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1040nr Form 2011

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1040nr Form 2011

1040nr form 2011 Publication 721 - Main Content Table of Contents Part I General InformationRefund of Contributions Tax Withholding and Estimated Tax Filing Requirements Part II Rules for RetireesAnnuity starting date. 1040nr form 2011 Gross monthly rate. 1040nr form 2011 Your cost. 1040nr form 2011 Choosing a survivor annuity after retirement. 1040nr form 2011 Canceling a survivor annuity after retirement. 1040nr form 2011 Annuity starting date after 1986. 1040nr form 2011 Annuity starting date before 1987. 1040nr form 2011 Simplified Method General Rule Three-Year Rule Alternative Annuity Option Federal Gift Tax Retirement During the Past Year Reemployment After Retirement Nonresident Aliens Thrift Savings Plan Rollover Rules Distributions Used To Pay Insurance Premiums for Public Safety Officers How To Report Benefits Part III Rules for Disability Retirement and Credit for the Elderly or the DisabledDisability Annuity Other Benefits Credit for the Elderly or the Disabled Part IV Rules for Survivors of Federal EmployeesFERS Death Benefit CSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Thrift Savings Plan Federal Estate Tax Part V Rules for Survivors of Federal RetireesCSRS or FERS Survivor Annuity Lump-Sum CSRS or FERS Payment Voluntary Contributions Thrift Savings Plan Federal Estate Tax Income Tax Deduction for Estate Tax Paid How To Get Tax HelpLow Income Taxpayer Clinics Part I General Information This part of the publication contains information that can apply to most recipients of civil service retirement benefits. 1040nr form 2011 Refund of Contributions If you leave federal government service or transfer to a job not under the CSRS or FERS and you are not eligible for an immediate annuity, you can choose to receive a refund of the money in your CSRS or FERS retirement account. 1040nr form 2011 The refund will include both regular and voluntary contributions you made to the fund, plus any interest payable. 1040nr form 2011 If the refund includes only your contributions, none of the refund is taxable. 1040nr form 2011 If it includes any interest, the interest is taxable unless you roll it over directly into another qualified plan or a traditional individual retirement arrangement (IRA). 1040nr form 2011 If you do not have the Office of Personnel Management (OPM) transfer the interest to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. 1040nr form 2011 See Rollover Rules in Part II for information on how to make a rollover. 1040nr form 2011 Interest is not paid on contributions to the CSRS for service after 1956 unless your service was for more than 1 year but not more than 5 years. 1040nr form 2011 Therefore, many employees who withdraw their contributions under the CSRS do not get interest and do not owe any tax on their refund. 1040nr form 2011 If you do not roll over interest included in your refund, it may qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. 1040nr form 2011 If you separate from service before the calendar year in which you reach age 55, it may be subject to an additional 10% tax on early distributions. 1040nr form 2011 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. 1040nr form 2011 A lump-sum distribution is eligible for capital gain treatment or the 10-year tax option only if the plan participant was born before January 2, 1936. 1040nr form 2011 Tax Withholding and Estimated Tax The CSRS or FERS annuity you receive is subject to federal income tax withholding, unless you choose not to have tax withheld. 1040nr form 2011 OPM will tell you how to make the choice. 1040nr form 2011 The choice for no withholding remains in effect until you change it. 1040nr form 2011 These withholding rules also apply to a disability annuity, whether received before or after minimum retirement age. 1040nr form 2011 If you choose not to have tax withheld, or if you do not have enough tax withheld, you may have to make estimated tax payments. 1040nr form 2011 You may owe a penalty if the total of your withheld tax and estimated tax does not cover most of the tax shown on your return. 1040nr form 2011 Generally, you will owe the penalty for 2014 if the additional tax you must pay with your return is $1,000 or more and more than 10% of the tax to be shown on your 2014 return. 1040nr form 2011 For more information, including exceptions to the penalty, see chapter 4 of Publication 505, Tax Withholding and Estimated Tax. 1040nr form 2011 Form CSA 1099R. 1040nr form 2011   Form CSA 1099R is mailed to you by OPM each year. 1040nr form 2011 It will show any tax you had withheld. 1040nr form 2011 File a copy of Form CSA 1099R with your tax return if any federal income tax was withheld. 1040nr form 2011    You also can view and download your Form CSA 1099R by visiting the OPM website at  www. 1040nr form 2011 servicesonline. 1040nr form 2011 opm. 1040nr form 2011 gov. 1040nr form 2011 To log in, you will need your retirement CSA claim number and your personal identification number. 1040nr form 2011 Choosing no withholding on payments outside the United States. 1040nr form 2011   The choice for no withholding generally cannot be made for annuity payments to be delivered outside the United States and its possessions. 1040nr form 2011   To choose no withholding if you are a U. 1040nr form 2011 S. 1040nr form 2011 citizen or resident alien, you must provide OPM with your home address in the United States or its possessions. 1040nr form 2011 Otherwise, OPM has to withhold tax. 1040nr form 2011 For example, OPM must withhold if you provide a U. 1040nr form 2011 S. 1040nr form 2011 address for a nominee, trustee, or agent (such as a bank) to whom the benefits are to be delivered, but you do not provide your own U. 1040nr form 2011 S. 1040nr form 2011 home address. 1040nr form 2011   If you do not provide a home address in the United States or its possessions, you can choose not to have tax withheld only if you certify to OPM that you are not a U. 1040nr form 2011 S. 1040nr form 2011 citizen, a U. 1040nr form 2011 S. 1040nr form 2011 resident alien, or someone who left the United States to avoid tax. 1040nr form 2011 But if you so certify, you may be subject to the 30% flat rate withholding that applies to nonresident aliens. 1040nr form 2011 For details, see Publication 519, U. 1040nr form 2011 S. 1040nr form 2011 Tax Guide for Aliens. 1040nr form 2011 Withholding certificate. 1040nr form 2011   If you give OPM a Form W-4P-A, Election of Federal Income Tax Withholding, you can choose not to have tax withheld or you can choose to have tax withheld. 1040nr form 2011 The amount of tax withheld depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. 1040nr form 2011 If you do not make either of these choices, OPM must withhold as if you were married with three withholding allowances. 1040nr form 2011 To change the amount of tax withholding or to stop withholding, call OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. 1040nr form 2011 C. 1040nr form 2011 calling area must call 202-606-0500). 1040nr form 2011 No special form is needed. 1040nr form 2011 You will need your retirement CSA or CSF claim number, your social security number, and your personal identification number (PIN) when you call. 1040nr form 2011 If you have TTY/TDD equipment, call 1-855–887–4957. 1040nr form 2011 If you need a PIN, call OPM's Retirement Information Office. 1040nr form 2011 You also can change the amount of withholding or stop withholding online by visiting the OPM website at www. 1040nr form 2011 servicesonline. 1040nr form 2011 opm. 1040nr form 2011 gov. 1040nr form 2011 You will need your retirement CSA or CSF claim number and your PIN. 1040nr form 2011 Withholding from certain lump-sum payments. 1040nr form 2011   If you leave the federal government before becoming eligible to retire and you apply for a refund of your CSRS or FERS contributions, or you die without leaving a survivor eligible for an annuity, you or your beneficiary will receive a distribution of your contributions to the retirement plan plus any interest payable. 1040nr form 2011 Tax will be withheld at a 20% rate on the interest distributed. 1040nr form 2011 However, tax will not be withheld if you have OPM transfer (roll over) the interest directly to your traditional IRA or other qualified plan. 1040nr form 2011 If you have OPM transfer (roll over) the interest directly to a Roth IRA, the entire amount will be taxed in the current year. 1040nr form 2011 Because no income tax will be withheld at the time of the transfer, you may want to increase your withholding or pay estimated taxes. 1040nr form 2011 See Rollover Rules in Part II. 1040nr form 2011 If you receive only your contributions, no tax will be withheld. 1040nr form 2011 Withholding from Thrift Savings Plan payments. 1040nr form 2011   Generally, a distribution that you receive from the TSP is subject to federal income tax withholding. 1040nr form 2011 The amount withheld is: 20% if the distribution is an eligible rollover distribution, 10% if it is a nonperiodic distribution other than an eligible rollover distribution, or An amount determined as if you were married with three withholding allowances, unless you submit a withholding certificate (Form W-4P), if it is a periodic distribution. 1040nr form 2011  However, you usually can choose not to have tax withheld from TSP payments other than eligible rollover distributions. 1040nr form 2011 By January 31 after the end of the year in which you receive a distribution, the TSP will issue Form 1099-R showing the total distributions you received in the prior year and the amount of tax withheld. 1040nr form 2011   For a detailed discussion of withholding on distributions from the TSP, see Important Tax Information About Payments From Your TSP Account, available from your agency personnel office or from the TSP. 1040nr form 2011 The above document is also available in the “Forms & Publications” section of the TSP website at www. 1040nr form 2011 tsp. 1040nr form 2011 gov. 1040nr form 2011 Estimated tax. 1040nr form 2011   Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 (after subtracting your withholding and credits) and you expect your withholding and your credits to be less than the smaller of: 90% of the tax to be shown on your income tax return for 2014, or 100% of the tax shown on your 2013 income tax return (110% of that amount if the adjusted gross income shown on the return was more than $150,000 ($75,000 if your filing status for 2014 will be married filing separately)). 1040nr form 2011 The return must cover all 12 months. 1040nr form 2011   You do not have to pay estimated tax for 2014 if you were a U. 1040nr form 2011 S. 1040nr form 2011 citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. 1040nr form 2011   Publication 505 contains information that you can use to help you figure your estimated tax payments. 1040nr form 2011 Filing Requirements If your gross income, including the taxable part of your annuity, is less than a certain amount, you generally do not have to file a federal income tax return for that year. 1040nr form 2011 The gross income filing requirements for the tax year are in the instructions to Form 1040, 1040A, or 1040EZ. 1040nr form 2011 Children. 1040nr form 2011   If you are the surviving spouse of a federal employee or retiree and your monthly annuity check includes a survivor annuity for one or more children, each child's annuity counts as his or her own income (not yours) for federal income tax purposes. 1040nr form 2011   If your child can be claimed as a dependent, treat the taxable part of his or her annuity as unearned income when applying the filing requirements for dependents. 1040nr form 2011 Form CSF 1099R. 1040nr form 2011   Form CSF 1099R will be mailed to you by January 31 after the end of each tax year. 1040nr form 2011 It will show the total amount of the annuity you received in the past year. 1040nr form 2011 It also should show, separately, the survivor annuity for a child or children. 1040nr form 2011 Only the part that is each individual's survivor annuity should be shown on that individual's Form 1040 or 1040A. 1040nr form 2011   If your Form CSF 1099R does not show separately the amount paid to you for a child or children, attach a statement to your return, along with a copy of Form CSF 1099R, explaining why the amount shown on the tax return differs from the amount shown on Form CSF 1099R. 1040nr form 2011    You also can view and download your Form CSF 1099R by visiting the OPM website at  www. 1040nr form 2011 servicesonline. 1040nr form 2011 opm. 1040nr form 2011 gov. 1040nr form 2011 To log in you will need your retirement CSF claim number and personal identification number. 1040nr form 2011    You may request a Summary of Payments, showing the amounts paid to you for your child(ren), from OPM by calling OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. 1040nr form 2011 C. 1040nr form 2011 calling area must call 202-606-0500). 1040nr form 2011 You will need your CSF claim number and your social security number when you call. 1040nr form 2011 Taxable part of annuity. 1040nr form 2011   To find the taxable part of a retiree's annuity when applying the filing requirements, see the discussion in Part II, Rules for Retirees , or Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled , whichever applies. 1040nr form 2011 To find the taxable part of each survivor annuity when applying the filing requirements, see the discussion in Part IV, Rules for Survivors of Federal Employees , or Part V, Rules for Survivors of Federal Retirees , whichever applies. 1040nr form 2011 Part II Rules for Retirees This part of the publication is for retirees who retired on nondisability retirement. 1040nr form 2011 If you retired on disability before you reached your minimum retirement age, see Part III, Rules for Disability Retirement and Credit for the Elderly or the Disabled. 