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1040nr Filing

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1040nr Filing

1040nr filing Publication 524 - Main Content Table of Contents Are You Eligible for the Credit?Qualified Individual Income Limits Credit Figured for You Figuring the Credit YourselfStep 1. 1040nr filing Determine Initial Amount Step 2. 1040nr filing Total Certain Nontaxable Pensions and Benefits Step 3. 1040nr filing Determine Excess Adjusted Gross Income Step 4. 1040nr filing Determine the Total of Steps 2 and 3 Step 5. 1040nr filing Determine Your Credit Examples How To Get Tax Help Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. 1040nr filing You are a qualified individual. 1040nr filing Your income is not more than certain limits. 1040nr filing You can use Figure A and Table 1 as guides to see if you are eligible for the credit. 1040nr filing Use Figure A first to see if you are a qualified individual. 1040nr filing If you are, go to Table 1 to make sure your income is not too high to take the credit. 1040nr filing You can take the credit only if you file Form 1040 or Form 1040A. 1040nr filing You cannot take the credit if you file Form 1040EZ or Form 1040NR. 1040nr filing Qualified Individual You are a qualified individual for this credit if you are a U. 1040nr filing S. 1040nr filing citizen or resident alien, and either of the following applies. 1040nr filing You were age 65 or older at the end of 2013. 1040nr filing You were under age 65 at the end of 2013 and all three of the following statements are true. 1040nr filing You retired on permanent and total disability (explained later). 1040nr filing You received taxable disability income for 2013. 1040nr filing On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). 1040nr filing Age 65. 1040nr filing   You are considered to be age 65 on the day before your 65th birthday. 1040nr filing As a result, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040nr filing U. 1040nr filing S. 1040nr filing Citizen or Resident Alien You must be a U. 1040nr filing S. 1040nr filing citizen or resident alien (or be treated as a resident alien) to take the credit. 1040nr filing Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. 1040nr filing Exceptions. 1040nr filing   You may be able to take the credit if you are a nonresident alien who is married to a U. 1040nr filing S. 1040nr filing citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. 1040nr filing S. 1040nr filing resident alien. 1040nr filing If you make that choice, both you and your spouse are taxed on your worldwide incomes. 1040nr filing   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. 1040nr filing S. 1040nr filing citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. 1040nr filing S. 1040nr filing resident alien for the entire year. 1040nr filing In that case, you may be allowed to take the credit. 1040nr filing   For information on these choices, see chapter 1 of Publication 519, U. 1040nr filing S. 1040nr filing Tax Guide for Aliens. 1040nr filing Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. 1040nr filing However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. 1040nr filing Head of household. 1040nr filing   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet all the following tests. 1040nr filing You file a separate return. 1040nr filing You paid more than half the cost of keeping up your home during the tax year. 1040nr filing Your spouse did not live in your home at any time during the last 6 months of the tax year and the absence was not temporary. 1040nr filing (See Temporary absences under Head of Household in Publication 501. 1040nr filing ) Your home was the main home of your child, stepchild, or an eligible foster child for more than half the year. 1040nr filing An eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1040nr filing You can claim an exemption for that child, or you cannot claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents. 1040nr filing For more information, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 1040nr filing Figure A. 1040nr filing Are You a Qualified Individual? Please click here for the text description of the image. 1040nr filing figure a Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). 1040nr filing You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. 1040nr filing Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. 1040nr filing If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. 1040nr filing You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. 1040nr filing Permanent and total disability. 1040nr filing    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. 1040nr filing A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. 1040nr filing See Physician's statement , later. 1040nr filing Substantial gainful activity. 1040nr filing   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. 1040nr filing Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. 1040nr filing   Substantial gainful activity is not work you do to take care of yourself or your home. 1040nr filing It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. 1040nr filing However, doing this kind of work may show that you are able to engage in substantial gainful activity. 1040nr filing    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. 1040nr filing   The following examples illustrate the tests of substantial gainful activity. 1040nr filing Example 1. 1040nr filing Trisha, a sales clerk, retired on disability. 1040nr filing She is 53 years old and now works as a full-time babysitter for the minimum wage. 1040nr filing Even though Trisha is doing different work, she is able to do the duties of her new job in a full-time competitive work situation for the minimum wage. 1040nr filing She cannot take the credit because she is able to engage in substantial gainful activity. 1040nr filing Example 2. 1040nr filing Tom, a bookkeeper, retired on disability. 1040nr filing He is 59 years old and now drives a truck for a charitable organization. 1040nr filing He sets his own hours and is not paid. 1040nr filing Duties of this nature generally are performed for pay or profit. 1040nr filing Some weeks he works 10 hours, and some weeks he works 40 hours. 1040nr filing Over the year he averages 20 hours a week. 1040nr filing The kind of work and his average hours a week conclusively show that Tom is able to engage in substantial gainful activity. 1040nr filing This is true even though Tom is not paid and he sets his own hours. 1040nr filing He cannot take the credit. 1040nr filing Example 3. 1040nr filing John, who retired on disability, took a job with a former employer on a trial basis. 1040nr filing The purpose of the job was to see if John could do the work. 1040nr filing The trial period lasted for 6 months during which John was paid the minimum wage. 1040nr filing Because of John's disability, he was assigned only light duties of a nonproductive “make-work” nature. 1040nr filing The activity was gainful because John was paid at least the minimum wage. 1040nr filing But the activity was not substantial because his duties were nonproductive. 1040nr filing These facts do not, by themselves, show that John is able to engage in substantial gainful activity. 1040nr filing Example 4. 1040nr filing Joan, who retired on disability from a job as a bookkeeper, lives with her sister who manages several motel units. 1040nr filing Joan helps her sister for 1 or 2 hours a day by performing duties such as washing dishes, answering phones, registering guests, and bookkeeping. 1040nr filing Joan can select the time of day when she feels most fit to work. 1040nr filing Work of this nature, performed off and on during the day at Joan's convenience, is not activity of a “substantial and gainful” nature even if she is paid for the work. 1040nr filing The performance of these duties does not, of itself, show that Joan is able to engage in substantial gainful activity. 