download A share of U. 1040 ez download S. 1040 ez download source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. 1040 ez download Real Property Gain or Loss Gains and losses from the sale or exchange of U. 1040 ez download S. 1040 ez download real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. 1040 ez download You must treat the gain or loss as effectively connected with that trade or business. 1040 ez download U. 1040 ez download S. 1040 ez download real property interest. 1040 ez download   This is any interest in real property located in the United States or the U. 1040 ez download S. 1040 ez download Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. 1040 ez download S. 1040 ez download real property holding corporation. 1040 ez download Real property includes the following. 1040 ez download Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. 1040 ez download Improvements on land, including buildings, other permanent structures, and their structural components. 1040 ez download Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. 1040 ez download U. 1040 ez download S. 1040 ez download real property holding corporation. 1040 ez download   A corporation is a U. 1040 ez download S. 1040 ez download real property holding corporation if the fair market value of the corporation's U. 1040 ez download S. 1040 ez download real property interests are at least 50% of the total fair market value of: The corporation's U. 1040 ez download S. 1040 ez download real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. 1040 ez download   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. 1040 ez download S. 1040 ez download trade or business unless you establish that the corporation is not a U. 1040 ez download S. 1040 ez download real property holding corporation. 1040 ez download   A U. 1040 ez download S. 1040 ez download real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. 1040 ez download An interest in a foreign corporation owning U. 1040 ez download S. 1040 ez download real property generally is not a U. 1040 ez download S. 1040 ez download real property interest unless the corporation chooses to be treated as a domestic corporation. 1040 ez download Qualified investment entities. 1040 ez download   Special rules apply to qualified investment entities (QIEs). 1040 ez download A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. 1040 ez download S. 1040 ez download real property holding corporation. 1040 ez download    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest is treated as a U. 1040 ez download S. 1040 ez download real property gain by the shareholder receiving the distribution. 1040 ez download A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. 1040 ez download A distribution that you do not treat as gain from the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest is included in your gross income as a regular dividend. 1040 ez download Note. 1040 ez download Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. 1040 ez download S. 1040 ez download real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. 1040 ez download Domestically controlled QIE. 1040 ez download   The sale of an interest in a domestically controlled QIE is not the sale of a U. 1040 ez download S. 1040 ez download real property interest. 1040 ez download The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. 1040 ez download The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. 1040 ez download Wash sale. 1040 ez download    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. 1040 ez download An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. 1040 ez download If this occurs, you are treated as having gain from the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. 1040 ez download This also applies to any substitute dividend payment. 1040 ez download   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. 1040 ez download Alternative minimum tax. 1040 ez download   There may be a minimum tax on your net gain from the disposition of U. 1040 ez download S. 1040 ez download real property interests. 1040 ez download Figure the amount of this tax, if any, on Form 6251. 1040 ez download Withholding of tax. 1040 ez download   If you dispose of a U. 1040 ez download S. 1040 ez download real property interest, the buyer may have to withhold tax. 1040 ez download See the discussion of Tax Withheld on Real Property Sales in chapter 8. 1040 ez download Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. 1040 ez download An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. 1040 ez download The three kinds of foreign source income are listed below. 1040 ez download Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. 1040 ez download Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. 1040 ez download Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. 1040 ez download A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. 1040 ez download Income, gain, or loss from the sale outside the United States, through the U. 1040 ez download S. 1040 ez download office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. 1040 ez download Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. 1040 ez download Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download For example, foreign source interest and dividend equivalents are treated as U. 1040 ez download S. 1040 ez download effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. 1040 ez download Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. 1040 ez download S. 1040 ez download citizens and residents. 1040 ez download Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. 1040 ez download However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. 1040 ez download Example. 1040 ez download Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. 1040 ez download S. 1040 ez download office of his overseas employer. 1040 ez download He worked in the U. 1040 ez download S. 1040 ez download office until December 25, 2012, but did not leave this country until January 11, 2013. 1040 ez download On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. 1040 ez download All of Ted's income during his stay here is U. 1040 ez download S. 1040 ez download source income. 1040 ez download During 2012, Ted was engaged in the trade or business of performing personal services in the United States. 1040 ez download Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. 1040 ez download The salary payment Ted received in January 2013 is U. 1040 ez download S. 1040 ez download source income to him in 2013. 1040 ez download It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. 1040 ez download Real property income. 1040 ez download   You may be able to choose to treat all income from real property as effectively connected. 1040 ez download See Income From Real Property , later, in this chapter. 1040 ez download The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. 1040 ez download S. 1040 ez download sources but only if the items are not effectively connected with your U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. 1040 ez download S. 1040 ez download source fixed or determinable annual or periodic gains, profits, or income. 1040 ez download Income is fixed when it is paid in amounts known ahead of time. 1040 ez download Income is determinable whenever there is a basis for figuring the amount to be paid. 1040 ez download Income can be periodic if it is paid from time to time. 1040 ez download It does not have to be paid annually or at regular intervals. 1040 ez download Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. 1040 ez download Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. 1040 ez download A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. 1040 ez download Other items of income, such as royalties, also may be subject to the 30% tax. 1040 ez download Some fixed or determinable income may be exempt from U. 1040 ez download S. 1040 ez download tax. 1040 ez download See chapter 3 if you are not sure whether the income is taxable. 1040 ez download Original issue discount (OID). 1040 ez download   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. 1040 ez download The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. 1040 ez download The 30% tax applies in the following circumstances. 1040 ez download You received a payment on a debt instrument. 1040 ez download In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. 1040 ez download But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. 1040 ez download You sold or exchanged the debt instrument. 1040 ez download The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. 1040 ez download   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. 1040 ez download S. 1040 ez download Source Income Subject to Withholding, if you bought the debt instrument at original issue. 1040 ez download However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. 1040 ez download You bought the debt instrument at a premium or paid an acquisition premium. 1040 ez download The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. 1040 ez download S. 1040 ez download Treasury securities). 1040 ez download The debt instrument is a contingent payment or inflation-indexed debt instrument. 1040 ez download For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. 