1040nr form 2011 However, on the day after you reach your minimum retirement age, use the rules in this section to report your disability retirement and begin recovering your cost. 1040nr form 2011 Annuity statement. 1040nr form 2011   The statement you received from OPM when your CSRS or FERS annuity was approved shows the commencing date (the annuity starting date), the gross monthly rate of your annuity benefit, and your total contributions to the retirement plan (your cost). 1040nr form 2011 You will use this information to figure the tax-free recovery of your cost. 1040nr form 2011 Annuity starting date. 1040nr form 2011   If you retire from federal government service on a regular annuity, your annuity starting date is the commencing date on your annuity statement from OPM. 1040nr form 2011 If something delays payment of your annuity, such as a late application for retirement, it does not affect the date your annuity begins to accrue or your annuity starting date. 1040nr form 2011 Gross monthly rate. 1040nr form 2011   This is the amount you were to get after any adjustment for electing a survivor's annuity or for electing the lump-sum payment under the alternative annuity option (if either applied) but before any deduction for income tax withholding, insurance premiums, etc. 1040nr form 2011 Your cost. 1040nr form 2011   Your monthly annuity payment contains an amount on which you have previously paid income tax. 1040nr form 2011 This amount represents part of your contributions to the retirement plan. 1040nr form 2011 Even though you did not receive the money that was contributed to the plan, it was included in your gross income for federal income tax purposes in the years it was taken out of your pay. 1040nr form 2011   The cost of your annuity is the total of your contributions to the retirement plan, as shown on your annuity statement from OPM. 1040nr form 2011 If you elected the alternative annuity option, it includes any deemed deposits and any deemed redeposits that were added to your lump-sum credit. 1040nr form 2011 (See Lump-sum credit under Alternative Annuity Option, later. 1040nr form 2011 )   If you repaid contributions that you had withdrawn from the retirement plan earlier, or if you paid into the plan to receive full credit for service not subject to retirement deductions, the entire repayment, including any interest, is a part of your cost. 1040nr form 2011 You cannot claim an interest deduction for any interest payments. 1040nr form 2011 You cannot treat these payments as voluntary contributions; they are considered regular employee contributions. 1040nr form 2011 Recovering your cost tax free. 1040nr form 2011   How you figure the tax-free recovery of the cost of your CSRS or FERS annuity depends on your annuity starting date. 1040nr form 2011 If your annuity starting date is before July 2, 1986, either the Three-Year Rule or the General Rule (both discussed later) applies to your annuity. 1040nr form 2011 If your annuity starting date is after July 1, 1986, and before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method (discussed later). 1040nr form 2011 If your annuity starting date is after November 18, 1996, you must use the Simplified Method. 1040nr form 2011   Under both the General Rule and the Simplified Method, each of your monthly annuity payments is made up of two parts: the tax-free part that is a return of your cost, and the taxable part that is the amount of each payment that is more than the part that represents your cost (unless such payment is used for purposes discussed under Distributions Used To Pay Insurance Premiums for Public Safety Officers , later). 1040nr form 2011 The tax-free part is a fixed dollar amount. 1040nr form 2011 It remains the same, even if your annuity is increased. 1040nr form 2011 Generally, this rule applies as long as you receive your annuity. 1040nr form 2011 However, see Exclusion limit , later. 1040nr form 2011 Choosing a survivor annuity after retirement. 1040nr form 2011    If you retired without a survivor annuity and report your annuity under the Simplified Method, do not change your tax-free monthly amount even if you later choose a survivor annuity. 1040nr form 2011   If you retired without a survivor annuity and report your annuity under the General Rule, you must figure the tax-free part of your annuity using a new exclusion percentage if you later choose a survivor annuity and take reduced annuity payments. 1040nr form 2011 To figure the new exclusion percentage, reduce your cost by the amount you previously recovered tax free. 1040nr form 2011 Figure the expected return as of the date the reduced annuity begins. 1040nr form 2011 For details on the General Rule, see Publication 939. 1040nr form 2011 Canceling a survivor annuity after retirement. 1040nr form 2011   If you retired with a survivor annuity payable to your spouse upon your death and you notify OPM that your marriage has ended, your annuity might be increased to remove the reduction for a survivor benefit. 1040nr form 2011 The increased annuity does not change the cost recovery you figured at the annuity starting date. 1040nr form 2011 The tax-free part of each annuity payment remains the same. 1040nr form 2011    For more information about choosing or canceling a survivor annuity after retirement, contact OPM's Retirement Information Office at 1-888-767-6738 (customers within the local Washington, D. 1040nr form 2011 C. 1040nr form 2011 calling area must call 202-606-0500). 1040nr form 2011 Exclusion limit. 1040nr form 2011   Your annuity starting date determines the total amount of annuity payments that you can exclude from income over the years. 1040nr form 2011 Annuity starting date after 1986. 1040nr form 2011   If your annuity starting date is after 1986, the total amount of annuity income that you (or the survivor annuitant) can exclude over the years as a return of your cost cannot exceed your total cost. 1040nr form 2011 Annuity payments you or your survivors receive after the total cost in the plan has been recovered are generally fully taxable. 1040nr form 2011 Example. 1040nr form 2011 Your annuity starting date is after 1986 and you exclude $100 a month under the Simplified Method. 1040nr form 2011 If your cost is $12,000, the exclusion ends after 10 years (120 months). 1040nr form 2011 Thereafter, your entire annuity is generally fully taxable. 1040nr form 2011 Annuity starting date before 1987. 1040nr form 2011   If your annuity starting date is before 1987, you can continue to take your monthly exclusion figured under the General Rule or Simplified Method for as long as you receive your annuity. 1040nr form 2011 If you chose a joint and survivor annuity, your survivor can continue to take that same exclusion. 1040nr form 2011 The total exclusion may be more than your cost. 1040nr form 2011 Deduction of unrecovered cost. 1040nr form 2011   If your annuity starting date is after July 1, 1986, and the cost of your annuity has not been fully recovered at your (or the survivor annuitant's) death, a deduction is allowed for the unrecovered cost. 1040nr form 2011 The deduction is claimed on your (or your survivor's) final tax return as a miscellaneous itemized deduction (not subject to the 2%-of-adjusted-gross-income limit). 1040nr form 2011 If your annuity starting date is before July 2, 1986, no tax benefit is allowed for any unrecovered cost at death. 1040nr form 2011 Simplified Method If your annuity starting date is after November 18, 1996, you must use the Simplified Method to figure the tax-free part of your CSRS or FERS annuity. 1040nr form 2011 (OPM has figured the taxable amount of your annuity shown on your Form CSA 1099R using the Simplified Method. 1040nr form 2011 ) You could have chosen to use either the Simplified Method or the General Rule if your annuity starting date is after July 1, 1986, but before November 19, 1996. 1040nr form 2011 The Simplified Method does not apply if your annuity starting date is before July 2, 1986. 1040nr form 2011 Under the Simplified Method, you figure the tax-free part of each full monthly payment by dividing your cost by a number of months based on your age. 1040nr form 2011 This number will differ depending on whether your annuity starting date is before November 19, 1996, or after November 18, 1996. 1040nr form 2011 If your annuity starting date is after 1997 and your annuity includes a survivor benefit for your spouse, this number is based on your combined ages. 1040nr form 2011 Worksheet A. 1040nr form 2011   Use Worksheet A. 1040nr form 2011 Simplified Method (near the end of this publication), to figure your taxable annuity. 1040nr form 2011 Be sure to keep the completed worksheet. 1040nr form 2011 It will help you figure your taxable amounts for later years. 1040nr form 2011 Instead of Worksheet A, you generally can use the Simplified Method Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR to figure your taxable annuity. 1040nr form 2011 However, you must use Worksheet A and Worksheet B in this publication if you chose the alternative annuity option, discussed later. 1040nr form 2011 Line 2. 1040nr form 2011   See Your cost , earlier, for an explanation of your cost in the plan. 1040nr form 2011 If your annuity starting date is after November 18, 1996, and you chose the alternative annuity option (explained later), you must reduce your cost by the tax-free part of the lump-sum payment you received. 1040nr form 2011 Line 3. 1040nr form 2011   The number you enter on line 3 is the appropriate number from Table 1 or 2 representing approximate life expectancies in months. 1040nr form 2011 If your annuity starting date is after 1997, use: Table 1 for an annuity without a survivor benefit, or Table 2 for an annuity with a survivor benefit. 1040nr form 2011 If your annuity starting date is before 1998, use Table 1. 1040nr form 2011 Line 6. 1040nr form 2011   If you received contributions tax free before 2013, the amount previously recovered tax free that you must enter on line 6 is the total amount from line 10 of last year's worksheet. 1040nr form 2011 If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, this amount includes the tax-free part of the lump-sum payment you received. 1040nr form 2011 Example. 1040nr form 2011 Bill Smith retired from the Federal Government on March 31, 2013, under an annuity that will provide a survivor benefit for his wife, Kathy. 1040nr form 2011 His annuity starting date is April 1, 2013, the annuity is paid in arrears, and he received his first monthly annuity payment on May 1, 2013. 1040nr form 2011 He must use the Simplified Method to figure the tax-free part of his annuity benefits. 1040nr form 2011 Bill's monthly annuity benefit is $1,000. 1040nr form 2011 He had contributed $31,000 to his retirement plan and had received no distributions before his annuity starting date. 1040nr form 2011 At his annuity starting date, he was 65 and Kathy was 57. 1040nr form 2011 Bill's completed Worksheet A is shown later. 1040nr form 2011 To complete line 3, he used Table 2 at the bottom of the worksheet and found that 310 is the number in the second column opposite the age range that includes 122 (his and Kathy's combined ages). 1040nr form 2011 Bill keeps a copy of the completed worksheet for his records. 1040nr form 2011 It will help him (and Kathy, if she survives him) figure the taxable amount of the annuity in later years. 1040nr form 2011 Bill's tax-free monthly amount is $100. 1040nr form 2011 (See line 4 of the worksheet. 1040nr form 2011 ) If he lives to collect more than 310 monthly payments, he will generally have to include in his gross income the full amount of any annuity payments received after 310 payments have been made. 1040nr form 2011 If Bill does not live to collect 310 monthly payments and his wife begins to receive monthly payments, she also will exclude $100 from each monthly payment until 310 payments (Bill's and hers) have been collected. 1040nr form 2011 If she dies before 310 payments have been made, a miscellaneous itemized deduction (not subject to the 2%-of-adjusted- gross-income limit) will be allowed for the unrecovered cost on her final income tax return. 1040nr form 2011 General Rule If your annuity starting date is after November 18, 1996, you cannot use the General Rule to figure the tax-free part of your CSRS or FERS annuity. 1040nr form 2011 If your annuity starting date is after July 1, 1986, but before November 19, 1996, you could have chosen to use either the General Rule or the Simplified Method. 1040nr form 2011 If your annuity starting date is before July 2, 1986, you could have chosen to use the General Rule only if you could not use the Three-Year Rule. 1040nr form 2011 Under the General Rule, you figure the tax-free part of each full monthly payment by multiplying the initial gross monthly rate of your annuity by an exclusion percentage. 1040nr form 2011 Figuring this percentage is complex and requires the use of actuarial tables. 1040nr form 2011 For these tables and other information about using the General Rule, see Publication 939. 1040nr form 2011 Three-Year Rule If your annuity starting date was before July 2, 1986, you probably had to report your annuity using the Three-Year Rule. 1040nr form 2011 Under this rule, you excluded all the annuity payments from income until you fully recovered your cost. 1040nr form 2011 After your cost was recovered, all payments became fully taxable. 1040nr form 2011 You cannot use another rule to again exclude amounts from income. 1040nr form 2011 The Three-Year Rule was repealed for retirees whose annuity starting date is after July 1, 1986. 1040nr form 2011 Worksheet A. 1040nr form 2011 Simplified Method for Bill Smith See the instructions in Part II of this publication under Simplified Method. 1040nr form 2011 1. 1040nr form 2011 Enter the total pension or annuity payments received this year. 1040nr form 2011 Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 1040nr form 2011 $ 8,000 2. 1040nr form 2011 Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. 1040nr form 2011 See Your cost in Part II, Rules for Retirees, earlier 2. 1040nr form 2011 31,000 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 1040nr form 2011 Otherwise, go to line 3. 