1040nr filing Sheltered employment. 1040nr filing   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. 1040nr filing These qualified locations are in sheltered workshops, hospitals and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. 1040nr filing   Compared to commercial employment, pay is lower for sheltered employment. 1040nr filing Therefore, one usually does not look for sheltered employment if he or she can get other employment. 1040nr filing The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. 1040nr filing Physician's statement. 1040nr filing   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. 1040nr filing You can use the statement in the Instructions for Schedule R. 1040nr filing   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. 1040nr filing Veterans. 1040nr filing    If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. 1040nr filing VA Form 21-0172 must be signed by a person authorized by the VA to do so. 1040nr filing You can get this form from your local VA regional office. 1040nr filing Physician's statement obtained in earlier year. 1040nr filing   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. 1040nr filing For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. 1040nr filing If you meet the required conditions, check the box on your Schedule R, Part II, line 2. 1040nr filing   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. 1040nr filing Disability income. 1040nr filing   If you are under age 65, you must also have taxable disability income to qualify for the credit. 1040nr filing Disability income must meet both of the following requirements. 1040nr filing It must be paid under your employer's accident or health plan or pension plan. 1040nr filing It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. 1040nr filing Payments that are not disability income. 1040nr filing    Any payment you receive from a plan that does not provide for disability retirement is not disability income. 1040nr filing Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. 1040nr filing    For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. 1040nr filing Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. 1040nr filing Income Limits To determine if you can claim the credit, you must consider two income limits. 1040nr filing The first limit is the amount of your adjusted gross income (AGI). 1040nr filing The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. 1040nr filing The limits are shown in Table 1. 1040nr filing If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. 1040nr filing See Figuring the Credit Yourself , later. 1040nr filing Table 1. 1040nr filing Income Limits IF your filing status is THEN, even if you qualify (see Figure A), you CANNOT take the credit if   Your adjusted gross income (AGI)* is equal to or more than. 1040nr filing . 1040nr filing . 1040nr filing     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. 1040nr filing . 1040nr filing . 1040nr filing   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. 1040nr filing If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. 1040nr filing Credit Figured for You You can figure the credit yourself, or the Internal Revenue Service (IRS) will figure it for you. 1040nr filing See Figuring the Credit Yourself , next. 1040nr filing If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. 1040nr filing Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you. 1040nr filing If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 30. 1040nr filing If you file Form 1040, check box c on Form 1040, line 53, and enter “CFE” on the line next to that box. 1040nr filing Attach Schedule R to your return. 1040nr filing Table 2. 1040nr filing Initial Amounts IF your filing status is. 1040nr filing . 1040nr filing . 1040nr filing   THEN enter on line 10 of Schedule R. 1040nr filing . 1040nr filing . 1040nr filing single,head of household, or qualifying widow(er) with dependent child and, by the end of 2013, you were       • 65 or older $5,000   • under 65 and retired on permanent and total disability1 $5,000 married filing a joint return and by the end of 2013       • both of you were 65 or older $7,500   • both of you were under 65 and one of you retired on permanent and total disability1 $5,000   • both of you were under 65 and both of you retired on permanent and total disability2 $7,500   • one of you was 65 or older, and the other was under 65 and retired on permanent  and total disability3 $7,500   • one of you was 65 or older, and the other was under 65 and not retired on permanent  and total disability $5,000 married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2013, you were       • 65 or older $3,750   • under 65 and retired on permanent and total disability1 $3,750   1 Amount cannot be more than the taxable disability income. 1040nr filing     2 Amount cannot be more than your combined taxable disability income. 1040nr filing     3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500. 1040nr filing   Figuring the Credit Yourself If you figure the credit yourself, fill out the front of Schedule R. 1040nr filing Next, fill out Schedule R, Part III. 1040nr filing If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. 1040nr filing If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter “Sch R” on the line next to that box. 1040nr filing There are five steps in Part III to determine the amount of your credit. 1040nr filing Determine your initial amount (lines 10–12). 1040nr filing Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c). 1040nr filing Determine your excess adjusted gross income (lines 14–17). 1040nr filing Determine the total of steps 2 and 3 (line 18). 1040nr filing Determine your credit (lines 19–22). 1040nr filing These steps are discussed in more detail next. 1040nr filing Step 1. 1040nr filing Determine Initial Amount To figure the credit, you must first determine your initial amount using lines 10 through 12. 1040nr filing See Table 2. 1040nr filing Your initial amount is on line 12. 1040nr filing Initial amounts for persons under age 65. 1040nr filing   If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income. 1040nr filing Special rules for joint returns. 1040nr filing   If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000. 1040nr filing   If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income. 1040nr filing Step 2. 1040nr filing Total Certain Nontaxable Pensions and Benefits Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. 1040nr filing You must reduce your initial amount by these payments. 1040nr filing Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. 1040nr filing If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received. 1040nr filing Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable. 1040nr filing Include the following nontaxable payments in the amounts you enter on lines 13a and 13b. 1040nr filing Nontaxable social security payments. 1040nr filing This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. 1040nr filing (Do not include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child's insurance benefit payments you may receive as a guardian. 1040nr filing ) Nontaxable railroad retirement pension payments treated as social security. 1040nr filing This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board. 1040nr filing Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). 1040nr filing (Do not include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980. 1040nr filing ) Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. 1040nr filing (Do not include amounts that are a return of your cost of a pension or annuity. 