1040 ez download   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. 1040 ez download See chapter 12. 1040 ez download Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. 1040 ez download S. 1040 ez download trade or business and is not exempted by treaty. 1040 ez download However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. 1040 ez download Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download Social Security Benefits A nonresident alien must include 85% of any U. 1040 ez download S. 1040 ez download social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. 1040 ez download S. 1040 ez download source fixed or determinable annual or periodic income. 1040 ez download Social security benefits include monthly retirement, survivor, and disability benefits. 1040 ez download This income is exempt under some tax treaties. 1040 ez download See Table 1 in Publication 901, U. 1040 ez download S. 1040 ez download Tax Treaties, for a list of tax treaties that exempt U. 1040 ez download S. 1040 ez download social security benefits from U. 1040 ez download S. 1040 ez download tax. 1040 ez download Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. 1040 ez download They apply even if you are engaged in a trade or business in the United States. 1040 ez download These rules do not apply to the sale or exchange of a U. 1040 ez download S. 1040 ez download real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. 1040 ez download See Real Property Gain or Loss , earlier, under Effectively Connected Income. 1040 ez download A capital asset is everything you own except: Inventory. 1040 ez download Business accounts or notes receivable. 1040 ez download Depreciable property used in a trade or business. 1040 ez download Real property used in a trade or business. 1040 ez download Supplies regularly used in a trade or business. 1040 ez download Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. 1040 ez download Certain U. 1040 ez download S. 1040 ez download government publications. 1040 ez download Certain commodities derivative financial instruments held by a commodities derivatives dealer. 1040 ez download Hedging transactions. 1040 ez download A capital gain is a gain on the sale or exchange of a capital asset. 1040 ez download A capital loss is a loss on the sale or exchange of a capital asset. 1040 ez download If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. 1040 ez download S. 1040 ez download currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. 1040 ez download You may want to read Publication 544. 1040 ez download However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. 1040 ez download Specific tax treatment that applies to U. 1040 ez download S. 1040 ez download citizens or residents generally does not apply to you. 1040 ez download The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. 1040 ez download Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. 1040 ez download Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. 1040 ez download Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. 1040 ez download Gains on the sale or exchange of original issue discount obligations. 1040 ez download Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download See Income From Real Property , later. 1040 ez download 183-day rule. 1040 ez download   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. 1040 ez download For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. 1040 ez download S. 1040 ez download sources over your capital losses from U. 1040 ez download S. 1040 ez download sources. 1040 ez download This rule applies even if any of the transactions occurred while you were not in the United States. 1040 ez download   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. 1040 ez download S. 1040 ez download trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. 1040 ez download   In arriving at your net gain, do not take the following into consideration. 1040 ez download The four types of gains listed earlier. 1040 ez download The deduction for a capital loss carryover. 1040 ez download Capital losses in excess of capital gains. 1040 ez download Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). 1040 ez download Losses from the sale or exchange of property held for personal use. 1040 ez download However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). 1040 ez download See Itemized Deductions in chapter 5. 1040 ez download   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. 1040 ez download Also, you must file your tax return on a calendar-year basis. 1040 ez download   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. 1040 ez download Reporting. 1040 ez download   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. 1040 ez download Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. 1040 ez download Attach them to Form 1040NR. 1040 ez download Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. 1040 ez download The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. 1040 ez download This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. 1040 ez download It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. 1040 ez download You can make this choice only for real property income that is not otherwise effectively connected with your U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. 1040 ez download This choice does not treat a nonresident alien, who is not otherwise engaged in a U. 1040 ez download S. 1040 ez download trade or business, as being engaged in a trade or business in the United States during the year. 1040 ez download Example. 1040 ez download You are a nonresident alien and are not engaged in a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download You own a single-family house in the United States that you rent out. 1040 ez download Your rental income for the year is $10,000. 1040 ez download This is your only U. 1040 ez download S. 1040 ez download source income. 1040 ez download As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. 1040 ez download You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. 1040 ez download You do not have to file a U. 1040 ez download S. 1040 ez download tax return (Form 1040NR) because your U. 1040 ez download S. 1040 ez download tax liability is satisfied by the withholding of tax. 1040 ez download If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. 1040 ez download (See Publication 527, Residential Rental Property, for information on rental expenses. 1040 ez download ) Any resulting net income is taxed at graduated rates. 1040 ez download If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. 1040 ez download For the first year you make the choice, also attach the statement discussed next. 1040 ez download Making the choice. 1040 ez download   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. 1040 ez download Include the following in your statement. 1040 ez download That you are making the choice. 1040 ez download Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. 1040 ez download A complete list of all your real property, or any interest in real property, located in the United States. 1040 ez download Give the legal identification of U. 1040 ez download S. 1040 ez download timber, coal, or iron ore in which you have an interest. 1040 ez download The extent of your ownership in the property. 1040 ez download The location of the property. 1040 ez download A description of any major improvements to the property. 1040 ez download The dates you owned the property. 1040 ez download Your income from the property. 1040 ez download Details of any previous choices and revocations of the real property income choice. 1040 ez download   This choice stays in effect for all later tax years unless you revoke it. 1040 ez download Revoking the choice. 1040 ez download   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. 1040 ez download S. 1040 ez download Individual Income Tax Return, for the year you made the choice and for later tax years. 1040 ez download You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. 1040 ez download If this time period has expired for the year of choice, you cannot revoke the choice for that year. 1040 ez download However, you may revoke the choice for later tax years only if you have IRS approval. 1040 ez download For information on how to get IRS approval, see Regulation section 1. 1040 ez download 871-10(d)(2). 1040 ez download Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . 1040 ez download If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. 1040 ez download Attach a statement to your return that includes the following information (if applicable). 1040 ez download Your name, taxpayer identification number, and tax year. 1040 ez download A description of the types of services performed (whether on or off board). 1040 ez download Names of vessels or registration numbers of aircraft on which you performed the services. 1040 ez download Amount of U. 1040 ez download S. 1040 ez download source transportation income derived from each type of service for each vessel or aircraft for the calendar year. 1040 ez download Total amount of U. 1040 ez download S. 1040 ez download source transportation income derived from all types of services for the calendar year. 1040 ez download This 4% tax applies to your U. 1040 ez download S. 1040 ez download source gross transportation income. 