1040nr form 2011   3. 1040nr form 2011 Enter the appropriate number from Table 1 below. 1040nr form 2011 But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. 1040nr form 2011 3. 1040nr form 2011 310 4. 1040nr form 2011 Divide line 2 by the number on line 3 4. 1040nr form 2011 100 5. 1040nr form 2011 Multiply line 4 by the number of months for which this year's payments were made. 1040nr form 2011 If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 1040nr form 2011 Otherwise, go to line 6 5. 1040nr form 2011 800 6. 1040nr form 2011 Enter any amounts previously recovered tax free in years after 1986. 1040nr form 2011 This is the amount shown on line 10 of your worksheet for last year 6. 1040nr form 2011 0 7. 1040nr form 2011 Subtract line 6 from line 2 7. 1040nr form 2011 31,000 8. 1040nr form 2011 Enter the smaller of line 5 or line 7 8. 1040nr form 2011 800 9. 1040nr form 2011 Taxable amount for year. 1040nr form 2011 Subtract line 8 from line 1. 1040nr form 2011 Enter the result, but not less than zero. 1040nr form 2011 Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. 1040nr form 2011 If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. 1040nr form 2011 If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. 1040nr form 2011 If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. 1040nr form 2011 $7,200 10. 1040nr form 2011 Was your annuity starting date before 1987?   Yes. 1040nr form 2011 Do not complete the rest of this worksheet. 1040nr form 2011    No. 1040nr form 2011 Add lines 6 and 8. 1040nr form 2011 This is the amount you have recovered tax free through 2013. 1040nr form 2011 You will need this number if you need to fill out this worksheet next year 10. 1040nr form 2011 800 11. 1040nr form 2011 Balance of cost to be recovered. 1040nr form 2011 Subtract line 10 from line 2. 1040nr form 2011 If zero, you will not have to complete this worksheet next year. 1040nr form 2011 The payments you receive next year will generally be fully taxable 11. 1040nr form 2011 $30,200 Table 1 for Line 3 Above    IF your age on your  annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. 1040nr form 2011 Alternative Annuity Option If you are eligible, you may choose an alternative form of annuity. 1040nr form 2011 If you make this choice, you will receive a lump-sum payment equal to your contributions to the plan and a reduced monthly annuity. 1040nr form 2011 You are eligible to make this choice if you meet all of the following requirements. 1040nr form 2011 You are retiring, but not on disability. 1040nr form 2011 You have a life-threatening illness or other critical medical condition. 1040nr form 2011 You do not have a former spouse entitled to court ordered benefits based on your service. 1040nr form 2011 If you are not eligible or do not choose this alternative annuity, you can skip the following discussion and go to Federal Gift Tax , later. 1040nr form 2011 Lump-Sum Payment The lump-sum payment you receive under the alternative annuity option generally has a tax-free part and a taxable part. 1040nr form 2011 The tax-free part represents part of your cost. 1040nr form 2011 The taxable part represents part of the earnings on your annuity contract. 1040nr form 2011 Your lump-sum credit (discussed later) may include a deemed deposit or redeposit that is treated as being included in your lump-sum payment even though you do not actually receive such amounts. 1040nr form 2011 Deemed deposits and redeposits, which are described later under Lump-sum credit , are taxable to you in the year of retirement. 1040nr form 2011 Your taxable amount may therefore be more than the lump-sum payment you receive. 1040nr form 2011 You must include the taxable part of the lump-sum payment in your income for the year you receive the payment unless you roll it over into another qualified plan or an IRA. 1040nr form 2011 If you do not have OPM transfer the taxable amount to an IRA or other plan in a direct rollover, tax will be withheld at a 20% rate. 1040nr form 2011 See Rollover Rules , later, for information on how to make a rollover. 1040nr form 2011 OPM can make a direct rollover only up to the amount of the lump-sum payment. 1040nr form 2011 Therefore, to defer tax on the full taxable amount if it is more than the payment, you must add funds from another source. 1040nr form 2011 The taxable part of the lump-sum payment does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. 1040nr form 2011 It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55, even if you reach age 55 in the year you receive the lump-sum payment. 1040nr form 2011 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. 1040nr form 2011 Worksheet B. 1040nr form 2011   Use Worksheet B. 1040nr form 2011 Lump-Sum Payment (near the end of this publication), to figure the taxable part of your lump-sum payment. 1040nr form 2011 Be sure to keep the completed worksheet for your records. 1040nr form 2011   To complete the worksheet, you will need to know the amount of your lump-sum credit and the present value of your annuity contract. 1040nr form 2011 Lump-sum credit. 1040nr form 2011   Generally, this is the same amount as the lump-sum payment you receive (the total of your contributions to the retirement system). 1040nr form 2011 However, for purposes of the alternative annuity option, your lump-sum credit also may include deemed deposits and redeposits that OPM advanced to your retirement account so that you are given credit for the service they represent. 1040nr form 2011 Deemed deposits (including interest) are for federal employment during which no retirement contributions were taken out of your pay. 1040nr form 2011 Deemed redeposits (including interest) are for any refunds of retirement contributions that you received and did not repay. 1040nr form 2011 You are treated as if you had received a lump-sum payment equal to the amount of your lump-sum credit and then had made a repayment to OPM of the advanced amounts. 1040nr form 2011 Present value of your annuity contract. 1040nr form 2011   The present value of your annuity contract is figured using actuarial tables provided by the IRS. 1040nr form 2011 If you are receiving a lump-sum payment under the Alternative Annuity Option, you can write to the address below to find out the present value of your annuity contract. 1040nr form 2011 Internal Revenue Service Attn: Actuarial Group 2 TE/GE SE:T:EP:RA:T:A2 NCA-629 1111 Constitution Ave. 1040nr form 2011 , NW Washington, DC 20224-0002 Example. 1040nr form 2011 David Brown retired from the federal government in 2013, one month after his 55th birthday. 1040nr form 2011 He had contributed $31,000 to his retirement plan and chose to receive a lump-sum payment of that amount under the alternative annuity option. 1040nr form 2011 The present value of his annuity contract was $155,000. 1040nr form 2011 The tax-free part and the taxable part of the lump-sum payment are figured using Worksheet B, as shown below. 1040nr form 2011 The taxable part ($24,800) is also his net cost in the plan, which is used to figure the taxable part of his reduced annuity payments. 1040nr form 2011 See Reduced Annuity , later. 1040nr form 2011 Worksheet B. 1040nr form 2011 Lump-Sum Payment for David Brown See the instructions in Part II of this publication under Alternative Annuity Option . 1040nr form 2011  1. 1040nr form 2011 Enter your lump-sum credit (your cost in the plan at the annuity starting date) 1. 1040nr form 2011 $ 31,000 2. 1040nr form 2011 Enter the present value of your annuity contract 2. 1040nr form 2011 155,000 3. 1040nr form 2011 Divide line 1 by line 2 3. 1040nr form 2011 . 1040nr form 2011 20 4. 1040nr form 2011 Tax-free amount. 1040nr form 2011 Multiply line 1 by line 3. 1040nr form 2011 (Caution: Do not include this amount on line 6 of Worksheet A in this publication. 1040nr form 2011 ) 4. 1040nr form 2011 $6,200 5. 1040nr form 2011 Taxable amount (net cost in the plan). 1040nr form 2011 Subtract line 4 from line 1. 1040nr form 2011 Include this amount in the total on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. 1040nr form 2011 Also, enter this amount on line 2 of Worksheet A in this publication. 1040nr form 2011 5. 1040nr form 2011 $24,800   Lump-sum payment in installments. 1040nr form 2011   If you choose the alternative annuity option, you usually will receive the lump-sum payment in two equal installments. 1040nr form 2011 You will receive the first installment after you make the choice upon retirement. 1040nr form 2011 The second installment will be paid to you, with interest, in the next calendar year. 1040nr form 2011 (Exceptions to the installment rule are provided for cases of critical medical need. 1040nr form 2011 )   Even though the lump-sum payment is made in installments, the overall tax treatment (explained at the beginning of this discussion) is the same as if the whole payment were paid at once. 1040nr form 2011 If the payment has a tax-free part, you must treat the taxable part as received first. 1040nr form 2011 How to report. 1040nr form 2011   Add any actual or deemed payment of your lump-sum credit (defined earlier) to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. 1040nr form 2011 Add the taxable part to the total for Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b, unless you roll over the taxable part to your traditional IRA or a qualified retirement plan. 1040nr form 2011    If you receive the lump-sum payment in two installments, include any interest paid with the second installment on line 8a of either Form 1040 or Form 1040A, or on line 9a of Form 1040NR. 1040nr form 2011 Reduced Annuity If you have chosen to receive a lump-sum payment under the alternative annuity option, you also will receive reduced monthly annuity payments. 1040nr form 2011 These annuity payments each will have a tax-free and a taxable part. 1040nr form 2011 To figure the tax-free part of each annuity payment, you must use the Simplified Method (Worksheet A). 1040nr form 2011 For instructions on how to complete the worksheet, see Worksheet A under Simplified Method, earlier. 1040nr form 2011 To complete Worksheet A, line 2, you must reduce your cost in the plan by the tax-free part of the lump-sum payment you received. 1040nr form 2011 Enter as your net cost on line 2 the amount from Worksheet B, line 5. 1040nr form 2011 Do not include the tax-free part of the lump-sum payment with other amounts recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. 1040nr form 2011 Example. 1040nr form 2011 The facts are the same as in the example for David Brown in the preceding discussion. 1040nr form 2011 In addition, David received 10 annuity payments in 2013 of $1,200 each. 1040nr form 2011 Using Worksheet A, he figures the taxable part of his annuity payments. 1040nr form 2011 He completes line 2 by reducing his $31,000 cost by the $6,200 tax-free part of his lump-sum payment. 1040nr form 2011 His entry on line 2 is his $24,800 net cost in the plan (the amount from Worksheet B, line 5). 1040nr form 2011 He does not include the tax-free part of his lump-sum payment on Worksheet A, line 6. 1040nr form 2011 David's filled-in Worksheet A is shown on the next page. 1040nr form 2011 Worksheet A. 1040nr form 2011 Simplified Method for David Brown See the instructions in Part II of this publication under Simplified Method . 1040nr form 2011 1. 1040nr form 2011 Enter the total pension or annuity payments received this year. 1040nr form 2011 Also, add this amount to the total for Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a 1. 1040nr form 2011 $ 12,000 2. 1040nr form 2011 Enter your cost in the plan at the annuity starting date, plus any death benefit exclusion*. 1040nr form 2011 See Your cost in Part II, Rules for Retirees, earlier 2. 1040nr form 2011 24,800 Note: If your annuity starting date was before this year and you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). 1040nr form 2011 Otherwise, go to line 3. 1040nr form 2011   3. 1040nr form 2011 Enter the appropriate number from Table 1 below. 1040nr form 2011 But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below. 1040nr form 2011 3. 1040nr form 2011 360 4. 1040nr form 2011 Divide line 2 by the number on line 3 4. 1040nr form 2011 68. 1040nr form 2011 89 5. 1040nr form 2011 Multiply line 4 by the number of months for which this year's payments were made. 1040nr form 2011 If your annuity starting date was before 1987, enter this amount on line 8 below and skip lines 6, 7, 10, and 11. 1040nr form 2011 Otherwise, go to line 6 5. 1040nr form 2011 688. 1040nr form 2011 90 6. 1040nr form 2011 Enter any amounts previously recovered tax free in years after 1986. 1040nr form 2011 This is the amount shown on line 10 of your worksheet for last year 6. 1040nr form 2011 0 7. 1040nr form 2011 Subtract line 6 from line 2 7. 1040nr form 2011 24,800 8. 1040nr form 2011 Enter the smaller of line 5 or line 7 8. 1040nr form 2011 688. 1040nr form 2011 90 9. 1040nr form 2011 Taxable amount for year. 1040nr form 2011 Subtract line 8 from line 1. 1040nr form 2011 Enter the result, but not less than zero. 1040nr form 2011 Also, add this amount to the total for Form 1040, line 16b, or Form 1040A, line 12b. 1040nr form 2011 If you are a nonresident alien, also enter this amount on line 1 of Worksheet C. 1040nr form 2011 If your Form CSA 1099R or Form CSF 1099R shows a larger amount, use the amount figured on this line instead. 1040nr form 2011 If you are a retired public safety officer, see Distributions Used To Pay Insurance Premiums for Public Safety Officers in Part II before entering an amount on your tax return or Worksheet C, line 1 9. 1040nr form 2011 $11,311. 1040nr form 2011 10 10. 1040nr form 2011 Was your annuity starting date before 1987?   Yes. 1040nr form 2011 Do not complete the rest of this worksheet. 1040nr form 2011    No. 1040nr form 2011 Add lines 6 and 8. 1040nr form 2011 This is the amount you have recovered tax free through 2013. 1040nr form 2011 You will need this number if you need to fill out this worksheet next year 10. 1040nr form 2011 688. 