1040nr filing These amounts do not reduce your initial amount. 1040nr filing ) You should be sure to take into account all of the nontaxable amounts you receive. 1040nr filing These amounts are verified by the IRS through information supplied by other government agencies. 1040nr filing Step 3. 1040nr filing Determine Excess Adjusted Gross Income You also must reduce your initial amount by your excess adjusted gross income. 1040nr filing Figure your excess adjusted gross income on lines 14–17. 1040nr filing You figure your excess adjusted gross income as follows. 1040nr filing Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status. 1040nr filing $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child, $10,000 if you are married filing jointly, or $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year. 1040nr filing Divide the result of (1) by 2. 1040nr filing Step 4. 1040nr filing Determine the Total of Steps 2 and 3 To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17). 1040nr filing Step 5. 1040nr filing Determine Your Credit Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (. 1040nr filing 15). 1040nr filing In certain cases, the amount of your credit may be limited. 1040nr filing See Limit on credit , later. 1040nr filing Example. 1040nr filing You are 66 years old and your spouse is 64. 1040nr filing Your spouse is not disabled. 1040nr filing You file a joint return on Form 1040. 1040nr filing Your adjusted gross income is $14,630. 1040nr filing Together you received $3,200 from social security, which was nontaxable. 1040nr filing You figure the credit as follows: Example applying the 5 step process Amount (Line references (shown in parentheses) are to the Schedule R)      1. 1040nr filing Initial amount (line 12) $5,000 2. 1040nr filing Total nontaxable social security  and other nontaxable  pensions (line 13c) $3,200   3. 1040nr filing Excess adjusted gross income  ($14,630–$10,000) ÷ 2 (line 17) 2,315   4. 1040nr filing Add (2) and (3) (line 18) 5,515 5. 1040nr filing Subtract (4) from (1) (line 12 – line 18 = line 19) (Do not enter less than -0-) $ -0- You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount. 1040nr filing Limit on credit. 1040nr filing   The amount of credit you can claim is generally limited to the amount of your tax. 1040nr filing Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. 1040nr filing Examples The following examples illustrate the credit for the elderly or the disabled. 1040nr filing The initial amounts are taken from Table 2, earlier. 1040nr filing Example 1. 1040nr filing James Davis is 58 years old, single, and files Form 1040A. 1040nr filing In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. 1040nr filing He got the required physician's statement in 2011 and kept it with his tax records. 1040nr filing His physician signed on line B of the statement. 1040nr filing This year James checks the box in Schedule R, Part II. 1040nr filing He does not need to get another statement for 2013. 1040nr filing He received the following income for the year: Nontaxable social security $1,500 Interest (taxable) 100 Taxable disability pension 11,400       James' adjusted gross income is $11,500 ($11,400 + $100). 1040nr filing He figures the credit on Schedule R as follows: 1. 1040nr filing Initial amount   $5,000 2. 1040nr filing Taxable disability pension   11,400 3. 1040nr filing Smaller of line 1 or line 2   5,000 4. 1040nr filing Nontaxable social security  benefits $1,500     5. 1040nr filing Excess adjusted gross income  ($11,500 − $7,500) ÷ 2 2,000     6. 1040nr filing Add lines 4 and 5   3,500 7. 1040nr filing Subtract line 6 from line 3  (Do not enter less than (-0-))   1,500 8. 1040nr filing Multiply line 7 by 15% (. 1040nr filing 15)   225 9. 1040nr filing Enter the amount from the  Credit Limit Worksheet in the  Instructions for Schedule R, line 21   151 10. 1040nr filing Credit (Enter the smaller of  line 8 or line 9)   $ 151 He enters $151 on line 30 of Form 1040A. 1040nr filing The Schedule R for James Davis is not shown. 1040nr filing Example 2. 1040nr filing William White is 53. 1040nr filing His wife Helen is 49. 1040nr filing William had a stroke 3 years ago and retired on permanent and total disability. 1040nr filing He is still permanently and totally disabled because of the stroke. 1040nr filing In November, Helen was injured in an accident at work and retired on permanent and total disability. 1040nr filing William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. 1040nr filing Helen earned $12,500 from her job and received a taxable disability pension of $1,700. 1040nr filing Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). 1040nr filing They do not itemize deductions. 1040nr filing They do not have any amounts that would increase their standard deduction. 1040nr filing Helen's doctor completed the physician's statement in the Instructions for Schedule R. 1040nr filing Helen is not required to include the statement with their return, but she must keep it for her records. 1040nr filing William got a physician's statement for the year he had the stroke. 1040nr filing His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. 1040nr filing William has kept the physician's statement with his records. 1040nr filing He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2. 1040nr filing William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. 1040nr filing They attach Schedule R to their Form 1040 and enter $41 on line 53. 1040nr filing They check box c on line 53 and enter “Sch R” on the line next to that box. 1040nr filing See their filled-in Schedule R and Helen's filled-in physician's statement, later. 1040nr filing Instructions for Physician's Statement     Taxpayer Physician If you retired after 1976, enter the date you retired in the space provided on the statement below. 1040nr filing A person is permanently and totally disabled if both of the following apply:   1. 1040nr filing He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 1040nr filing   2. 1040nr filing A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death. 1040nr filing Physician's Statement     I certify that Helen A. 1040nr filing White Name of disabled person was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. 1040nr filing If retired after 1976, enter the date retired ▶ November 1, 2013   Physician: Sign your name on either A or B below. 1040nr filing AThe disability has lasted or can be expected to last continuously for at least a year     Physician's signatureDate BThere is no reasonable probability that the disabled condition will ever improve Ayden D. 1040nr filing Doctor 2/8/14   Physician's signatureDate Physician's name Physician's address Ayden D. 1040nr filing Doctor 1900 Green St. 1040nr filing , Hometown, MD 20000         This image is too large to be displayed in the current screen. 1040nr filing Please click the link to view the image. 1040nr filing Page 1 of Schedule R for the Whites This image is too large to be displayed in the current screen. 1040nr filing Please click the link to view the image. 1040nr filing Page 2 of Schedule R for the Whites How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. 1040nr filing Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. 1040nr filing Free help with your tax return. 1040nr filing   Free help in preparing your return is available nationwide from IRS-certified volunteers. 1040nr filing The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. 1040nr filing The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 1040nr filing Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040nr filing Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. 1040nr filing To find the nearest VITA or TCE site, visit IRS. 1040nr filing gov or call 1-800-906-9887. 