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Aarp Org Taxaide

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Aarp Org Taxaide

Aarp org taxaide 4. Aarp org taxaide   Filing U. Aarp org taxaide S. Aarp org taxaide Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. Aarp org taxaide S. Aarp org taxaide Tax ReturnU. Aarp org taxaide S. Aarp org taxaide Armed Forces. Aarp org taxaide Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. Aarp org taxaide S. Aarp org taxaide income tax return is required for your situation. Aarp org taxaide If a U. Aarp org taxaide S. Aarp org taxaide return is required, your next step is to see if you meet the filing requirements. Aarp org taxaide If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. Aarp org taxaide This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. Aarp org taxaide Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. Aarp org taxaide S. Aarp org taxaide income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. Aarp org taxaide If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. Aarp org taxaide S. Aarp org taxaide tax return, your filing requirement may be less than the amount in Table 4-1. Aarp org taxaide For details, see the information under Filing Requirement if Possession Income Is Excluded , later. Aarp org taxaide Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. Aarp org taxaide For more information, see the Form 1040 instructions. Aarp org taxaide Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. Aarp org taxaide S. Aarp org taxaide tax return, you must determine your adjusted filing requirement. Aarp org taxaide Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. Aarp org taxaide Personal exemption. Aarp org taxaide   When figuring your filing requirement, your personal exemption is allowed in full. Aarp org taxaide Do not reduce it for this purpose. Aarp org taxaide Do not include exemptions for your dependents. Aarp org taxaide Allowable standard deduction. Aarp org taxaide   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. Aarp org taxaide Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. Aarp org taxaide Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. Aarp org taxaide S. Aarp org taxaide income tax     Gross income from all sources (including excluded possession income)   Example. Aarp org taxaide Barbara Spruce, a U. Aarp org taxaide S. Aarp org taxaide citizen, is single, under 65, and a bona fide resident of American Samoa. Aarp org taxaide During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. Aarp org taxaide S. Aarp org taxaide income tax). Aarp org taxaide Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. Aarp org taxaide   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. Aarp org taxaide You must file a U. Aarp org taxaide S. Aarp org taxaide income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. Aarp org taxaide    1. Aarp org taxaide Enter the allowable standard deduction you figured earlier under Allowable standard deduction . Aarp org taxaide If your filing status is married filing separately, enter -0-   2. Aarp org taxaide Personal exemption. Aarp org taxaide If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. Aarp org taxaide Add lines 1 and 2. Aarp org taxaide You must file a U. Aarp org taxaide S. Aarp org taxaide income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. Aarp org taxaide 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide AND at the end of 2013 you were*. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide THEN file a return if your gross income** was at least. Aarp org taxaide . Aarp org taxaide . Aarp org taxaide single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Aarp org taxaide ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Aarp org taxaide Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). Aarp org taxaide If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Aarp org taxaide *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. Aarp org taxaide Example 1. Aarp org taxaide James and Joan Thompson, one over 65, are U. Aarp org taxaide S. Aarp org taxaide citizens and bona fide residents of Puerto Rico during the entire tax year. Aarp org taxaide They file a joint income tax return. Aarp org taxaide During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. Aarp org taxaide S. Aarp org taxaide income tax). Aarp org taxaide Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. Aarp org taxaide S. Aarp org taxaide income tax return because their gross income subject to U. Aarp org taxaide S. Aarp org taxaide tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). Aarp org taxaide Example 2. Aarp org taxaide Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. Aarp org taxaide S. Aarp org taxaide income tax return because her gross income subject to U. Aarp org taxaide S. Aarp org taxaide tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). Aarp org taxaide If you must file a U. Aarp org taxaide S. Aarp org taxaide income tax return, you may be able to file a paperless return using IRS e-file. Aarp org taxaide See your form instructions or visit our website at IRS. Aarp org taxaide gov. Aarp org taxaide When To File If you file on a calendar year basis, the due date for filing your U. Aarp org taxaide S. Aarp org taxaide income tax return is April 15 following the end of your tax year. Aarp org taxaide If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. Aarp org taxaide If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. Aarp org taxaide For your 2013 tax return, the due date is April 15, 2014. Aarp org taxaide If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. Aarp org taxaide If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. Aarp org taxaide See your form instructions for a list of designated private delivery services. Aarp org taxaide Extension of Time To File You can get an extension of time to file your U. Aarp org taxaide S. Aarp org taxaide income tax return. Aarp org taxaide Special rules apply for those living outside the United States. Aarp org taxaide Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. Aarp org taxaide Example. Aarp org taxaide If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. Aarp org taxaide Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. Aarp org taxaide If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. Aarp org taxaide You may also be charged penalties (see the Instructions for Form 4868). Aarp org taxaide How to get the automatic extension. Aarp org taxaide   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. Aarp org taxaide E-file Form 