1040nr form 2011 90 11. 1040nr form 2011 Balance of cost to be recovered. 1040nr form 2011 Subtract line 10 from line 2. 1040nr form 2011 If zero, you will not have to complete this worksheet next year. 1040nr form 2011 The payments you receive next year will generally be fully taxable 11. 1040nr form 2011 $24,111. 1040nr form 2011 10 Table 1 for Line 3 Above    IF your age on your annuity starting date was   AND your annuity starting date was—     before November 19, 1996,  THEN enter on line 3 after November 18, 1996,  THEN enter on line 3   55 or under 300 360   56–60 260 310   61–65 240 260   66–70 170 210   71 or over 120 160  Table 2 for Line 3 Above    IF the annuitants' combined ages on your annuity starting date were   THEN enter on line 3         110 or under   410         111–120   360         121–130   310         131–140   260         141 or over   210       * A death benefit exclusion of up to $5,000 applied to certain benefits received by survivors of employees who died before August 21, 1996. 1040nr form 2011 Reemployment after choosing the alternative annuity option. 1040nr form 2011 If you chose this option when you retired and then you were reemployed by the Federal Government before retiring again, your Form CSA 1099R may show only the amount of your contributions to your retirement plan during your reemployment. 1040nr form 2011 If the amount on the form does not include all your contributions, disregard it and use your total contributions to figure the taxable part of your annuity payments. 1040nr form 2011 Annuity starting date before November 19, 1996. 1040nr form 2011   If your annuity starting date is before November 19, 1996, and you chose the alternative annuity option, the taxable and tax-free parts of your lump-sum payment and your annuity payments are figured using different rules. 1040nr form 2011 Under those rules, you do not reduce your cost in the plan (Worksheet A, line 2) by the tax-free part of the lump-sum payment. 1040nr form 2011 However, you must include that tax-free amount with other amounts previously recovered tax free (Worksheet A, line 6) when limiting your total exclusion to your total cost. 1040nr form 2011 Federal Gift Tax If, through the exercise or nonexercise of an election or option, you provide an annuity for your beneficiary at or after your death, you have made a gift. 1040nr form 2011 The gift may be taxable for gift tax purposes. 1040nr form 2011 The value of the gift is equal to the value of the annuity. 1040nr form 2011 Joint and survivor annuity. 1040nr form 2011   If the gift is an interest in a joint and survivor annuity where only you and your spouse can receive payments before the death of the last spouse to die, the gift generally will qualify for the unlimited marital deduction. 1040nr form 2011 This will eliminate any gift tax liability with regard to that gift. 1040nr form 2011   If you provide survivor annuity benefits for someone other than your current spouse, such as your former spouse, the unlimited marital deduction will not apply. 1040nr form 2011 This may result in a taxable gift. 1040nr form 2011 More information. 1040nr form 2011   For information about the gift tax, see Publication 950, Introduction to Estate and Gift Taxes, and Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and its instructions. 1040nr form 2011 Retirement During the Past Year If you have recently retired, the following discussions covering annual leave, voluntary contributions, and community property may apply to you. 1040nr form 2011 Annual leave. 1040nr form 2011   A payment for accrued annual leave received on retirement is a salary payment. 1040nr form 2011 It is taxable as wages in the tax year you receive it. 1040nr form 2011 Voluntary contributions. 1040nr form 2011   Voluntary contributions to the retirement fund are those made in addition to the regular contributions that were deducted from your salary. 1040nr form 2011 They also include the regular contributions withheld from your salary after you have the years of service necessary for the maximum annuity allowed by law. 1040nr form 2011 Voluntary contributions are not the same as employee contributions to the Thrift Savings Plan. 1040nr form 2011 See Thrift Savings Plan , later. 1040nr form 2011 Additional annuity benefit. 1040nr form 2011   If you choose to receive an additional annuity benefit from your voluntary contributions, it is treated separately from the annuity benefit that comes from the regular contributions deducted from your salary. 1040nr form 2011 This separate treatment applies for figuring the amounts to be excluded from, and included in, gross income. 1040nr form 2011 It does not matter that you receive only one monthly check covering both benefits. 1040nr form 2011 Each year you will receive a Form CSA 1099R that will show how much of your total annuity received in the past year was from each type of benefit. 1040nr form 2011   Figure the taxable and tax-free parts of your additional monthly benefits from voluntary contributions using the rules that apply to regular CSRS and FERS annuities, as explained earlier. 1040nr form 2011 Refund of voluntary contributions. 1040nr form 2011   If you choose to receive a refund of your voluntary contributions plus accrued interest, the interest is taxable to you in the tax year it is distributed unless you roll it over to a traditional IRA or another qualified retirement plan. 1040nr form 2011 If you do not have OPM transfer the interest to a traditional IRA or other qualified retirement plan in a direct rollover, tax will be withheld at a 20% rate. 1040nr form 2011 See Rollover Rules , later. 1040nr form 2011 The interest does not qualify as a lump-sum distribution eligible for capital gain treatment or the 10-year tax option. 1040nr form 2011 It also may be subject to an additional 10% tax on early distributions if you separate from service before the calendar year in which you reach age 55. 1040nr form 2011 For more information, see Lump-Sum Distributions and Tax on Early Distributions in Publication 575. 1040nr form 2011 Community property laws. 1040nr form 2011   State community property laws apply to your annuity. 1040nr form 2011 These laws will affect your income tax only if you file a return separately from your spouse. 1040nr form 2011   Generally, the determination of whether your annuity is separate income (taxable to you) or community income (taxable to both you and your spouse) is based on your marital status and domicile when you were working. 1040nr form 2011 Regardless of whether you are now living in a community property state or a noncommunity property state, your current annuity may be community income if it is based on services you performed while married and domiciled in a community property state. 1040nr form 2011   At any time, you have only one domicile even though you may have more than one home. 1040nr form 2011 Your domicile is your fixed and permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. 1040nr form 2011 The question of your domicile is mainly a matter of your intentions as indicated by your actions. 1040nr form 2011   If your annuity is a mixture of community income and separate income, you must divide it between the two kinds of income. 1040nr form 2011 The division is based on your periods of service and domicile in community and noncommunity property states while you were married. 1040nr form 2011   For more information, see Publication 555, Community Property. 1040nr form 2011 Reemployment After Retirement If you retired from federal service and are later rehired by the Federal Government as an employee, you can continue to receive your annuity during reemployment. 1040nr form 2011 The employing agency usually will pay you the difference between your salary for your period of reemployment and your annuity. 1040nr form 2011 This amount is taxable as wages. 1040nr form 2011 Your annuity will continue to be taxed just as it was before. 1040nr form 2011 If you are still recovering your cost, you continue to do so. 1040nr form 2011 If you have recovered your cost, the annuity you receive while you are reemployed generally is fully taxable. 1040nr form 2011 Nonresident Aliens The following special rules apply to nonresident alien federal employees performing services outside the United States and to nonresident alien retirees and beneficiaries. 1040nr form 2011 A nonresident alien is an individual who is not a citizen or a resident alien of the United States. 1040nr form 2011 Special rule for figuring your total contributions. 1040nr form 2011   Your contributions to the retirement plan (your cost) also include the government's contributions to the plan to a certain extent. 1040nr form 2011 You include government contributions that would not have been taxable to you at the time they were contributed if they had been paid directly to you. 1040nr form 2011 For example, government contributions would not have been taxable to you if, at the time made, your services were performed outside the United States. 1040nr form 2011 Thus, your cost is increased by these government contributions and the benefits that you, or your beneficiary, must include in income are reduced. 1040nr form 2011   This method of figuring your total contributions does not apply to any contributions the government made on your behalf after you became a citizen or a resident alien of the United States. 1040nr form 2011 Limit on taxable amount. 1040nr form 2011   There is a limit on the taxable amount of payments received from the CSRS, the FERS, or the TSP by a nonresident alien retiree or nonresident alien beneficiary. 1040nr form 2011 Figure this limited taxable amount by multiplying the otherwise taxable amount by a fraction. 1040nr form 2011 The numerator of the fraction is the retiree's total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay, other than tax-exempt pay for services performed outside the United States. 1040nr form 2011 The denominator is the retiree's total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay for all services. 1040nr form 2011    Basic pay includes regular pay plus any standby differential. 1040nr form 2011 It does not include bonuses, overtime pay, certain retroactive pay, uniform or other allowances, or lump-sum leave payments. 1040nr form 2011   To figure the limited taxable amount of your CSRS or FERS annuity or your TSP distributions, use Worksheet C. 1040nr form 2011 (For an annuity, first complete Worksheet A in this publication. 1040nr form 2011 ) Worksheet C. 1040nr form 2011 Limited Taxable Amount for Nonresident Alien 1. 1040nr form 2011 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. 1040nr form 2011   2. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay other than tax-exempt pay for services performed outside the United States 2. 1040nr form 2011   3. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay for all services 3. 1040nr form 2011   4. 1040nr form 2011 Divide line 2 by line 3 4. 1040nr form 2011   5. 1040nr form 2011 Limited taxable amount. 1040nr form 2011 Multiply line 1 by line 4. 1040nr form 2011 Enter this amount on Form 1040NR, line 17b 5. 1040nr form 2011   Example 1. 1040nr form 2011 You are a nonresident alien who performed all services for the U. 1040nr form 2011 S. 1040nr form 2011 Government abroad as a nonresident alien. 1040nr form 2011 You retired and began to receive a monthly annuity of $200. 1040nr form 2011 Your total basic pay for all services for the U. 1040nr form 2011 S. 1040nr form 2011 Government was $100,000. 1040nr form 2011 All of your basic pay was tax exempt because it was not U. 1040nr form 2011 S. 1040nr form 2011 source income. 1040nr form 2011 The taxable amount of your annuity using Worksheet A in this publication is $720. 1040nr form 2011 You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. 1040nr form 2011 Worksheet C. 1040nr form 2011 Limited Taxable Amount for Nonresident Alien — Example 1 1. 1040nr form 2011 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. 1040nr form 2011 $ 720 2. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay other than tax-exempt pay for services performed outside the United States 2. 1040nr form 2011 0 3. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay for all services 3. 1040nr form 2011 100,000 4. 1040nr form 2011 Divide line 2 by line 3 4. 1040nr form 2011 0 5. 1040nr form 2011 Limited taxable amount. 1040nr form 2011 Multiply line 1 by line 4. 1040nr form 2011 Enter this amount on Form 1040NR, line 17b 5. 1040nr form 2011 0 Example 2. 1040nr form 2011 You are a nonresident alien who performed services for the U. 1040nr form 2011 S. 1040nr form 2011 Government as a nonresident alien both within the United States and abroad. 1040nr form 2011 You retired and began to receive a monthly annuity of $240. 1040nr form 2011 Your total basic pay for your services for the U. 1040nr form 2011 S. 1040nr form 2011 Government was $120,000; $40,000 was for work done in the United States and $80,000 was for your work done in a foreign country. 1040nr form 2011 The part of your total basic pay for your work done in a foreign country was tax exempt because it was not U. 1040nr form 2011 S. 1040nr form 2011 source income. 1040nr form 2011 The taxable amount of your annuity figured using Worksheet A in this publication is $1,980. 1040nr form 2011 You are a nonresident alien, so you figure the limited taxable amount of your annuity using Worksheet C as follows. 1040nr form 2011 Worksheet C. 1040nr form 2011 Limited Taxable Amount for Nonresident Alien — Example 2 1. 1040nr form 2011 Enter the otherwise taxable amount of the CSRS or FERS annuity (from line 9 of Worksheet A or from Forms CSA 1099R or CSF 1099R) or TSP distributions (from Form 1099R) 1. 1040nr form 2011 $ 1,980 2. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay other than tax-exempt pay for services performed outside the United States 2. 1040nr form 2011 40,000 3. 1040nr form 2011 Enter the total U. 1040nr form 2011 S. 1040nr form 2011 Government basic pay for all services 3. 1040nr form 2011 120,000 4. 1040nr form 2011 Divide line 2 by line 3 4. 