1040nr filing   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040nr filing To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040nr filing aarp. 1040nr filing org/money/taxaide or call 1-888-227-7669. 1040nr filing   For more information on these programs, go to IRS. 1040nr filing gov and enter “VITA” in the search box. 1040nr filing Internet. 1040nr filing IRS. 1040nr filing gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. 1040nr filing Apply for an Employer Identification Number (EIN). 1040nr filing Go to IRS. 1040nr filing gov and enter Apply for an EIN in the search box. 1040nr filing Request an Electronic Filing PIN by going to IRS. 1040nr filing gov and entering Electronic Filing PIN in the search box. 1040nr filing Check the status of your 2013 refund with Where's My Refund? Go to IRS. 1040nr filing gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040nr filing If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040nr filing Check the status of your amended return. 1040nr filing Go to IRS. 1040nr filing gov and enter Where's My Amended Return in the search box. 1040nr filing Download forms, instructions, and publications, including some accessible versions. 1040nr filing Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. 1040nr filing gov or IRS2Go. 1040nr filing Tax return and tax account transcripts are generally available for the current year and past three years. 1040nr filing Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040nr filing gov. 1040nr filing Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040nr filing Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040nr filing gov. 1040nr filing Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. 1040nr filing gov or IRS2Go. 1040nr filing Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. 1040nr filing An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. 1040nr filing Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. 1040nr filing If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. 1040nr filing Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040nr filing Locate the nearest volunteer help site with the VITA Locator Tool on IRS. 1040nr filing gov. 1040nr filing Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040nr filing The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040nr filing Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. 1040nr filing AARP offers the Tax-Aide counseling program as part of the TCE program. 1040nr filing Visit AARP's website to find the nearest Tax-Aide location. 1040nr filing Research your tax questions. 1040nr filing Search publications and instructions by topic or keyword. 1040nr filing Read the Internal Revenue Code, regulations, or other official guidance. 1040nr filing Read Internal Revenue Bulletins. 1040nr filing Sign up to receive local and national tax news by email. 1040nr filing Phone. 1040nr filing You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040nr filing Download the free IRS2Go mobile app from the iTunes app store or from Google Play. 1040nr filing Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040nr filing Call to locate the nearest volunteer help site, 1-800-906-9887. 1040nr filing Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040nr filing The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040nr filing Most VITA and TCE sites offer free electronic filing. 1040nr filing Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040nr filing Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040nr filing Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. 1040nr filing The automated Where's My Refund? information is available 24 hours a day, 7 days a week. 1040nr filing If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040nr filing Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040nr filing Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040nr filing Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 1040nr filing Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040nr filing Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). 1040nr filing You should receive your order within 10 business days. 1040nr filing Call to order transcripts of your tax returns or tax account, 1-800-908-9946. 1040nr filing Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. 1040nr filing Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. 1040nr filing Call to ask tax questions, 1-800-829-1040. 1040nr filing Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040nr filing The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040nr filing These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. 1040nr filing gsa. 1040nr filing gov/fedrelay. 1040nr filing Walk-in. 1040nr filing You can find a selection of forms, publications and services — in-person, face-to-face. 1040nr filing Products. 1040nr filing You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040nr filing Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040nr filing Services. 1040nr filing You can walk in to your local TAC most business days for personal, face-to-face tax help. 1040nr filing An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040nr filing If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. 1040nr filing No appointment is necessary—just walk in. 1040nr filing Before visiting, check www. 1040nr filing irs. 1040nr filing gov/localcontacts for hours of operation and services provided. 1040nr filing Mail. 1040nr filing You can send your order for forms, instructions, and publications to the address below. 1040nr filing You should receive a response within 10 business days after your request is received. 1040nr filing  Internal Revenue Service 1201 N. 1040nr filing Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. 1040nr filing   The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040nr filing Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040nr filing What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. 1040nr filing We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 1040nr filing You face (or your business is facing) an immediate threat of adverse action. 1040nr filing You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040nr filing   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 1040nr filing Here's why we can help: TAS is an independent organization within the IRS. 1040nr filing Our advocates know how to work with the IRS. 1040nr filing Our services are free and tailored to meet your needs. 1040nr filing We have offices in every state, the District of Columbia, and Puerto Rico. 1040nr filing How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. 1040nr filing irs. 1040nr filing gov/advocate, or call us toll-free at 1-877-777-4778. 1040nr filing How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040nr filing If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. 1040nr filing irs. 1040nr filing gov/sams. 1040nr filing Low Income Taxpayer Clinics. 1040nr filing   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. 1040nr filing Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040nr filing Visit www. 1040nr filing TaxpayerAdvocate. 1040nr filing irs. 1040nr filing gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040nr filing Prev  Up  Next   Home   More Online Publications
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Seafood Inspection Program

NOAA oversees fisheries management in the United States and provides a voluntary inspection service to the industry. The NOAA Seafood Inspection Program offers product quality evaluation, grading, and certification services. NOAA provides official marks to eligible products, such as U.S. Grade A, Processed Under Federal Inspection (PUFI) and Lot Inspection.