1040 ez download This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. 1040 ez download For transportation income from personal services, the transportation must be between the United States and a U. 1040 ez download S. 1040 ez download possession. 1040 ez download For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. 1040 ez download Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. 1040 ez download S. 1040 ez download residence with a period of nonresidence. 1040 ez download The special rule applies if you meet all of the following conditions. 1040 ez download You were a U. 1040 ez download S. 1040 ez download resident for a period that includes at least 3 consecutive calendar years. 1040 ez download You were a U. 1040 ez download S. 1040 ez download resident for at least 183 days in each of those years. 1040 ez download You ceased to be treated as a U. 1040 ez download S. 1040 ez download resident. 1040 ez download You then again became a U. 1040 ez download S. 1040 ez download resident before the end of the third calendar year after the end of the period described in (1) above. 1040 ez download Under this special rule, you are subject to tax on your U. 1040 ez download S. 1040 ez download source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. 1040 ez download Example. 1040 ez download John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. 1040 ez download On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. 1040 ez download During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). 1040 ez download He returned to the United States on October 5, 2013, as a lawful permanent resident. 1040 ez download He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). 1040 ez download Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. 1040 ez download Reporting requirements. 1040 ez download   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. 1040 ez download The return is due by the due date (including extensions) for filing your U. 1040 ez download S. 1040 ez download income tax return for the year that you again become a U. 1040 ez download S. 1040 ez download resident. 1040 ez download If you already filed returns for that period, you must file amended returns. 1040 ez download You must attach a statement to your return that identifies the source of all of your U. 1040 ez download S. 1040 ez download and foreign gross income and the items of income subject to this special rule. 1040 ez download Expatriation Tax The expatriation tax provisions apply to U. 1040 ez download S. 1040 ez download citizens who have renounced their citizenship and long-term residents who have ended their residency. 1040 ez download The rules that apply are based on the dates of expatriation, which are described in the following sections. 1040 ez download Expatriation Before June 4, 2004. 1040 ez download Expatriation After June 3, 2004, and Before June 17, 2008. 1040 ez download Expatriation After June 16, 2008. 1040 ez download Long-term resident defined. 1040 ez download   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. 1040 ez download In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. 1040 ez download Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. 1040 ez download S. 1040 ez download taxes. 1040 ez download Unless you received a ruling from the IRS that you did not expatriate to avoid U. 1040 ez download S. 1040 ez download taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. 1040 ez download The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). 1040 ez download Table 4-1. 1040 ez download Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . 1040 ez download . 1040 ez download . 1040 ez download   THEN the rules outlined on this page apply if . 1040 ez download . 1040 ez download . 1040 ez download     Your 5-year average annual net income tax was more than . 1040 ez download . 1040 ez download . 1040 ez download OR Your net worth equaled or exceeded . 1040 ez download . 1040 ez download . 1040 ez download 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. 1040 ez download Reporting requirements. 1040 ez download   If you lost your U. 1040 ez download S. 1040 ez download citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. 1040 ez download If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. 1040 ez download   Your U. 1040 ez download S. 1040 ez download residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. 1040 ez download Penalties. 1040 ez download   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. 1040 ez download The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. 1040 ez download The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. 1040 ez download Expatriation tax. 1040 ez download   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. 1040 ez download It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. 1040 ez download See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. 1040 ez download Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. 1040 ez download Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. 1040 ez download $127,000 if you expatriated or terminated residency in 2005. 1040 ez download $131,000 if you expatriated or terminated residency in 2006. 1040 ez download $136,000 if you expatriated or terminated residency in 2007. 1040 ez download $139,000 if you expatriated or terminated residency in 2008. 1040 ez download Your net worth is $2 million or more on the date of your expatriation or termination of residency. 1040 ez download You fail to certify on Form 8854 that you have complied with all U. 1040 ez download S. 1040 ez download federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. 1040 ez download Exception for dual-citizens and certain minors. 1040 ez download   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. 1040 ez download However, they still must provide the certification required in (3). 1040 ez download Certain dual-citizens. 1040 ez download   You may qualify for the exception described above if all of the following apply. 1040 ez download You became at birth a U. 1040 ez download S. 1040 ez download citizen and a citizen of another country and you continue to be a citizen of that other country. 1040 ez download You were never a resident alien of the United States (as defined in chapter 1). 1040 ez download You never held a U. 1040 ez download S. 1040 ez download passport. 1040 ez download You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. 1040 ez download S. 1040 ez download citizenship. 1040 ez download Certain minors. 1040 ez download   You may qualify for the exception described above if you meet all of the following requirements. 1040 ez download You became a U. 1040 ez download S. 1040 ez download citizen at birth. 1040 ez download Neither of your parents was a U. 1040 ez download S. 1040 ez download citizen at the time of your birth. 1040 ez download You expatriated before you were 18½. 1040 ez download You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. 1040 ez download Tax consequences of presence in the United States. 1040 ez download   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. 1040 ez download   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. 1040 ez download Instead, you are treated as a U. 1040 ez download S. 1040 ez download citizen or resident and taxed on your worldwide income for that tax year. 1040 ez download You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. 1040 ez download   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. 1040 ez download However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. 1040 ez download You have ties with other countries. 1040 ez download You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. 1040 ez download You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. 1040 ez download Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. 1040 ez download See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. 1040 ez download Related employer. 1040 ez download   If your employer in the United States is any of the following, then your employer is related to you. 1040 ez download You must count any days you performed services in the United States for that employer as days of presence in the United States. 1040 ez download Members of your family. 1040 ez download This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. 1040 ez download ), and lineal descendants (children, grandchildren, etc. 1040 ez download ). 1040 ez download A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. 1040 ez download A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. 1040 ez download (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. 1040 ez download ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. 1040 ez download Date of tax expatriation. 1040 ez download   For purposes of U. 1040 ez download S. 1040 ez download tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. 1040 ez download You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. 1040 ez download You file Form 8854 in accordance with the form instructions. 1040 ez download Annual return. 1040 ez download   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. 