1040nr form 2011 . 1040nr form 2011 333 5. 1040nr form 2011 Limited taxable amount. 1040nr form 2011 Multiply line 1 by line 4. 1040nr form 2011 Enter this amount on Form 1040NR, line 17b 5. 1040nr form 2011 659 Thrift Savings Plan Generally, all of the money in your TSP account is taxed as ordinary income when you receive it. 1040nr form 2011 (However, see Roth TSP balance and Uniformed services TSP accounts, next. 1040nr form 2011 ) This is because neither the contributions to your traditional TSP balance nor its earnings have been included previously in your taxable income. 1040nr form 2011 The way that you withdraw your account balance determines when you must pay the tax. 1040nr form 2011 Roth TSP balance. 1040nr form 2011   The TSP also offers a Roth TSP option, which allows you to make after-tax contributions into your TSP account. 1040nr form 2011 This means Roth TSP contributions are included in your income. 1040nr form 2011 The contribution limits are the same as the traditional TSP. 1040nr form 2011 You can elect to have part or all of your TSP contributions designated as a Roth TSP. 1040nr form 2011 Agency contributions will be part of your traditional TSP balance. 1040nr form 2011 Also, you cannot roll over any portion of your traditional TSP into your Roth TSP. 1040nr form 2011   Qualified distributions from your Roth TSP are not included in income. 1040nr form 2011 This applies to both your cost in the account and income earned on that account. 1040nr form 2011 A qualified distribution is generally a distribution that is: Made after a 5-tax-year period of participation, and Made on or after the date you reach age 59½, made to a beneficiary or your estate on or after your death, or attributable to your being disabled. 1040nr form 2011   For more information, go to the TSP website, www. 1040nr form 2011 tsp. 1040nr form 2011 gov, or the TSP Service Office. 1040nr form 2011 See Publication 575, Pension and Annuity Income, for more information about designated Roth accounts. 1040nr form 2011 Uniformed services TSP accounts. 1040nr form 2011   If you have a uniformed services TSP account that includes contributions from combat zone pay, the distributions attributable to those contributions are tax exempt. 1040nr form 2011 However, any earnings on those contributions to a traditional TSP balance are subject to tax when they are distributed. 1040nr form 2011 See Roth TSP balance discussed previously to get more information about Roth contributions. 1040nr form 2011 The statement you receive from the TSP will separately state the total amount of your distribution and the amount of your taxable distribution for the year. 1040nr form 2011 You can get more information from the TSP website, www. 1040nr form 2011 tsp. 1040nr form 2011 gov, or the TSP Service Office. 1040nr form 2011 Direct rollover by the TSP. 1040nr form 2011   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a traditional IRA or other qualified retirement plan, the tax on that part is deferred until you receive payments from the traditional IRA or other plan. 1040nr form 2011 However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. 1040nr form 2011 Also, see Rollover Rules , later. 1040nr form 2011 Direct rollover by the TSP to a Roth IRA. 1040nr form 2011   If you ask the TSP to transfer any part of the money in your account, from traditional contributions and its earnings, to a Roth IRA, the amount transferred will be taxed in the current year. 1040nr form 2011 However, see the following Note for a discussion on direct rollovers by the TSP of Roth contributions and its earnings. 1040nr form 2011 Also, see Rollovers to Roth IRAs for more information, later. 1040nr form 2011 Note. 1040nr form 2011 A direct rollover of your Roth contributions and its earnings (if certain conditions are met, see Roth TSP balance , earlier) in your TSP account to a Roth 401(k), Roth 403(b), Roth 457(b), or Roth IRA are not subject to tax when they are transferred or when you receive payments from those accounts at a later date. 1040nr form 2011 This is because you already paid tax on those contributions. 1040nr form 2011 You cannot rollover Roth contributions and its earnings in your TSP account to a traditional IRA. 1040nr form 2011 TSP annuity. 1040nr form 2011   If you ask the TSP to buy an annuity with the money in your account, from traditional contributions and its earnings, the annuity payments are taxed when you receive them. 1040nr form 2011 The payments are not subject to the additional 10% tax on early distributions, even if you are under age 55 when they begin. 1040nr form 2011 However, there is no tax on the annuity payments if the annuity is purchased using the money in your account from Roth contributions and its earnings if certain conditions are met. 1040nr form 2011 See Roth TSP balance , earlier. 1040nr form 2011 This is because you already paid tax on those contributions. 1040nr form 2011 Cash withdrawals. 1040nr form 2011   If you withdraw any of the money in your TSP account, from traditional contributions and its earnings, it is generally taxed as ordinary income when you receive it unless you roll it over into a traditional IRA or other qualified plan. 1040nr form 2011 (See Rollover Rules , later. 1040nr form 2011 ) If you receive your entire TSP account balance in a single tax year, you may be able to use the 10-year tax option to figure your tax. 1040nr form 2011 See Lump-Sum Distributions in Publication 575 for details. 1040nr form 2011 However, there is no tax if you withdraw money in your TSP account from Roth contributions and its earnings if certain conditions are met. 1040nr form 2011 See Roth TSP balance , earlier. 1040nr form 2011    To qualify for the 10-year tax option, the plan participant must have been born before January 2, 1936. 1040nr form 2011   If you receive a single payment or you choose to receive your account balance in monthly payments over a period of less than 10 years, the TSP generally must withhold 20% for federal income tax. 1040nr form 2011 If you choose to receive your account balance in monthly payments over a period of 10 or more years or a period based on your life expectancy, the payments are subject to withholding as if you are married with three withholding allowances, unless you submit a withholding certificate. 1040nr form 2011 See also Withholding from Thrift Savings Plan payments earlier under Tax Withholding and Estimated Tax in Part I. 1040nr form 2011 However, there is no withholding requirement for amounts withdrawn from your TSP account that is from Roth contributions and its earnings, if certain conditions are met. 1040nr form 2011 See Roth TSP balance , earlier, for a discussion of those conditions. 1040nr form 2011 Tax on early distributions. 1040nr form 2011   Any money paid to you from your TSP account before you reach age 59½ may be subject to an additional 10% tax on early distributions. 1040nr form 2011 However, this additional tax does not apply in certain situations, including any of the following. 1040nr form 2011 You receive the distribution and separate from government service during or after the calendar year in which you reach age 55. 1040nr form 2011 You choose to receive your account balance in monthly payments based on your life expectancy. 1040nr form 2011 You are totally and permanently disabled. 1040nr form 2011 You receive amounts from your Roth contributions since that represents a return of your cost (after-tax money). 1040nr form 2011 The earnings may be subject to the 10% tax depending on whether you met certain conditions. 1040nr form 2011 See Roth TSP balance , earlier. 1040nr form 2011   For more information, see Tax on Early Distributions in Publication 575. 1040nr form 2011 Outstanding loan. 1040nr form 2011   If the TSP declares a distribution from your account because money you borrowed has not been repaid when you separate from government service, your account is reduced and the amount of the distribution (your unpaid loan balance and any unpaid interest), from traditional contributions and its earnings, is taxed in the year declared. 1040nr form 2011 The distribution also may be subject to the additional 10% tax on early distributions. 1040nr form 2011 However, the tax will be deferred if you make a rollover contribution to a traditional IRA or other qualified plan equal to the declared distribution amount. 1040nr form 2011 See Rollover Rules , later. 1040nr form 2011   If you withdraw any money from your TSP account in that same year, the TSP must withhold income tax of 20% of the total of the declared distribution and the amount withdrawn. 1040nr form 2011 However, no withholding is required for portions of the distribution that is from Roth contributions and its earnings, if certain conditions are met. 1040nr form 2011 See Roth TSP balance , earlier. 1040nr form 2011 More information. 1040nr form 2011   For more information about the TSP, see Summary of the Thrift Savings Plan, distributed to all federal employees. 1040nr form 2011 Also, see Important Tax Information About Payments From Your TSP Account and Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, which are available from your agency personnel office or from the TSP by calling 1-TSP-YOU-FIRST (1-877-968-3778) and for participants who are deaf, hard of hearing, or have a speech disability, call 1-TSP-THRIFT5 (1-877-847-4385). 1040nr form 2011    The above documents are also available on the TSP website at www. 1040nr form 2011 tsp. 1040nr form 2011 gov. 1040nr form 2011 Select “Forms & Publications. 1040nr form 2011 ” Rollover Rules Generally, a rollover is a tax-free withdrawal of cash or other assets from one qualified retirement plan or traditional IRA and its reinvestment in another qualified retirement plan or traditional IRA. 1040nr form 2011 You do not include the amount rolled over in your income, and you cannot take a deduction for it. 1040nr form 2011 The amount rolled over is taxed later as the new program pays that amount to you. 1040nr form 2011 If you roll over amounts into a traditional IRA, later distributions of these amounts from the traditional IRA do not qualify for the capital gain or the 10-year tax option. 1040nr form 2011 However, capital gain treatment or the 10-year tax option will be restored if the traditional IRA contains only amounts rolled over from a qualified plan and these amounts are rolled over from the traditional IRA into a qualified retirement plan. 1040nr form 2011 To qualify for the capital gain treatment or 10-year tax option, the plan participant must have been born before January 2, 1936. 1040nr form 2011 You can also roll over a distribution from a qualified retirement plan into a Roth IRA. 1040nr form 2011 Although the transfer of a distribution into a Roth IRA is considered a rollover for Roth IRA purposes, it is not a tax-free transfer unless you are rolling over amounts from Roth contributions and its earnings. 1040nr form 2011 See Rollovers to Roth IRAs , later, for more information. 1040nr form 2011 Qualified retirement plan. 1040nr form 2011   For this purpose, a qualified retirement plan generally is: A qualified employee plan, A qualified employee annuity, A tax-sheltered annuity plan (403(b) plan), or An eligible state or local government section 457 deferred compensation plan. 1040nr form 2011 The CSRS, FERS, and TSP are considered qualified retirement plans. 1040nr form 2011 Distributions eligible for rollover treatment. 1040nr form 2011   If you receive a refund of your CSRS or FERS contributions when you leave government service, you can roll over any interest you receive on the contributions. 1040nr form 2011 You cannot roll over any part of your CSRS or FERS annuity payments. 1040nr form 2011   You can roll over a distribution of any part of your TSP account balance except: A distribution of your account balance that you choose to receive in monthly payments over: Your life expectancy, The joint life expectancies of you and your beneficiary, or A period of 10 years or more, A required minimum distribution generally beginning at age 70½, A declared distribution because of an unrepaid loan, if you have not separated from government service (see Outstanding loan under Thrift Savings Plan, earlier), or A hardship distribution. 1040nr form 2011   In addition, a distribution to your beneficiary generally is not treated as an eligible rollover distribution. 1040nr form 2011 However, see Qualified domestic relations order (QDRO) and Rollovers by surviving spouse , and Rollovers by nonspouse beneficiary , later. 1040nr form 2011 Direct rollover option. 1040nr form 2011   You can choose to have the OPM or TSP transfer any part of an eligible rollover distribution directly to another qualified retirement plan that accepts rollover distributions or to a traditional IRA or Roth IRA. 1040nr form 2011   There is an automatic rollover requirement for mandatory distributions. 1040nr form 2011 A mandatory distribution is a distribution made without your consent and before you reach age 62 or normal retirement age, whichever is later. 1040nr form 2011 The automatic rollover requirement applies if the distribution is more than $1,000 and is an eligible rollover distribution. 1040nr form 2011 You can choose to have the distribution paid directly to you or rolled over directly to your traditional or Roth IRA or another qualified retirement plan. 1040nr form 2011 If you do not make this choice, OPM will automatically roll over the distribution into an IRA of a designated trustee or issuer. 1040nr form 2011 No tax withheld. 1040nr form 2011   If you choose the direct rollover option or have an automatic rollover, no tax will be withheld from any part of the distribution that is directly paid to the trustee of the other plan. 1040nr form 2011 However, if the rollover is to a Roth IRA, you may want to choose to have tax withheld since any amount rolled over is generally included in income. 1040nr form 2011 Any part of the eligible rollover distribution paid to you is subject to withholding at a 20% rate. 1040nr form 2011 Direct roll over amounts from Roth contributions and its earnings do not have tax withheld because you already paid tax on those amounts. 