Contact the Agency or Department

Website:

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Address: 1315 East West Hwy.,
F/SI - Room 10837

Silver Spring, MD 20910

Phone Number: 301-713-2355

Toll-free: 1-800-422-2750

The 1040nr Filing

1040nr filing 2. 1040nr filing   Possession Source Income Table of Contents Types of IncomeCompensation for Labor or Personal Services Investment Income Sales or Other Dispositions of Property Scholarships, Fellowships, Grants, Prizes, and Awards Effectively Connected Income In order to determine where to file your return and which form(s) you need to complete, you must determine the source of each item of income you received during the tax year. 1040nr filing Income you received from sources within, or that was effectively connected with the conduct of a trade or business within, the relevant possession must be identified separately from U. 1040nr filing S. 1040nr filing or foreign source income. 1040nr filing This chapter discusses the rules for determining if the source of your income is from: American Samoa, The Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of Puerto Rico (Puerto Rico), Guam, or The U. 1040nr filing S. 1040nr filing Virgin Islands (USVI). 1040nr filing Generally, the same rules that apply for determining U. 1040nr filing S. 1040nr filing source income also apply for determining possession source income. 1040nr filing However, there are some important exceptions to these rules. 1040nr filing Both the general rules and the exceptions are discussed in this chapter. 1040nr filing U. 1040nr filing S. 1040nr filing income rule. 1040nr filing   This rule states that income is not possession source income if, under the rules of Internal Revenue Code sections 861–865, it is treated as income: From sources within the United States, or Effectively connected with the conduct of a trade or business within the United States. 1040nr filing Table 2-1 shows the general rules for determining whether income is from sources within the United States. 1040nr filing Table 2-1. 1040nr filing General Rules for Determining U. 1040nr filing S. 1040nr filing Source of Income Item of Income Factor Determining Source Salaries, wages, and other compensation for labor or personal services Where labor or services performed Pensions Contributions: Where services were performed that earned the pension Investment earnings: Where pension trust is located Interest Residence of payer Dividends Where corporation created or organized Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. 1040nr filing Where property is used Sale of business inventory—purchased Where sold Sale of business inventory—produced Allocation if produced and sold in different locations Sale of real property Location of property Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property , later, for exceptions) Sale of natural resources Allocation based on fair market value of product at export terminal. 1040nr filing For more information, see Regulations section 1. 1040nr filing 863-1(b). 1040nr filing Types of Income This section looks at the most common types of income received by individuals, and the rules for determining the source of the income. 1040nr filing Generally, the same rules shown in Table 2-1 are used to determine if you have possession source income. 1040nr filing Compensation for Labor or Personal Services Income from labor or personal services includes wages, salaries, commissions, fees, per diem allowances, employee allowances and bonuses, and fringe benefits. 1040nr filing It also includes income earned by sole proprietors and general partners from providing personal services in the course of their trade or business. 1040nr filing Services performed wholly within a relevant possession. 1040nr filing   Generally, all pay you receive for services performed in a relevant possession is considered to be from sources within that possession. 1040nr filing However, there is an exception for income earned as a member of the U. 1040nr filing S. 1040nr filing Armed Forces or a civilian spouse. 1040nr filing U. 1040nr filing S. 1040nr filing Armed Forces. 1040nr filing   If you are a bona fide resident of a relevant possession, your military service pay will be sourced in that possession even if you perform the services in the United States or another possession. 1040nr filing However, if you are not a bona fide resident of a possession, your military service pay will be income from the  United States even if you perform services in a possession. 1040nr filing Civilian spouse of active duty member of the U. 1040nr filing S. 1040nr filing Armed Forces. 1040nr filing   If you are a bona fide resident of a U. 1040nr filing S. 1040nr filing possession and choose to keep that possession as your tax residence under MSRRA when relocating with your servicemember spouse under military orders, the source of income for your labor or personal services is considered to be that possession. 1040nr filing Likewise, if your tax residence is in one of the 50 states or the District of Columbia before relocating and you choose to keep it as your tax residence, the source of income for services performed in any of the U. 1040nr filing S. 1040nr filing possessions is considered to be the United States and, specifically, your state of residence or the District of Columbia. 1040nr filing Services performed partly inside and partly outside a relevant possession. 1040nr filing   If you are an employee and receive compensation for labor or personal services performed both inside and outside the relevant possession, special rules apply in determining the source of the compensation. 1040nr filing Compensation (other than certain fringe benefits) is sourced on a time basis. 1040nr filing Certain fringe benefits (such as housing and education) are sourced on a geographical basis. 1040nr filing   Or, you may be permitted to use an alternative basis to determine the source of compensation. 1040nr filing See Alternative basis , later. 1040nr filing   If you are self-employed, determine the source of your income for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. 1040nr filing In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. 1040nr filing Time basis. 1040nr filing   Use a time basis to figure your compensation for labor or personal services from the relevant possession (other than the fringe benefits discussed later). 