1040 ez download You must file this form even if you owe no U. 1040 ez download S. 1040 ez download tax. 1040 ez download Penalty. 1040 ez download   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. 1040 ez download You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. 1040 ez download How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. 1040 ez download S. 1040 ez download source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. 1040 ez download S. 1040 ez download trade or business. 1040 ez download For this purpose, U. 1040 ez download S. 1040 ez download source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. 1040 ez download S. 1040 ez download domestic corporation, and Debt obligations of U. 1040 ez download S. 1040 ez download persons or of the United States, a state or political subdivision thereof, or the District of Columbia. 1040 ez download U. 1040 ez download S. 1040 ez download source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. 1040 ez download The income or gain is considered U. 1040 ez download S. 1040 ez download source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. 1040 ez download Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. 1040 ez download S. 1040 ez download source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. 1040 ez download Other information. 1040 ez download   For more information on the expatriation tax provisions, including exceptions to the tax and special U. 1040 ez download S. 1040 ez download source rules, see section 877 of the Internal Revenue Code. 1040 ez download Expatriation Tax Return If you expatriated or terminated your U. 1040 ez download S. 1040 ez download residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. 1040 ez download Attach it to Form 1040NR if you are required to file that form. 1040 ez download If you are present in the United States following your expatriation and are subject to tax as a U. 1040 ez download S. 1040 ez download citizen or resident, file Form 8854 with Form 1040. 1040 ez download Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. 1040 ez download Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. 1040 ez download $145,000 if you expatriated or terminated residency in 2009 or 2010. 1040 ez download $147,000 if you expatriated or terminated residency in 2011. 1040 ez download $151,000 if you expatriated or terminated residency in 2012. 1040 ez download $155,000 if you expatriated or terminated residency in 2013. 1040 ez download Your net worth is $2 million or more on the date of your expatriation or termination of residency. 1040 ez download You fail to certify on Form 8854 that you have complied with all U. 1040 ez download S. 1040 ez download federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. 1040 ez download Exception for dual-citizens and certain minors. 1040 ez download   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. 1040 ez download However, they still must provide the certification required in (3) above. 1040 ez download Certain dual-citizens. 1040 ez download   You may qualify for the exception described above if both of the following apply. 1040 ez download You became at birth a U. 1040 ez download S. 1040 ez download citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. 1040 ez download You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. 1040 ez download For the purpose of determining U. 1040 ez download S. 1040 ez download residency, use the substantial presence test described in chapter 1. 1040 ez download Certain minors. 1040 ez download   You may qualify for the exception described earlier if you meet both of the following requirements. 1040 ez download You expatriated before you were 18½. 1040 ez download You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. 1040 ez download For the purpose of determining U. 1040 ez download S. 1040 ez download residency, use the substantial presence test described in chapter 1. 1040 ez download Expatriation date. 1040 ez download   Your expatriation date is the date you relinquish U. 1040 ez download S. 1040 ez download citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. 1040 ez download S. 1040 ez download resident). 1040 ez download Former U. 1040 ez download S. 1040 ez download citizen. 1040 ez download   You are considered to have relinquished your U. 1040 ez download S. 1040 ez download citizenship on the earliest of the following dates. 1040 ez download The date you renounced U. 1040 ez download S. 1040 ez download citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). 1040 ez download The date you furnished to the State Department a signed statement of voluntary relinquishment of U. 1040 ez download S. 1040 ez download nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). 1040 ez download The date the State Department issued a certificate of loss of nationality. 1040 ez download The date that a U. 1040 ez download S. 1040 ez download court canceled your certificate of naturalization. 1040 ez download Former long-term resident. 1040 ez download   You are considered to have terminated your long-term residency on the earliest of the following dates. 1040 ez download The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. 1040 ez download S. 1040 ez download consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. 1040 ez download The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. 1040 ez download If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. 1040 ez download See Effect of Tax Treaties in chapter 1 for more information about dual residents. 1040 ez download How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). 1040 ez download This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. 1040 ez download But see Exceptions , later. 1040 ez download Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. 1040 ez download S. 1040 ez download internal revenue laws. 1040 ez download Losses from deemed sales must be taken into account to the extent otherwise provided under U. 1040 ez download S. 1040 ez download internal revenue laws. 1040 ez download However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. 1040 ez download The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. 1040 ez download $626,000 if you expatriated or terminated residency in 2009. 1040 ez download $627,000 if you expatriated or terminated residency in 2010. 1040 ez download $636,000 if you expatriated or terminated residency in 2011. 1040 ez download $651,000 if you expatriated or terminated residency in 2012. 1040 ez download $668,000 if you expatriated or terminated residency in 2013. 1040 ez download Exceptions. 1040 ez download   The mark-to-market tax does not apply to the following. 1040 ez download Eligible deferred compensation items. 1040 ez download Ineligible deferred compensation items. 1040 ez download Interests in nongrantor trusts. 1040 ez download Specified tax deferred accounts. 1040 ez download Instead, items (1) and (3) may be subject to withholding at source. 1040 ez download In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. 1040 ez download In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. 1040 ez download See paragraphs (d), (e), and (f) of section 877A for more information. 1040 ez download Expatriation Tax Return If you expatriated or terminated your U. 1040 ez download S. 1040 ez download residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. 1040 ez download Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. 1040 ez download Deferral of payment of mark-to-market tax. 1040 ez download   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. 1040 ez download If you make this election, the following rules apply. 1040 ez download You can make the election on a property-by-property basis. 1040 ez download The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. 1040 ez download Interest is charged for the period the tax is deferred. 1040 ez download The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. 1040 ez download The due date of the return required for the year of death. 1040 ez download The time that the security provided for the property fails to be adequate. 1040 ez download See item (6) below. 1040 ez download You make the election on Form 8854. 1040 ez download You must provide adequate security (such as a bond). 1040 ez download You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. 1040 ez download   For more information about the deferral of payment, see the Instructions for Form 8854. 1040 ez download Prev  Up  Next   Home   More Online Publications
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Income from Abroad is Taxable

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement,  a Form 1099 (Information Return) or the foreign equivalents.    See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime.  The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax. 

Foreign Financial Accounts

In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts.  The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

  • You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
  • The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

More information on foreign financial account reporting requirements is in News Release FS-2007-15, Foreign Financial Accounts Reporting Requirements and Publication 4261, Do You have a Foreign Financial Account?