1040nr form 2011 Payment to you option. 1040nr form 2011   If an eligible rollover distribution is paid to you, the OPM or TSP must withhold 20% for income tax even if you plan to roll over the distribution to another qualified retirement plan, traditional or Roth IRA. 1040nr form 2011 However, the full amount is treated as distributed to you even though you actually receive only 80%. 1040nr form 2011 You generally must include in income any part (including the part withheld) that you do not roll over within 60 days to another qualified retirement plan or to a traditional IRA. 1040nr form 2011 Rollovers to Roth IRAs are generally included in income. 1040nr form 2011 Eligible rollover distributions that are from Roth contributions do not have tax withheld because you already paid tax on those amounts. 1040nr form 2011 If you leave government service before the calendar year in which you reach age 55 and are under age 59½ when a distribution is paid to you, you may have to pay an additional 10% tax on any part, including any tax withheld, that you do not roll over. 1040nr form 2011 However, distributions from Roth contributions will not be subject to the 10% additional tax because it is a return of your cost (after-tax money). 1040nr form 2011 Earnings from those contributions may be subject to the 10% additional tax if certain conditions are not met. 1040nr form 2011 See Roth TSP balance , earlier. 1040nr form 2011 Also, see Tax on Early Distributions in Publication 575. 1040nr form 2011 Exception to withholding. 1040nr form 2011   Withholding from an eligible rollover distribution paid to you is not required if the distributions for your tax year total less than $200. 1040nr form 2011 Partial rollovers. 1040nr form 2011   A lump-sum distribution may qualify for capital gain treatment or the 10-year tax option if the plan participant was born before January 2, 1936. 1040nr form 2011 See Lump-Sum Distributions in Publication 575. 1040nr form 2011 However, if you roll over any part of the distribution, the part you keep does not qualify for this special tax treatment. 1040nr form 2011 Rolling over more than amount received. 1040nr form 2011   If you want to roll over more of an eligible rollover distribution than the amount you received after income tax was withheld, you will have to add funds from some other source (such as your savings or borrowed amounts). 1040nr form 2011 Example. 1040nr form 2011 You left government service at age 53. 1040nr form 2011 On February 1, 2013, you receive an eligible rollover distribution of $10,000 from you
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The 1040nr Form 2011

1040nr form 2011 4. 1040nr form 2011   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. 1040nr form 2011 Resident aliens are generally taxed in the same way as U. 1040nr form 2011 S. 1040nr form 2011 citizens. 1040nr form 2011 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business and how it is taxed. 1040nr form 2011 Topics - This chapter discusses: Income that is effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 Income that is not effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 Interrupted period of residence. 1040nr form 2011 Expatriation tax. 1040nr form 2011 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. 1040nr form 2011 Resident Aliens Resident aliens are generally taxed in the same way as U. 1040nr form 2011 S. 1040nr form 2011 citizens. 1040nr form 2011 This means that their worldwide income is subject to U. 1040nr form 2011 S. 1040nr form 2011 tax and must be reported on their U. 1040nr form 2011 S. 1040nr form 2011 tax return. 1040nr form 2011 Income of resident aliens is subject to the graduated tax rates that apply to U. 1040nr form 2011 S. 1040nr form 2011 citizens. 1040nr form 2011 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. 1040nr form 2011 S. 1040nr form 2011 citizens. 1040nr form 2011 Nonresident Aliens A nonresident alien's income that is subject to U. 1040nr form 2011 S. 1040nr form 2011 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). 1040nr form 2011 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. 1040nr form 2011 These are the same rates that apply to U. 1040nr form 2011 S. 1040nr form 2011 citizens and residents. 1040nr form 2011 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. 1040nr form 2011 If you were formerly a U. 1040nr form 2011 S. 1040nr form 2011 citizen or resident alien, these rules may not apply. 1040nr form 2011 See Expatriation Tax, later, in this chapter. 1040nr form 2011 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. 1040nr form 2011 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. 1040nr form 2011 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. 1040nr form 2011 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. 1040nr form 2011 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. 1040nr form 2011 For more information, see Services Performed for Foreign Employer in chapter 3. 1040nr form 2011 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. 1040nr form 2011 Students and trainees. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 The taxable part of any scholarship or fellowship grant that is U. 1040nr form 2011 S. 1040nr form 2011 source income is treated as effectively connected with a trade or business in the United States. 1040nr form 2011 Business operations. 1040nr form 2011   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. 1040nr form 2011 Partnerships. 1040nr form 2011   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. 1040nr form 2011 Beneficiary of an estate or trust. 1040nr form 2011   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. 1040nr form 2011 Trading in stocks, securities, and commodities. 1040nr form 2011   If your only U. 1040nr form 2011 S. 1040nr form 2011 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. 1040nr form 2011 S. 1040nr form 2011 resident broker or other agent, you are not engaged in a trade or business in the United States. 1040nr form 2011   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. 1040nr form 2011   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. 1040nr form 2011   This discussion does not apply if you have a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 Trading for a nonresident alien's own account. 1040nr form 2011   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. 1040nr form 2011 S. 1040nr form 2011 business activity. 1040nr form 2011 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. 1040nr form 2011   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. 1040nr form 2011 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. 1040nr form 2011 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . 1040nr form 2011 Effectively Connected Income If you are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. 1040nr form 2011 For a discussion of these rules, see Foreign Income , later. 1040nr form 2011 Investment Income Investment income from U. 1040nr form 2011 S. 1040nr form 2011 sources that may or may not be treated as effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business generally falls into the following three categories. 1040nr form 2011 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. 1040nr form 2011 ). 1040nr form 2011 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. 1040nr form 2011 Timber, coal, or domestic iron ore with a retained economic interest. 1040nr form 2011 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. 1040nr form 2011 Patents transferred before October 5, 1966. 1040nr form 2011 Original issue discount obligations. 1040nr form 2011 Capital gains (and losses). 1040nr form 2011 Use the two tests, described next, to determine whether an item of U. 1040nr form 2011 S. 1040nr form 2011 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. 1040nr form 2011 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. 1040nr form 2011 Asset-use test. 1040nr form 2011   This test usually applies to income that is not directly produced by trade or business activities. 1040nr form 2011 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. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 Business-activities test. 1040nr form 2011   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. 1040nr form 2011 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. 1040nr form 2011 Under this test, if the conduct of the U. 1040nr form 2011 S. 1040nr form 2011 trade or business was a material factor in producing the income, the income is considered effectively connected. 1040nr form 2011 Personal Service Income You usually are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business when you perform personal services in the United States. 1040nr form 2011 Personal service income you receive in a tax year in which you are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business is effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 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. 1040nr form 2011 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. 1040nr form 2011 The income may be paid to you in the form of cash, services, or property. 1040nr form 2011 If you are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Pensions. 1040nr form 2011   If you were a nonresident alien engaged in a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 This is true whether or not you are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business in the year you receive the retirement pay. 1040nr form 2011 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. 1040nr form 2011 You had a fixed place of business in the United States involved in earning the income. 1040nr form 2011 At least 90% of your U. 1040nr form 2011 S. 1040nr form 2011 source transportation income is attributable to regularly scheduled transportation. 1040nr form 2011 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. 1040nr form 2011 “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. 1040nr form 2011 This definition applies to both scheduled and chartered air transportation. 1040nr form 2011 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. 1040nr form 2011 See Transportation Tax, later, in this chapter. 1040nr form 2011 Business Profits and Losses and Sales Transactions All profits or losses from U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 A share of U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 Real Property Gain or Loss Gains and losses from the sale or exchange of U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 You must treat the gain or loss as effectively connected with that trade or business. 1040nr form 2011 U. 1040nr form 2011 S. 1040nr form 2011 real property interest. 1040nr form 2011   This is any interest in real property located in the United States or the U. 1040nr form 2011 S. 1040nr form 2011 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. 1040nr form 2011 S. 1040nr form 2011 real property holding corporation. 1040nr form 2011 Real property includes the following. 1040nr form 2011 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. 1040nr form 2011 Improvements on land, including buildings, other permanent structures, and their structural components. 1040nr form 2011 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. 1040nr form 2011 U. 1040nr form 2011 S. 1040nr form 2011 real property holding corporation. 1040nr form 2011   A corporation is a U. 1040nr form 2011 S. 1040nr form 2011 real property holding corporation if the fair market value of the corporation's U. 1040nr form 2011 S. 1040nr form 2011 real property interests are at least 50% of the total fair market value of: The corporation's U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business unless you establish that the corporation is not a U. 1040nr form 2011 S. 1040nr form 2011 real property holding corporation. 1040nr form 2011   A U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 An interest in a foreign corporation owning U. 1040nr form 2011 S. 1040nr form 2011 real property generally is not a U. 1040nr form 2011 S. 1040nr form 2011 real property interest unless the corporation chooses to be treated as a domestic corporation. 1040nr form 2011 Qualified investment entities. 1040nr form 2011   Special rules apply to qualified investment entities (QIEs). 1040nr form 2011 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. 1040nr form 2011 S. 1040nr form 2011 real property holding corporation. 1040nr form 2011    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest is treated as a U. 1040nr form 2011 S. 1040nr form 2011 real property gain by the shareholder receiving the distribution. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 A distribution that you do not treat as gain from the sale or exchange of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest is included in your gross income as a regular dividend. 1040nr form 2011 Note. 1040nr form 2011 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 Domestically controlled QIE. 1040nr form 2011   The sale of an interest in a domestically controlled QIE is not the sale of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Wash sale. 1040nr form 2011    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 If this occurs, you are treated as having gain from the sale or exchange of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. 1040nr form 2011 This also applies to any substitute dividend payment. 1040nr form 2011   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. 1040nr form 2011 Alternative minimum tax. 1040nr form 2011   There may be a minimum tax on your net gain from the disposition of U. 1040nr form 2011 S. 1040nr form 2011 real property interests. 1040nr form 2011 Figure the amount of this tax, if any, on Form 6251. 1040nr form 2011 Withholding of tax. 1040nr form 2011   If you dispose of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest, the buyer may have to withhold tax. 1040nr form 2011 See the discussion of Tax Withheld on Real Property Sales in chapter 8. 