1040nr filing Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed  services in the relevant  possession during the year     Total number of days you  performed services during the year           You can use a unit of time less than a day in the above fraction, if appropriate. 1040nr filing The time period for which the income is made does not have to be a year. 1040nr filing Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. 1040nr filing Example. 1040nr filing In 2013, you worked in your employer's office in the United States for 60 days and in the Puerto Rico office for 180 days, earning a total of $80,000 for the year. 1040nr filing Your Puerto Rico source income is $60,000, figured as follows. 1040nr filing       180 days 240 days × $80,000 = $60,000                 Multi-year compensation. 1040nr filing   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. 1040nr filing Multi-year compensation is compensation that is included in your income in 1 tax year but is attributable to a period that includes 2 or more tax years. 1040nr filing You determine the period to which the income is attributable based on the facts and circumstances of your case. 1040nr filing For more information on multi-year compensation, see Treasury Decision (T. 1040nr filing D. 1040nr filing ) 9212 and Regulations section 1. 1040nr filing 861-4, 2005-35 I. 1040nr filing R. 1040nr filing B. 1040nr filing 429, available at www. 1040nr filing irs. 1040nr filing gov/irb/2005-35_IRB/ar14. 1040nr filing html. 1040nr filing Certain fringe benefits sourced on a geographical basis. 1040nr filing   If you received any of the following fringe benefits as compensation for labor or services performed as an employee partly inside and partly outside a relevant possession, you must source that income on a geographical basis. 1040nr filing Housing. 1040nr filing Education. 1040nr filing Local transportation. 1040nr filing Tax reimbursement. 1040nr filing Hazardous or hardship duty pay. 1040nr filing Moving expense reimbursement. 1040nr filing For information on determining the source of the fringe benefits listed above, see Regulations section 1. 1040nr filing 861-4. 1040nr filing Alternative basis. 1040nr filing   You can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your income than the time or geographical basis. 1040nr filing If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your income. 1040nr filing De minimis exception. 1040nr filing   There is an exception to the rule for determining the source of income earned in a possession. 1040nr filing Generally, you will not have income from a possession if during a tax year you: Are a U. 1040nr filing S. 1040nr filing citizen or resident, Are not a bona fide resident of that possession, Are not employed by or under contract with an individual, partnership, or corporation that is engaged in a trade or business in that possession, Temporarily perform services in that possession for 90 days or less, and Earned $3,000 or less from such services. 1040nr filing This exception began with income earned during your 2008 tax year. 1040nr filing Pensions. 1040nr filing   Generally, pension income has two components: contributions to the pension plan and the earnings accrued from investing those contributions. 1040nr filing The contribution portion is sourced according to where services were performed that earned the pension. 1040nr filing The investment earnings portion is sourced according to the location of the pension trust. 1040nr filing Example. 1040nr filing You are a U. 1040nr filing S. 1040nr filing citizen who worked in Puerto Rico for a U. 1040nr filing S. 1040nr filing company. 1040nr filing All services were performed in Puerto Rico. 1040nr filing Upon retirement you remained in Puerto Rico and began receiving your pension from the U. 1040nr filing S. 1040nr filing pension trust of your employer. 1040nr filing Distributions from the U. 1040nr filing S. 1040nr filing pension trust must be allocated between (1) contributions, which are Puerto Rico source income, and (2) investment earnings, which are U. 1040nr filing S. 1040nr filing source income. 1040nr filing Investment Income This category includes such income as interest, dividends, rents, and royalties. 1040nr filing Interest income. 1040nr filing   The source of interest income is generally determined by the residence of the payer. 1040nr filing Interest paid by corporations created or organized in a relevant possession (possession corporation) or by individuals who are bona fide residents of a relevant possession is considered income from sources within that possession. 1040nr filing   However, there is an exception to this rule if you are a bona fide resident of a relevant possession, receive interest from a corporation created or organized in that possession, and are a shareholder of that corporation who owns, directly or indirectly, at least 10% of the total voting stock of the corporation. 1040nr filing See Regulations section 1. 1040nr filing 937-2(i) for more information. 1040nr filing Dividends. 1040nr filing   Generally, dividends paid by a corporation created or organized in a relevant possession will be considered income from sources within that possession. 1040nr filing There are additional rules for bona fide residents of a relevant possession who receive dividend income from possession corporations, and who own, directly or indirectly, at least 10% of the voting stock of the corporation. 1040nr filing For more information, see Regulations section 1. 1040nr filing 937-2(g). 1040nr filing Rental income. 1040nr filing   Rents from property located in a relevant possession are treated as income from sources within that possession. 1040nr filing Royalties. 1040nr filing   Royalties from natural resources located in a relevant possession are considered income from sources within that possession. 1040nr filing   Also considered possession source income are royalties received for the use of, or for the privilege of using, in a relevant possession, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property. 1040nr filing Sales or Other Dispositions of Property The source rules for sales or other dispositions of property are varied. 1040nr filing The most common situations are discussed below. 1040nr filing Real property. 