Consequences for Evading Taxes on Foreign Source Income

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts.  These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

Reporting Promoters of Off-Shore Tax Avoidance Schemes

The IRS encourages you to report promoters of off-shore tax avoidance schemes.  Whistleblowers who provide allegations of fraud to the IRS may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

Page Last Reviewed or Updated: 29-Nov-2013

The 1040 Ez Download

1040 ez download 2. 1040 ez download   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. 1040 ez download Providing information. 1040 ez download Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. 1040 ez download Fuel used between airfield and farm. 1040 ez download Fuel not used for farming. 1040 ez download Vehicles not considered highway vehicles. 1040 ez download Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. 1040 ez download This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. 1040 ez download Information on the refund of second tax is included. 1040 ez download This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. 1040 ez download Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. 1040 ez download Exported taxable fuel. 1040 ez download   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. 1040 ez download Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. 1040 ez download Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. 1040 ez download Gasoline and Aviation Gasoline Ultimate Purchasers. 1040 ez download   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. 1040 ez download On a farm for farming purposes (credit only). 1040 ez download Off-highway business use. 1040 ez download Export. 1040 ez download In a boat engaged in commercial fishing. 1040 ez download In certain intercity and local buses. 1040 ez download In a school bus. 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download In a highway vehicle owned by the United States that is not used on a highway. 1040 ez download Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). 1040 ez download In an aircraft or vehicle owned by an aircraft museum. 1040 ez download   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. 1040 ez download On a farm for farming purposes (credit only). 1040 ez download Export. 1040 ez download In foreign trade. 1040 ez download Certain helicopter and fixed-wing air ambulance uses. 1040 ez download In commercial aviation (other than foreign trade). 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). 1040 ez download In an aircraft owned by an aircraft museum. 1040 ez download In military aircraft. 1040 ez download Claims by persons who paid the tax to the government. 1040 ez download   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. 1040 ez download See Filing Claims, later. 1040 ez download Sales by registered ultimate vendors. 1040 ez download   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. 1040 ez download A state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040 ez download A nonprofit educational organization for its exclusive use. 1040 ez download   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. 1040 ez download A sample certificate is included as Model Certificate M in the Appendix. 1040 ez download The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. 1040 ez download   The ultimate vendor must be registered by the IRS. 1040 ez download See Registration Requirements, earlier. 1040 ez download Credit card purchases. 1040 ez download   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040 ez download   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040 ez download How to make the claim. 1040 ez download   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). 1040 ez download Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. 1040 ez download Ultimate purchasers. 1040 ez download   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. 1040 ez download On a farm for farming purposes. 1040 ez download Off-highway business use. 1040 ez download Export. 1040 ez download In a qualified local bus. 1040 ez download In a school bus. 1040 ez download Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download In a highway vehicle owned by the United States that is not used on a highway. 1040 ez download Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). 1040 ez download In a vehicle owned by an aircraft museum. 1040 ez download As a fuel in a propulsion engine of a diesel-powered train. 1040 ez download Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. 1040 ez download Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. 1040 ez download Registered ultimate vendor (state use). 1040 ez download   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040 ez download The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. 1040 ez download The ultimate vendor must be registered by the IRS. 1040 ez download See Registration Requirements, earlier. 1040 ez download Registered ultimate vendor (blocked pump). 1040 ez download   This is an ultimate vendor that sells undyed kerosene from a blocked pump. 1040 ez download   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. 1040 ez download Blocked pump. 1040 ez download   A blocked pump is a fuel pump that meets all the following requirements. 1040 ez download It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. 1040 ez download It is at a fixed location. 1040 ez download It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. 1040 ez download ” It meets either of the following conditions. 1040 ez download It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. 1040 ez download It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. 1040 ez download Registered ultimate vendor (certain intercity and local buses). 1040 ez download   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. 1040 ez download   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. 1040 ez download A sample waiver is included as Model Waiver N in the Appendix. 1040 ez download The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. 1040 ez download Credit Card Purchases. 1040 ez download   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040 ez download   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040 ez download Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. 1040 ez download The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. 1040 ez download 198 per gallon is $. 1040 ez download 197 (if exported, the claim rate is $. 1040 ez download 198). 1040 ez download The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. 1040 ez download On a farm for farming purposes. 1040 ez download Off-highway business use. 1040 ez download Export. 1040 ez download In a qualified local bus. 1040 ez download In a school bus. 1040 ez download Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download In a highway vehicle owned by the United States that is not used on a highway. 1040 ez download Exclusive use by a nonprofit educational organization. 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia. 1040 ez download In an aircraft or vehicle owned by an aircraft museum. 1040 ez download Blender claims. 1040 ez download   The claim rate for undyed diesel fuel taxed at $. 1040 ez download 244 and used to produce a diesel-water fuel emulsion is $. 1040 ez download 046 per gallon of diesel fuel so used. 1040 ez download The blender must be registered by the IRS in order to make the claim. 1040 ez download The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. 1040 ez download 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. 1040 ez download Kerosene for Use in Aviation Ultimate purchasers. 1040 ez download   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. 1040 ez download   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. 1040 ez download Generally, the ultimate purchaser is the aircraft operator. 1040 ez download   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. 1040 ez download On a farm for farming purposes. 1040 ez download Certain helicopter and fixed-wing aircraft uses. 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download Exclusive use by a nonprofit educational organization. 1040 ez download In an aircraft owned by an aircraft museum. 1040 ez download In military aircraft. 1040 ez download Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. 1040 ez download   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. 1040 ez download At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. 1040 ez download   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. 1040 ez download For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. 1040 ez download 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. 1040 ez download 025 per gallon part of the tax. 1040 ez download The ultimate vendor may make this claim. 1040 ez download The operator may make a claim for the $. 1040 ez download 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. 1040 ez download 175 tax per gallon. 1040 ez download Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. 1040 ez download   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. 1040 ez download A sample waiver is included as Model Waiver L in the Appendix. 1040 ez download The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. 1040 ez download   Noncommercial aviation means any use of an aircraft not described as commercial aviation. 1040 ez download For the definition of commercial aviation, see Commercial aviation on page 11. 1040 ez download Kerosene for use in nonexempt, noncommercial aviation. 1040 ez download   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. 1040 ez download The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. 1040 ez download A sample certificate is included as Model Certificate Q in the Appendix. 1040 ez download The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. 1040 ez download Kerosene for use in aviation by a state or local government. 1040 ez download   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). 1040 ez download The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. 1040 ez download The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. 1040 ez download A sample certificate is included as Model Certificate P in the Appendix. 