1040nr form 2011 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. 1040nr form 2011 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 form 2011 The three kinds of foreign source income are listed below. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Income, gain, or loss from the sale outside the United States, through the U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 For example, foreign source interest and dividend equivalents are treated as U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 citizens and residents. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Example. 1040nr form 2011 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. 1040nr form 2011 S. 1040nr form 2011 office of his overseas employer. 1040nr form 2011 He worked in the U. 1040nr form 2011 S. 1040nr form 2011 office until December 25, 2012, but did not leave this country until January 11, 2013. 1040nr form 2011 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. 1040nr form 2011 All of Ted's income during his stay here is U. 1040nr form 2011 S. 1040nr form 2011 source income. 1040nr form 2011 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. 1040nr form 2011 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. 1040nr form 2011 The salary payment Ted received in January 2013 is U. 1040nr form 2011 S. 1040nr form 2011 source income to him in 2013. 1040nr form 2011 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. 1040nr form 2011 Real property income. 1040nr form 2011   You may be able to choose to treat all income from real property as effectively connected. 1040nr form 2011 See Income From Real Property , later, in this chapter. 1040nr form 2011 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. 1040nr form 2011 S. 1040nr form 2011 sources but only if the items are not effectively connected with your U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. 1040nr form 2011 S. 1040nr form 2011 source fixed or determinable annual or periodic gains, profits, or income. 1040nr form 2011 Income is fixed when it is paid in amounts known ahead of time. 1040nr form 2011 Income is determinable whenever there is a basis for figuring the amount to be paid. 1040nr form 2011 Income can be periodic if it is paid from time to time. 1040nr form 2011 It does not have to be paid annually or at regular intervals. 1040nr form 2011 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 Other items of income, such as royalties, also may be subject to the 30% tax. 1040nr form 2011 Some fixed or determinable income may be exempt from U. 1040nr form 2011 S. 1040nr form 2011 tax. 1040nr form 2011 See chapter 3 if you are not sure whether the income is taxable. 1040nr form 2011 Original issue discount (OID). 1040nr form 2011   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. 1040nr form 2011 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. 1040nr form 2011 The 30% tax applies in the following circumstances. 1040nr form 2011 You received a payment on a debt instrument. 1040nr form 2011 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. 1040nr form 2011 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. 1040nr form 2011 You sold or exchanged the debt instrument. 1040nr form 2011 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. 1040nr form 2011   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. 1040nr form 2011 S. 1040nr form 2011 Source Income Subject to Withholding, if you bought the debt instrument at original issue. 1040nr form 2011 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. 1040nr form 2011 You bought the debt instrument at a premium or paid an acquisition premium. 1040nr form 2011 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. 1040nr form 2011 S. 1040nr form 2011 Treasury securities). 1040nr form 2011 The debt instrument is a contingent payment or inflation-indexed debt instrument. 1040nr form 2011 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. 1040nr form 2011   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. 1040nr form 2011 See chapter 12. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 trade or business and is not exempted by treaty. 1040nr form 2011 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. 1040nr form 2011 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 Social Security Benefits A nonresident alien must include 85% of any U. 1040nr form 2011 S. 1040nr form 2011 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. 1040nr form 2011 S. 1040nr form 2011 source fixed or determinable annual or periodic income. 1040nr form 2011 Social security benefits include monthly retirement, survivor, and disability benefits. 1040nr form 2011 This income is exempt under some tax treaties. 1040nr form 2011 See Table 1 in Publication 901, U. 1040nr form 2011 S. 1040nr form 2011 Tax Treaties, for a list of tax treaties that exempt U. 1040nr form 2011 S. 1040nr form 2011 social security benefits from U. 1040nr form 2011 S. 1040nr form 2011 tax. 1040nr form 2011 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. 1040nr form 2011 They apply even if you are engaged in a trade or business in the United States. 1040nr form 2011 These rules do not apply to the sale or exchange of a U. 1040nr form 2011 S. 1040nr form 2011 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. 1040nr form 2011 See Real Property Gain or Loss , earlier, under Effectively Connected Income. 1040nr form 2011 A capital asset is everything you own except: Inventory. 1040nr form 2011 Business accounts or notes receivable. 1040nr form 2011 Depreciable property used in a trade or business. 1040nr form 2011 Real property used in a trade or business. 1040nr form 2011 Supplies regularly used in a trade or business. 1040nr form 2011 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. 1040nr form 2011 Certain U. 1040nr form 2011 S. 1040nr form 2011 government publications. 1040nr form 2011 Certain commodities derivative financial instruments held by a commodities derivatives dealer. 1040nr form 2011 Hedging transactions. 1040nr form 2011 A capital gain is a gain on the sale or exchange of a capital asset. 1040nr form 2011 A capital loss is a loss on the sale or exchange of a capital asset. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. 1040nr form 2011 You may want to read Publication 544. 1040nr form 2011 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. 1040nr form 2011 Specific tax treatment that applies to U. 1040nr form 2011 S. 1040nr form 2011 citizens or residents generally does not apply to you. 1040nr form 2011 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. 1040nr form 2011 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. 1040nr form 2011 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. 1040nr form 2011 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. 1040nr form 2011 Gains on the sale or exchange of original issue discount obligations. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 See Income From Real Property , later. 1040nr form 2011 183-day rule. 1040nr form 2011   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. 1040nr form 2011 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. 1040nr form 2011 S. 1040nr form 2011 sources over your capital losses from U. 1040nr form 2011 S. 1040nr form 2011 sources. 1040nr form 2011 This rule applies even if any of the transactions occurred while you were not in the United States. 1040nr form 2011   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. 1040nr form 2011 S. 1040nr form 2011 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. 1040nr form 2011   In arriving at your net gain, do not take the following into consideration. 1040nr form 2011 The four types of gains listed earlier. 1040nr form 2011 The deduction for a capital loss carryover. 1040nr form 2011 Capital losses in excess of capital gains. 1040nr form 2011 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). 1040nr form 2011 Losses from the sale or exchange of property held for personal use. 1040nr form 2011 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). 1040nr form 2011 See Itemized Deductions in chapter 5. 1040nr form 2011   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. 1040nr form 2011 Also, you must file your tax return on a calendar-year basis. 1040nr form 2011   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. 1040nr form 2011 Reporting. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 Attach them to Form 1040NR. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. 1040nr form 2011 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. 1040nr form 2011 You can make this choice only for real property income that is not otherwise effectively connected with your U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 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. 1040nr form 2011 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business, as being engaged in a trade or business in the United States during the year. 1040nr form 2011 Example. 1040nr form 2011 You are a nonresident alien and are not engaged in a U. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 You own a single-family house in the United States that you rent out. 1040nr form 2011 Your rental income for the year is $10,000. 1040nr form 2011 This is your only U. 1040nr form 2011 S. 1040nr form 2011 source income. 1040nr form 2011 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. 1040nr form 2011 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. 1040nr form 2011 You do not have to file a U. 1040nr form 2011 S. 1040nr form 2011 tax return (Form 1040NR) because your U. 1040nr form 2011 S. 1040nr form 2011 tax liability is satisfied by the withholding of tax. 1040nr form 2011 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. 1040nr form 2011 (See Publication 527, Residential Rental Property, for information on rental expenses. 1040nr form 2011 ) Any resulting net income is taxed at graduated rates. 1040nr form 2011 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. 1040nr form 2011 For the first year you make the choice, also attach the statement discussed next. 1040nr form 2011 Making the choice. 1040nr form 2011   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. 1040nr form 2011 Include the following in your statement. 1040nr form 2011 That you are making the choice. 1040nr form 2011 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. 1040nr form 2011 A complete list of all your real property, or any interest in real property, located in the United States. 1040nr form 2011 Give the legal identification of U. 1040nr form 2011 S. 1040nr form 2011 timber, coal, or iron ore in which you have an interest. 1040nr form 2011 The extent of your ownership in the property. 1040nr form 2011 The location of the property. 1040nr form 2011 A description of any major improvements to the property. 1040nr form 2011 The dates you owned the property. 1040nr form 2011 Your income from the property. 1040nr form 2011 Details of any previous choices and revocations of the real property income choice. 1040nr form 2011   This choice stays in effect for all later tax years unless you revoke it. 1040nr form 2011 Revoking the choice. 1040nr form 2011   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. 1040nr form 2011 S. 1040nr form 2011 Individual Income Tax Return, for the year you made the choice and for later tax years. 1040nr form 2011 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. 1040nr form 2011 If this time period has expired for the year of choice, you cannot revoke the choice for that year. 1040nr form 2011 However, you may revoke the choice for later tax years only if you have IRS approval. 1040nr form 2011 For information on how to get IRS approval, see Regulation section 1. 1040nr form 2011 871-10(d)(2). 1040nr form 2011 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 . 1040nr form 2011 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. 1040nr form 2011 Attach a statement to your return that includes the following information (if applicable). 1040nr form 2011 Your name, taxpayer identification number, and tax year. 1040nr form 2011 A description of the types of services performed (whether on or off board). 1040nr form 2011 Names of vessels or registration numbers of aircraft on which you performed the services. 1040nr form 2011 Amount of U. 1040nr form 2011 S. 1040nr form 2011 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. 1040nr form 2011 Total amount of U. 1040nr form 2011 S. 1040nr form 2011 source transportation income derived from all types of services for the calendar year. 1040nr form 2011 This 4% tax applies to your U. 1040nr form 2011 S. 1040nr form 2011 source gross transportation income. 1040nr form 2011 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. 1040nr form 2011 For transportation income from personal services, the transportation must be between the United States and a U. 1040nr form 2011 S. 1040nr form 2011 possession. 1040nr form 2011 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. 1040nr form 2011 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. 1040nr form 2011 S. 1040nr form 2011 residence with a period of nonresidence. 1040nr form 2011 The special rule applies if you meet all of the following conditions. 1040nr form 2011 You were a U. 1040nr form 2011 S. 1040nr form 2011 resident for a period that includes at least 3 consecutive calendar years. 1040nr form 2011 You were a U. 1040nr form 2011 S. 1040nr form 2011 resident for at least 183 days in each of those years. 1040nr form 2011 You ceased to be treated as a U. 1040nr form 2011 S. 1040nr form 2011 resident. 1040nr form 2011 You then again became a U. 1040nr form 2011 S. 1040nr form 2011 resident before the end of the third calendar year after the end of the period described in (1) above. 1040nr form 2011 Under this special rule, you are subject to tax on your U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 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. 1040nr form 2011 Example. 1040nr form 2011 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. 