1040nr filing   Real property includes land and buildings, and generally anything built on, growing on, or attached to land. 1040nr filing The location of the property generally determines the source of income from the sale. 1040nr filing For example, if you are a bona fide resident of Guam and sell your home that is located in Guam, the gain on the sale is sourced in Guam. 1040nr filing If, however, the home you sold was located in the United States, the gain is U. 1040nr filing S. 1040nr filing source income. 1040nr filing Personal property. 1040nr filing   The term “personal property” refers to property (such as machinery, equipment, or furniture) that is not real property. 1040nr filing Generally, gain (or loss) from the sale or other disposition is sourced according to the seller's tax home. 1040nr filing If personal property is sold by a bona fide resident of a relevant possession, the gain (or loss) from the sale is treated as sourced within that possession. 1040nr filing   This rule does not apply to the sale of inventory, intangible property, depreciable personal property, or property sold through a foreign office or fixed place of business. 1040nr filing The rules applying to sales of inventory are discussed below. 1040nr filing For information on sales of the other types of property mentioned, see Internal Revenue Code section 865. 1040nr filing Inventory. 1040nr filing   Your inventory is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. 1040nr filing The source of income from the sale of inventory depends on whether the inventory was purchased or produced. 1040nr filing Purchased. 1040nr filing   Income from the sale of inventory that you purchased is sourced where you sell the property. 1040nr filing Generally, this is where title to the property passes to the buyer. 1040nr filing Produced. 1040nr filing   Income from the sale of inventory that you produced in a relevant possession and sold outside that possession (or vice versa) is sourced based on an allocation. 1040nr filing For information on making the allocation, see Regulations section 1. 1040nr filing 863-3(f). 1040nr filing Special Rules for Gains From Dispositions of Certain Property There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U. 1040nr filing S. 1040nr filing citizen or resident alien prior to becoming a bona fide resident of a possession. 1040nr filing You are subject to these special rules if you meet both of the following conditions. 1040nr filing For the tax year for which the source of the gain must be determined, you are a bona fide resident of the relevant possession. 1040nr filing For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident of the relevant possession). 1040nr filing If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant possession for purposes of the Internal Revenue Code. 1040nr filing Accordingly, bona fide residents of American Samoa and Puerto Rico, for example, may not exclude the gain on their U. 1040nr filing S. 1040nr filing tax return. 1040nr filing (See chapter 3 for additional filing information. 1040nr filing ) With respect to the CNMI, Guam, and the USVI, the gain from the disposition of this property will not meet the requirements for certain tax rules that may allow bona fide residents of those possessions to reduce or obtain a rebate of taxes on income from sources within the relevant possessions. 1040nr filing These rules apply to dispositions after April 11, 2005. 1040nr filing For details, see Regulations section 1. 1040nr filing 937-2(f)(1) and Examples 1 and 2 of section 1. 1040nr filing 937-2(k). 1040nr filing Example 1. 1040nr filing In 2007, Cheryl Jones, a U. 1040nr filing S. 1040nr filing citizen, lived in the United States and paid $1,000 for 100 shares of stock in the Rose Corporation, a U. 1040nr filing S. 1040nr filing corporation listed on the New York Stock Exchange. 1040nr filing On March 1, 2010, she moved to Puerto Rico and changed her tax home to Puerto Rico on the same date. 1040nr filing Cheryl satisfied the presence test in 2010 and, under the year-of-move exception, she was considered a bona fide resident of Puerto Rico for the rest of 2010. 1040nr filing On March 1, 2010, the closing value of Cheryl's stock in the Rose Corporation was $2,000. 1040nr filing On January 5, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold all her Rose Corporation stock for $7,000. 1040nr filing Under the earlier rules, none of Cheryl's $6,000 gain will be treated as income from sources within Puerto Rico. 1040nr filing The source rules discussed in the preceding paragraphs supplement, and may apply in conjunction with, an existing special rule. 1040nr filing This existing special rule applies if you are a U. 1040nr filing S. 1040nr filing citizen or resident alien who becomes a bona fide resident of American Samoa, the CNMI, or Guam, and who has gain from the disposition of certain U. 1040nr filing S. 1040nr filing assets during the 10-year period beginning when you became a bona fide resident. 1040nr filing The gain is U. 1040nr filing S. 1040nr filing source income that generally is subject to U. 1040nr filing S. 1040nr filing tax if the property is either (1) located in the United States; (2) stock issued by a U. 1040nr filing S. 1040nr filing corporation or a debt obligation of a U. 1040nr filing S. 1040nr filing person or of the United States, a state (or political subdivision), or the District of Columbia; or (3) property that has a basis in whole or in part by reference to property described in (1) or (2). 1040nr filing See chapter 3 for filing information. 1040nr filing Special election. 1040nr filing   For dispositions after April 11, 2005, you can choose to treat the part of gain (or loss) attributable to the time you held the property while a bona fide resident of the relevant possession (the possession holding period) as gain (or loss) from sources within that possession. 1040nr filing Make the election by reporting the gain attributable to the possession holding period on your income tax return for the year of disposition. 1040nr filing This election overrides both of the special rules discussed earlier. 1040nr filing   There are two methods for figuring the gain for the possession holding period, one for marketable securities and another for other types of investment property. 1040nr filing Marketable securities. 1040nr filing   Marketable securities are those actively traded on an established financial market, such as stock in a publicly held corporation. 