1040 ez download The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. 1040 ez download Credit card purchases. 1040 ez download   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. 1040 ez download   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. 1040 ez download Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. 1040 ez download While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. 1040 ez download The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. 1040 ez download On a farm for farming purposes. 1040 ez download Off-highway business use. 1040 ez download In a boat engaged in commercial fishing. 1040 ez download In certain intercity and local buses. 1040 ez download In a school bus. 1040 ez download In a qualified local bus. 1040 ez download Exclusive use by a qualified blood collector organization. 1040 ez download Exclusive use by a nonprofit educational organization. 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia. 1040 ez download In an aircraft or vehicle owned by an aircraft museum. 1040 ez download Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. 1040 ez download See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. 1040 ez download Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. 1040 ez download This is in addition to all other taxes imposed on the sale or use of the fuel. 1040 ez download The section 4081(e) refund (discussed below) cannot be claimed. 1040 ez download If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. 1040 ez download No credit against any tax is allowed for this tax. 1040 ez download For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. 1040 ez download Conditions to allowance of refund. 1040 ez download   A claim for refund of the tax is allowed only if all the following conditions are met. 1040 ez download A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). 1040 ez download After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). 1040 ez download The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). 1040 ez download The person that paid the first tax has met the reporting requirements, discussed next. 1040 ez download Reporting requirements. 1040 ez download   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. 1040 ez download A model first taxpayer's report is shown in the Appendix as Model Certificate B. 1040 ez download The report must contain all information needed to complete the model. 1040 ez download   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. 1040 ez download Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. 1040 ez download Optional reporting. 1040 ez download   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. 1040 ez download However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. 1040 ez download Providing information. 1040 ez download   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. 1040 ez download If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. 1040 ez download   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. 1040 ez download If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. 1040 ez download A model statement of subsequent seller is shown in the Appendix as Model Certificate A. 1040 ez download The statement must contain all information necessary to complete the model. 1040 ez download   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. 1040 ez download Each buyer must be given a copy of the report. 1040 ez download Refund claim. 1040 ez download   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. 1040 ez download You must make your claim for refund on Form 8849. 1040 ez download Complete Schedule 5 (Form 8849) and attach it to your Form 8849. 1040 ez download Do not include this claim with a claim under another tax provision. 1040 ez download You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. 1040 ez download You must submit the following information with your claim. 1040 ez download A copy of the first taxpayer's report (discussed earlier). 1040 ez download A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. 1040 ez download Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. 1040 ez download If applicable, the type of use number from Table 2-1 is indicated in each heading. 1040 ez download Type of use table. 1040 ez download   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. 1040 ez download For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. 1040 ez download Table 2-1. 1040 ez download Type of Use Table No. 1040 ez download Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. 1040 ez download 1). 1040 ez download   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. 1040 ez download Farm. 1040 ez download   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. 1040 ez download It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. 1040 ez download A fish farm is an area where fish are grown or raised — not merely caught or harvested. 1040 ez download Farming purposes. 1040 ez download   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. 1040 ez download To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. 1040 ez download To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. 1040 ez download To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. 1040 ez download To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. 1040 ez download For this use to qualify, you must have produced more than half the commodity so treated during the tax year. 1040 ez download Commodity means a single raw product. 1040 ez download For example, apples and peaches are two separate commodities. 1040 ez download To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. 1040 ez download , is incidental to your farming operations. 1040 ez download Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. 1040 ez download   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. 1040 ez download However, see Custom application of fertilizer and pesticide, next. 1040 ez download   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. 1040 ez download For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. 1040 ez download Custom application of fertilizer and pesticide. 1040 ez download   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. 1040 ez download Generally, the applicator is treated as having used the fuel on a farm for farming purposes. 1040 ez download For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. 1040 ez download For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. 1040 ez download Fuel used between airfield and farm. 1040 ez download   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. 1040 ez download Fuel not used for farming. 1040 ez download   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. 1040 ez download Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. 1040 ez download For personal use, such as mowing the lawn. 1040 ez download In processing, packaging, freezing, or canning operations. 1040 ez download In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. 1040 ez download Off-highway business use (No. 1040 ez download 2). 1040 ez download   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. 1040 ez download The terms “highway vehicle,” “public highway,” and “registered” are defined below. 1040 ez download Do not consider any use in a boat as an off-highway business use. 1040 ez download   Off-highway business use includes fuels used in any of the following ways. 1040 ez download In stationary machines such as generators, compressors, power saws, and similar equipment. 1040 ez download For cleaning purposes. 1040 ez download In forklift trucks, bulldozers, and earthmovers. 1040 ez download   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. 1040 ez download Example. 1040 ez download Caroline owns a landscaping business. 1040 ez download She uses power lawn mowers and chain saws in her business. 1040 ez download The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. 1040 ez download The gasoline used in her personal lawn mower at home does not qualify. 1040 ez download Highway vehicle. 1040 ez download   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. 1040 ez download Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. 1040 ez download A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. 1040 ez download A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). 1040 ez download A special kind of cargo, goods, supplies, or materials. 1040 ez download Some off-highway task unrelated to highway transportation, except as discussed next. 1040 ez download Vehicles not considered highway vehicles. 1040 ez download   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. 1040 ez download Specially designed mobile machinery for nontransportation functions. 1040 ez download A self-propelled vehicle is not a highway vehicle if all the following apply. 1040 ez download The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. 1040 ez download The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. 1040 ez download The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. 1040 ez download The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. 1040 ez download Vehicles specially designed for off-highway transportation. 1040 ez download A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. 1040 ez download To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. 1040 ez download It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. 1040 ez download Nontransportation trailers and semitrailers. 1040 ez download A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. 1040 ez download For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. 1040 ez download Public highway. 1040 ez download   A public highway includes any road in the United States that is not a private roadway. 1040 ez download This includes federal, state, county, and city roads and streets. 1040 ez download Registered. 1040 ez download   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. 1040 ez download Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. 1040 ez download A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. 1040 ez download Dual use of propulsion motor. 1040 ez download   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. 1040 ez download It does not matter if the special equipment is mounted on the vehicle. 