1040nr form 2011 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. 1040nr form 2011 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). 1040nr form 2011 He returned to the United States on October 5, 2013, as a lawful permanent resident. 1040nr form 2011 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). 1040nr form 2011 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. 1040nr form 2011 Reporting requirements. 1040nr form 2011   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. 1040nr form 2011 The return is due by the due date (including extensions) for filing your U. 1040nr form 2011 S. 1040nr form 2011 income tax return for the year that you again become a U. 1040nr form 2011 S. 1040nr form 2011 resident. 1040nr form 2011 If you already filed returns for that period, you must file amended returns. 1040nr form 2011 You must attach a statement to your return that identifies the source of all of your U. 1040nr form 2011 S. 1040nr form 2011 and foreign gross income and the items of income subject to this special rule. 1040nr form 2011 Expatriation Tax The expatriation tax provisions apply to U. 1040nr form 2011 S. 1040nr form 2011 citizens who have renounced their citizenship and long-term residents who have ended their residency. 1040nr form 2011 The rules that apply are based on the dates of expatriation, which are described in the following sections. 1040nr form 2011 Expatriation Before June 4, 2004. 1040nr form 2011 Expatriation After June 3, 2004, and Before June 17, 2008. 1040nr form 2011 Expatriation After June 16, 2008. 1040nr form 2011 Long-term resident defined. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 taxes. 1040nr form 2011 Unless you received a ruling from the IRS that you did not expatriate to avoid U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). 1040nr form 2011 Table 4-1. 1040nr form 2011 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . 1040nr form 2011 . 1040nr form 2011 . 1040nr form 2011   THEN the rules outlined on this page apply if . 1040nr form 2011 . 1040nr form 2011 . 1040nr form 2011     Your 5-year average annual net income tax was more than . 1040nr form 2011 . 1040nr form 2011 . 1040nr form 2011 OR Your net worth equaled or exceeded . 1040nr form 2011 . 1040nr form 2011 . 1040nr form 2011 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. 1040nr form 2011 Reporting requirements. 1040nr form 2011   If you lost your U. 1040nr form 2011 S. 1040nr form 2011 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. 1040nr form 2011 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. 1040nr form 2011   Your U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 Penalties. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. 1040nr form 2011 Expatriation tax. 1040nr form 2011   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. 1040nr form 2011 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. 1040nr form 2011 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 $127,000 if you expatriated or terminated residency in 2005. 1040nr form 2011 $131,000 if you expatriated or terminated residency in 2006. 1040nr form 2011 $136,000 if you expatriated or terminated residency in 2007. 1040nr form 2011 $139,000 if you expatriated or terminated residency in 2008. 1040nr form 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. 1040nr form 2011 You fail to certify on Form 8854 that you have complied with all U. 1040nr form 2011 S. 1040nr form 2011 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. 1040nr form 2011 Exception for dual-citizens and certain minors. 1040nr form 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. 1040nr form 2011 However, they still must provide the certification required in (3). 1040nr form 2011 Certain dual-citizens. 1040nr form 2011   You may qualify for the exception described above if all of the following apply. 1040nr form 2011 You became at birth a U. 1040nr form 2011 S. 1040nr form 2011 citizen and a citizen of another country and you continue to be a citizen of that other country. 1040nr form 2011 You were never a resident alien of the United States (as defined in chapter 1). 1040nr form 2011 You never held a U. 1040nr form 2011 S. 1040nr form 2011 passport. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 citizenship. 1040nr form 2011 Certain minors. 1040nr form 2011   You may qualify for the exception described above if you meet all of the following requirements. 1040nr form 2011 You became a U. 1040nr form 2011 S. 1040nr form 2011 citizen at birth. 1040nr form 2011 Neither of your parents was a U. 1040nr form 2011 S. 1040nr form 2011 citizen at the time of your birth. 1040nr form 2011 You expatriated before you were 18½. 1040nr form 2011 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. 1040nr form 2011 Tax consequences of presence in the United States. 1040nr form 2011   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. 1040nr form 2011   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. 1040nr form 2011 Instead, you are treated as a U. 1040nr form 2011 S. 1040nr form 2011 citizen or resident and taxed on your worldwide income for that tax year. 1040nr form 2011 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. 1040nr form 2011   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. 1040nr form 2011 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. 1040nr form 2011 You have ties with other countries. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. 1040nr form 2011 Related employer. 1040nr form 2011   If your employer in the United States is any of the following, then your employer is related to you. 1040nr form 2011 You must count any days you performed services in the United States for that employer as days of presence in the United States. 1040nr form 2011 Members of your family. 1040nr form 2011 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. 1040nr form 2011 ), and lineal descendants (children, grandchildren, etc. 1040nr form 2011 ). 1040nr form 2011 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. 1040nr form 2011 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. 1040nr form 2011 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. 1040nr form 2011 ) 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. 1040nr form 2011 Date of tax expatriation. 1040nr form 2011   For purposes of U. 1040nr form 2011 S. 1040nr form 2011 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. 1040nr form 2011 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. 1040nr form 2011 You file Form 8854 in accordance with the form instructions. 1040nr form 2011 Annual return. 1040nr form 2011   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. 1040nr form 2011 You must file this form even if you owe no U. 1040nr form 2011 S. 1040nr form 2011 tax. 1040nr form 2011 Penalty. 1040nr form 2011   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. 1040nr form 2011 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 trade or business. 1040nr form 2011 For this purpose, U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 domestic corporation, and Debt obligations of U. 1040nr form 2011 S. 1040nr form 2011 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. 1040nr form 2011 U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 The income or gain is considered U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 S. 1040nr form 2011 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. 1040nr form 2011 Other information. 1040nr form 2011   For more information on the expatriation tax provisions, including exceptions to the tax and special U. 1040nr form 2011 S. 1040nr form 2011 source rules, see section 877 of the Internal Revenue Code. 1040nr form 2011 Expatriation Tax Return If you expatriated or terminated your U. 1040nr form 2011 S. 1040nr form 2011 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. 1040nr form 2011 Attach it to Form 1040NR if you are required to file that form. 1040nr form 2011 If you are present in the United States following your expatriation and are subject to tax as a U. 1040nr form 2011 S. 1040nr form 2011 citizen or resident, file Form 8854 with Form 1040. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 $145,000 if you expatriated or terminated residency in 2009 or 2010. 1040nr form 2011 $147,000 if you expatriated or terminated residency in 2011. 1040nr form 2011 $151,000 if you expatriated or terminated residency in 2012. 1040nr form 2011 $155,000 if you expatriated or terminated residency in 2013. 1040nr form 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. 1040nr form 2011 You fail to certify on Form 8854 that you have complied with all U. 1040nr form 2011 S. 1040nr form 2011 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. 1040nr form 2011 Exception for dual-citizens and certain minors. 1040nr form 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. 1040nr form 2011 However, they still must provide the certification required in (3) above. 1040nr form 2011 Certain dual-citizens. 1040nr form 2011   You may qualify for the exception described above if both of the following apply. 1040nr form 2011 You became at birth a U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 For the purpose of determining U. 1040nr form 2011 S. 1040nr form 2011 residency, use the substantial presence test described in chapter 1. 1040nr form 2011 Certain minors. 1040nr form 2011   You may qualify for the exception described earlier if you meet both of the following requirements. 1040nr form 2011 You expatriated before you were 18½. 1040nr form 2011 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. 1040nr form 2011 For the purpose of determining U. 1040nr form 2011 S. 1040nr form 2011 residency, use the substantial presence test described in chapter 1. 1040nr form 2011 Expatriation date. 1040nr form 2011   Your expatriation date is the date you relinquish U. 1040nr form 2011 S. 1040nr form 2011 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. 1040nr form 2011 S. 1040nr form 2011 resident). 1040nr form 2011 Former U. 1040nr form 2011 S. 1040nr form 2011 citizen. 1040nr form 2011   You are considered to have relinquished your U. 1040nr form 2011 S. 1040nr form 2011 citizenship on the earliest of the following dates. 1040nr form 2011 The date you renounced U. 1040nr form 2011 S. 1040nr form 2011 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). 1040nr form 2011 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. 1040nr form 2011 S. 1040nr form 2011 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). 1040nr form 2011 The date the State Department issued a certificate of loss of nationality. 1040nr form 2011 The date that a U. 1040nr form 2011 S. 1040nr form 2011 court canceled your certificate of naturalization. 1040nr form 2011 Former long-term resident. 1040nr form 2011   You are considered to have terminated your long-term residency on the earliest of the following dates. 1040nr form 2011 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. 1040nr form 2011 S. 1040nr form 2011 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 See Effect of Tax Treaties in chapter 1 for more information about dual residents. 1040nr form 2011 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”). 1040nr form 2011 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. 1040nr form 2011 But see Exceptions , later. 1040nr form 2011 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. 1040nr form 2011 S. 1040nr form 2011 internal revenue laws. 1040nr form 2011 Losses from deemed sales must be taken into account to the extent otherwise provided under U. 1040nr form 2011 S. 1040nr form 2011 internal revenue laws. 1040nr form 2011 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. 1040nr form 2011 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. 1040nr form 2011 $626,000 if you expatriated or terminated residency in 2009. 1040nr form 2011 $627,000 if you expatriated or terminated residency in 2010. 1040nr form 2011 $636,000 if you expatriated or terminated residency in 2011. 1040nr form 2011 $651,000 if you expatriated or terminated residency in 2012. 1040nr form 2011 $668,000 if you expatriated or terminated residency in 2013. 1040nr form 2011 Exceptions. 1040nr form 2011   The mark-to-market tax does not apply to the following. 1040nr form 2011 Eligible deferred compensation items. 1040nr form 2011 Ineligible deferred compensation items. 1040nr form 2011 Interests in nongrantor trusts. 1040nr form 2011 Specified tax deferred accounts. 1040nr form 2011 Instead, items (1) and (3) may be subject to withholding at source. 1040nr form 2011 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. 1040nr form 2011 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. 1040nr form 2011 See paragraphs (d), (e), and (f) of section 877A for more information. 1040nr form 2011 Expatriation Tax Return If you expatriated or terminated your U. 1040nr form 2011 S. 1040nr form 2011 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. 1040nr form 2011 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. 1040nr form 2011 Deferral of payment of mark-to-market tax. 1040nr form 2011   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. 1040nr form 2011 If you make this election, the following rules apply. 1040nr form 2011 You can make the election on a property-by-property basis. 1040nr form 2011 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. 1040nr form 2011 Interest is charged for the period the tax is deferred. 1040nr form 2011 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. 1040nr form 2011 The due date of the return required for the year of death. 1040nr form 2011 The time that the security provided for the property fails to be adequate. 1040nr form 2011 See item (6) below. 1040nr form 2011 You make the election on Form 8854. 1040nr form 2011 You must provide adequate security (such as a bond). 1040nr form 2011 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. 1040nr form 2011   For more information about the deferral of payment, see the Instructions for Form 8854. 1040nr form 2011 Prev  Up  Next   Home   More Online Publications