1040nr filing Under the special election, allocate the gain (or loss) by figuring the appreciation separately for your possession and U. 1040nr filing S. 1040nr filing holding periods. 1040nr filing   Your possession holding period begins on the first day you do not have a tax home outside the relevant possession. 1040nr filing The gain (or loss) attributable to the possession holding period is the difference in fair market value of the security at the close of the market on the first and last days of this holding period. 1040nr filing This is your gain (or loss) that is treated as being from sources within the relevant possession. 1040nr filing If you were a bona fide resident of the relevant possession for more than one continuous period, combine the gains (or losses) from each possession holding period. 1040nr filing Example 2. 1040nr filing Assume the same facts as in Example 1, except that Cheryl makes the special election to allocate the gain between her U. 1040nr filing S. 1040nr filing and possession holding periods. 1040nr filing Cheryl's possession holding period began March 1, 2010, the date her tax home changed to Puerto Rico. 1040nr filing Therefore, the portion of gain attributable to her possession holding period is $5,000 ($7,000 sale price – $2,000 closing value on first day of the possession holding period). 1040nr filing By reporting $5,000 of her $6,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. 1040nr filing Other personal property. 1040nr filing   For personal property other than marketable securities, use a time-based allocation. 1040nr filing Figure the gain (or loss) attributable to the possession holding period by multiplying your total gain (or loss) by the following fraction. 1040nr filing      Number of days in the  possession holding period     Total number of days  in your holding period         The result is your gain (or loss) that is treated as being from sources within the relevant possession. 1040nr filing Example 3. 1040nr filing In addition to the stock in Rose Corporation, Cheryl acquired a 5% interest in the Alder Partnership on January 1, 2009. 1040nr filing On March 1, 2010, when she established bona fide residency in Puerto Rico, her partnership interest was not considered a marketable security. 1040nr filing On September 16, 2013, while still a bona fide resident of Puerto Rico, Cheryl sold her interest in Alder Partnership for a $100,000 gain. 1040nr filing She had owned the interest for a total of 1,720 days. 1040nr filing Cheryl's possession holding period (from March 1, 2010, through September 16, 2013) is 1,296 days. 1040nr filing The portion of her gain attributable to Puerto Rico is $75,349 ($100,000 x (1,296 Puerto Rico days ÷ 1,720 total days)). 1040nr filing By reporting $75,349 of her $100,000 gain as Puerto Rico source income on her 2013 Puerto Rico tax return (and the remainder as non-Puerto Rico source income), Cheryl elects to treat that amount as Puerto Rico source income. 1040nr filing Scholarships, Fellowships, Grants, Prizes, and Awards The source of these types of income is generally the residence of the payer, regardless of who actually disburses the funds. 1040nr filing Therefore, in order to be possession source income, the payer must be a resident of the relevant possession, such as an individual who is a bona fide resident or a corporation created or organized in that possession. 1040nr filing These rules do not apply to amounts paid as salary or other compensation for services. 1040nr filing See Compensation for Labor or Personal Services, earlier in this chapter, for the source rules that apply. 1040nr filing Effectively Connected Income In limited circumstances, some kinds of income from sources outside the relevant possession must be treated as effectively connected with a trade or business in that possession. 1040nr filing These circumstances are listed below. 1040nr filing You have an office or other fixed place of business in the relevant possession to which the income can be attributed. 1040nr filing That office or place of business is a material factor in producing the income. 1040nr filing The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. 1040nr filing 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. 1040nr filing The three kinds of income from sources outside the relevant possession to which these rules apply are the following. 1040nr filing Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the relevant possession or from any interest in such property. 1040nr filing Included are rents or royalties for the use of, or for the privilege of using, outside the relevant possession, 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 relevant possession. 1040nr filing Dividends or interest from the active conduct of a banking, financing, or similar business in the relevant possession. 1040nr filing Income, gain, or loss from the sale or exchange outside the relevant possession, through the office or other fixed place of business in the relevant possession, 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. 1040nr filing Item (3) will not apply if you sold the property for use, consumption, or disposition outside the relevant possession and an office or other fixed place of business in a foreign country was a material factor in the sale. 1040nr filing Example. 1040nr filing Marcy Jackson is a bona fide resident of American Samoa. 1040nr filing Her business, which she conducts from an office in American Samoa, is developing and selling specialized computer software. 1040nr filing A software purchaser will frequently pay Marcy an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. 1040nr filing Marcy installs the software at the purchaser's place of business, which may be in American Samoa, in the United States, or in another country. 1040nr filing The income from selling the software is effectively connected with the conduct of Marcy's business in American Samoa, even though the product's destination may be outside the possession. 1040nr filing However, the compensation she receives for installing the software (personal services) outside of American Samoa is not effectively connected with the conduct of her business in the possession—the income is sourced where she performs the services. 1040nr filing Prev  Up  Next   Home   More Online Publications