1040 ez download Example. 1040 ez download The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. 1040 ez download The fuel used in the motor to run the mixer is not off-highway business use. 1040 ez download Use in separate motor. 1040 ez download   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. 1040 ez download If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. 1040 ez download You may make a reasonable estimate based on your operating experience and supported by your records. 1040 ez download   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. 1040 ez download Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. 1040 ez download The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. 1040 ez download Example. 1040 ez download Hazel owns a refrigerated truck. 1040 ez download It has a separate motor for the refrigeration unit. 1040 ez download The same tank supplies both motors. 1040 ez download Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. 1040 ez download Therefore, 10% of the fuel is used in an off-highway business use. 1040 ez download Fuel lost or destroyed. 1040 ez download   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. 1040 ez download Export (No. 1040 ez download 3). 1040 ez download   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. 1040 ez download Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. 1040 ez download In a boat engaged in commercial fishing (No. 1040 ez download 4). 1040 ez download   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. 1040 ez download They include boats used in both fresh and salt water fishing. 1040 ez download They do not include boats used for both sport fishing and commercial fishing on the same trip. 1040 ez download In certain intercity and local buses (No. 1040 ez download 5). 1040 ez download   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. 1040 ez download The bus must be engaged in one of the following activities. 1040 ez download Scheduled transportation along regular routes. 1040 ez download Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. 1040 ez download Vans and similar vehicles used for van-pooling or taxi service do not qualify. 1040 ez download Available to the general public. 1040 ez download   This means you offer service to more than a limited number of persons or organizations. 1040 ez download If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. 1040 ez download A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. 1040 ez download Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. 1040 ez download In a qualified local bus (No. 1040 ez download 6). 1040 ez download   In a qualified local bus means fuel used in a bus meeting all the following requirements. 1040 ez download It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. 1040 ez download It operates along scheduled, regular routes. 1040 ez download It has a seating capacity of at least 20 adults (excluding the driver). 1040 ez download It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. 1040 ez download Intracity passenger land transportation. 1040 ez download   This is the land transportation of passengers between points located within the same metropolitan area. 1040 ez download It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. 1040 ez download Under contract. 1040 ez download   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. 1040 ez download More than a nominal subsidy. 1040 ez download   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. 1040 ez download A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. 1040 ez download In a school bus (No. 1040 ez download 7). 1040 ez download   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. 1040 ez download A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. 1040 ez download For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. 1040 ez download 8). 1040 ez download   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. 1040 ez download In foreign trade (No. 1040 ez download 9). 1040 ez download   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. 1040 ez download The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. 1040 ez download In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. 1040 ez download Certain helicopter and fixed-wing aircraft uses (No. 1040 ez download 10). 1040 ez download   Includes: Certain helicopter uses. 1040 ez download   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. 1040 ez download Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. 1040 ez download Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040 ez download Providing emergency medical transportation. 1040 ez download   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040 ez download For item (1), treat each flight segment as a separate flight. 1040 ez download Fixed-wing aircraft uses. 1040 ez download   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. 1040 ez download Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). 1040 ez download Providing emergency medical transportation. 1040 ez download The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. 1040 ez download During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. 1040 ez download Exclusive use by a qualified blood collector organization (No. 1040 ez download 11). 1040 ez download   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. 1040 ez download Qualified blood collector organization. 1040 ez download   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. 1040 ez download In a highway vehicle owned by the United States that is not used on a highway (No. 1040 ez download 12). 1040 ez download   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. 1040 ez download This use applies whether or not the vehicle is registered or required to be registered for highway use. 1040 ez download Exclusive use by a nonprofit educational organization (No. 1040 ez download 13). 1040 ez download   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. 1040 ez download It has a regular faculty and curriculum. 1040 ez download It has a regularly enrolled body of students who attend the place where the instruction normally occurs. 1040 ez download   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. 1040 ez download Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. 1040 ez download 14). 1040 ez download   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. 1040 ez download A state or local government is any state, any political subdivision thereof, or the District of Columbia. 1040 ez download An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. 1040 ez download Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. 1040 ez download In an aircraft or vehicle owned by an aircraft museum (No. 1040 ez download 15). 1040 ez download   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. 1040 ez download It is exempt from income tax as an organization described in section 501(c)(3). 1040 ez download It is operated as a museum under a state (or District of Columbia) charter. 1040 ez download It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. 1040 ez download   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). 1040 ez download In military aircraft (No. 1040 ez download 16). 1040 ez download   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. 1040 ez download In commercial aviation (other than foreign trade). 1040 ez download   See Commercial aviation, earlier, for the definition. 1040 ez download Use in a train. 1040 ez download   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. 1040 ez download This includes use in a locomotive, work train, switching engine, and track maintenance machine. 1040 ez download Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. 1040 ez download The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. 1040 ez download Biodiesel or renewable diesel mixture credit claimant. 1040 ez download   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. 1040 ez download Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). 1040 ez download   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. 1040 ez download The credit is based on the gallons of biodiesel or renewable diesel in the mixture. 1040 ez download Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. 1040 ez download Claim requirements. 1040 ez download   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. 1040 ez download Alternative fuel credit claimant. 1040 ez download   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. 1040 ez download Carbon capture requirement. 1040 ez download   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. 1040 ez download Alternative fuel credit. 1040 ez download   The registered alternative fueler is the person eligible to make the claim. 1040 ez download An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. 1040 ez download An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. 1040 ez download Alternative fuel mixture credit claimant. 1040 ez download   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. 1040 ez download The credit is based on the gallons of alternative fuel in the mixture. 1040 ez download An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). 1040 ez download Registration. 1040 ez download   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. 1040 ez download See Registration Requirements in chapter 1. 1040 ez download Credits for fuel provide incentive for United States production. 1040 ez download   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. 1040 ez download The United States includes any possession of the United States. 1040 ez download Credit for fuels derived from paper or pulp production. 1040 ez download   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. 1040 ez download How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. 1040 ez download Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. 1040 ez download See Notice 2005-4 and the Instructions for Form 720 for more information. 1040 ez download Also see Notice 2013-26 on page 984 of I. 1040 ez download R. 1040 ez download B. 1040 ez download 2013-18 at www. 1040 ez download irs. 1040 ez download gov/pub/irs-irbs/irb13-18. 1040 ez download pdf; and see chapter 2, later. 1040 ez download Coordination with income tax credit. 1040 ez download   Only one credit may be taken for any amount of biodiesel or renewable diesel. 1040 ez download If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. 1040 ez download   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. 1040 ez download Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. 1040 ez download   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. 1040 ez download   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. 1040 ez download Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. 1040 ez download This section also covers recordkeeping requirements and when to include the credit or refund in your income. 1040 ez download Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. 1040 ez download In some cases, you will have to attach additional information. 1040 ez download You need to keep records that support your claim for a credit or refund. 1040 ez download Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. 1040 ez download Ultimate purchaser. 1040 ez download   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. 1040 ez download If you are an ultimate purchaser, you must keep the following records. 1040 ez download The number of gallons purchased and used during the period covered by your claim. 1040 ez download The dates of the purchases. 1040 ez download The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. 1040 ez download The nontaxable use for which you used the fuel. 1040 ez download The number of gallons used for each nontaxable use. 1040 ez download It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. 1040 ez download If the fuel is exported, you must have proof of exportation. 1040 ez download   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. 1040 ez download Exceptions. 1040 ez download    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. 1040 ez download However, see Claims by credit card issuers, later, for an exception. 1040 ez download The ultimate purchaser may not claim a credit or refund as follows. 1040 ez download The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. 1040 ez download A new certificate is required each year or when any information in the current certificate expires. 1040 ez download The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. 1040 ez download A new waiver is required each year or when any information in the current waiver expires. 1040 ez download The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. 1040 ez download A new waiver is required each year or when any information in the current waiver expires. 1040 ez download The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. 1040 ez download A new certificate is required each year or when any information in the current certificate expires. 1040 ez download Registered ultimate vendor. 1040 ez download   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. 1040 ez download If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. 1040 ez download   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. 1040 ez download You are required to have a valid certificate or waiver in your possession in order to make the claim. 1040 ez download   In addition, you must have a registration number that has not been revoked or suspended. 1040 ez download See Form 637. 1040 ez download State use. 1040 ez download   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. 1040 ez download If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. 1040 ez download The name and taxpayer identification number of each person (government unit) that bought the fuel. 1040 ez download The number of gallons sold to each person. 1040 ez download An unexpired certificate from the buyer. 1040 ez download See Model Certificate P in the Appendix. 1040 ez download The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. 1040 ez download Nonprofit educational organization and state use. 1040 ez download   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. 1040 ez download If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. 1040 ez download The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. 1040 ez download The number of gallons sold to each person. 1040 ez download An unexpired certificate from the buyer. 1040 ez download See Model Certificate M in the Appendix. 1040 ez download  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. 1040 ez download Blocked pump. 1040 ez download   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. 1040 ez download If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. 1040 ez download The date of each sale. 1040 ez download The name and address of the buyer. 1040 ez download The number of gallons sold to that buyer. 1040 ez download Certain intercity and local bus use. 1040 ez download   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. 1040 ez download You must keep the following information. 1040 ez download The date of each sale. 1040 ez download The name and address of the buyer. 1040 ez download The number of gallons sold to the buyer. 1040 ez download A copy of the waiver signed by the buyer at the time the credit or payment is claimed. 1040 ez download See Model Waiver N in the Appendix. 1040 ez download Kerosene for use in commercial aviation or noncommercial aviation. 1040 ez download   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. 1040 ez download See Kerosene for use in aviation, earlier, for a list of nontaxable uses. 1040 ez download You must keep the following information. 1040 ez download The date of each sale. 1040 ez download The name and address of the buyer. 1040 ez download The number of gallons sold to the buyer. 1040 ez download A copy of the waiver signed by the buyer at the time the credit or payment is claimed. 1040 ez download See Model Waiver L in the Appendix. 1040 ez download Kerosene for use in nonexempt, noncommercial aviation. 1040 ez download   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. 1040 ez download You must keep the following information. 1040 ez download The date of each sale. 1040 ez download The name and address of the buyer. 1040 ez download The number of gallons sold to the buyer. 1040 ez download A copy of the certificate signed by the buyer at the time the credit or payment is claimed. 1040 ez download See Model Certificate Q in the Appendix. 1040 ez download Claims by credit card issuers. 1040 ez download   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. 1040 ez download An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). 1040 ez download   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. 1040 ez download However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. 1040 ez download   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. 1040 ez download A state is not allowed to make a claim for these fuels. 1040 ez download However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. 1040 ez download   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. 1040 ez download The total number of gallons. 1040 ez download Its registration number. 1040 ez download A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. 1040 ez download A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. 1040 ez download Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. 1040 ez download Taxpayer identification number. 1040 ez download   To file a claim, you must have a taxpayer identification number. 1040 ez download Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. 1040 ez download   If you normally file only a U. 1040 ez download S. 1040 ez download individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. 1040 ez download You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. 1040 ez download To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. 1040 ez download   If you operate a business, use your EIN. 1040 ez download If you do not have an EIN, you may apply for one online. 1040 ez download Go to the IRS website at irs. 1040 ez download gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. 1040 ez download You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. 1040 ez download Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. 1040 ez download Complete and attach to Form 8849 the appropriate Form 8849 schedules. 1040 ez download The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. 1040 ez download If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. 1040 ez download See the Instructions for Form 720. 1040 ez download Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. 1040 ez download The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. 1040 ez download The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. 1040 ez download To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. 1040 ez download Only one claim may be made for any particular amount of alternative fuel. 1040 ez download Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. 1040 ez download See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. 1040 ez download A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. 1040 ez download If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. 1040 ez download Credit only. 1040 ez download   You can claim the following taxes only as a credit on Form 4136. 1040 ez download Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. 1040 ez download Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. 1040 ez download Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. 1040 ez download Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). 1040 ez download When to file. 1040 ez download   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). 1040 ez download You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. 1040 ez download Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. 1040 ez download How to claim a credit. 1040 ez download   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. 1040 ez download Individuals. 1040 ez download   You claim the credit on the “Credits from” line of Form 1040. 1040 ez download Also check box b on that line. 1040 ez download If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. 1040 ez download Partnerships. 1040 ez download   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 1040 ez download , showing each partner's share of the number of gallons of each fuel sold or used for a non