4868 using your personal computer or a tax professional. Aarp org taxaide E-file and pay by credit or debit card. Aarp org taxaide Your payment must be at least $1. Aarp org taxaide You may pay by phone or over the Internet. Aarp org taxaide Do not file Form 4868. Aarp org taxaide File a paper Form 4868. Aarp org taxaide If you are a fiscal year taxpayer, you must file a paper Form 4868. Aarp org taxaide See Form 4868 for information on getting an extension using these options. Aarp org taxaide When to file. Aarp org taxaide   You must request the automatic extension by the due date for your return. Aarp org taxaide You can file your return any time before the 6-month extension period ends. Aarp org taxaide When you file your return. Aarp org taxaide   Enter any payment you made related to the extension of time to file on Form 1040, line 68. Aarp org taxaide If you file Form 1040A, U. Aarp org taxaide S. Aarp org taxaide Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. Aarp org taxaide Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. Aarp org taxaide You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. Aarp org taxaide Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. Aarp org taxaide S. Aarp org taxaide citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Aarp org taxaide However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. Aarp org taxaide If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. Aarp org taxaide For more information, see Publication 3, Armed Forces' Tax Guide. Aarp org taxaide Married taxpayers. Aarp org taxaide   If you file a joint return, only one spouse has to qualify for this automatic extension. Aarp org taxaide However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. Aarp org taxaide How to get the extension. Aarp org taxaide   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. Aarp org taxaide (See the situations listed under (2), earlier. Aarp org taxaide ) Extension beyond 2 months. Aarp org taxaide   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. Aarp org taxaide File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). Aarp org taxaide Be sure to check the box on Form 4868, line 8, if appropriate. Aarp org taxaide   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Aarp org taxaide   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Aarp org taxaide Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. Aarp org taxaide Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. Aarp org taxaide If you are not including a check or a money order, send your U. Aarp org taxaide S. Aarp org taxaide tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. Aarp org taxaide S. Aarp org taxaide tax return and all attachments to:  Internal Revenue Service P. Aarp org taxaide O. Aarp org taxaide Box 1303 Charlotte, NC 28201-1303 USA Also send your U. Aarp org taxaide S. Aarp org taxaide return to these addresses if you are attaching Form 5074 or Form 8689. Aarp org taxaide If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. Aarp org taxaide Special Rules for Completing Your U. Aarp org taxaide S. Aarp org taxaide Tax Return If you are not excluding possession income from your U. Aarp org taxaide S. Aarp org taxaide tax return, follow the instructions for the specific forms you file. Aarp org taxaide However, you may not qualify to claim the earned income credit (EIC). Aarp org taxaide Earned income credit. Aarp org taxaide   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. Aarp org taxaide S. Aarp org taxaide tax return. Aarp org taxaide This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. Aarp org taxaide S. Aarp org taxaide Armed Forces. Aarp org taxaide U. Aarp org taxaide S. Aarp org taxaide Armed Forces. Aarp org taxaide   U. Aarp org taxaide S. Aarp org taxaide military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Aarp org taxaide Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Aarp org taxaide Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Aarp org taxaide Income from American Samoa or Puerto Rico excluded. Aarp org taxaide   You will not be allowed to take deductions and credits that apply to the excluded income. Aarp org taxaide The additional information you need follows. Aarp org taxaide Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. Aarp org taxaide S. Aarp org taxaide income tax return. Aarp org taxaide Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. Aarp org taxaide S. Aarp org taxaide tax return. Aarp org taxaide Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). Aarp org taxaide Figuring the deduction. Aarp org taxaide   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. Aarp org taxaide   Gross income subject to U. Aarp org taxaide S. Aarp org taxaide income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). Aarp org taxaide Moving expense deduction. Aarp org taxaide   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. Aarp org taxaide Likewise, the expenses of a move back to the United States are generally attributable to U. Aarp org taxaide S. Aarp org taxaide earned income. Aarp org taxaide   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. Aarp org taxaide S. Aarp org taxaide tax return. Aarp org taxaide For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. Aarp org taxaide   If you are claiming expenses for a move from a U. Aarp org taxaide S. Aarp org taxaide possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. Aarp org taxaide For purposes of deducting moving expenses, the possessions are considered part of the United States. Aarp org taxaide See Publication 521, Moving Expenses, for information about what expenses are deductible. Aarp org taxaide Self-employment tax deduction. Aarp org taxaide   Generally, if you are reporting self-employment income on your U. Aarp org taxaide S. Aarp org taxaide return, you can include the deductible part of your self-employment tax on Form 1040, line 27. Aarp org taxaide This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). Aarp org taxaide   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. Aarp org taxaide   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. Aarp org taxaide This would happen if, for instance, you have two businesses and only the income from one of them is excludable. Aarp org taxaide   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. Aarp org taxaide   Self-employment income subject to U. Aarp org taxaide S. Aarp org taxaide income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. Aarp org taxaide Include the deductible part of this amount on Form 1040, line 27. Aarp org taxaide Individual retirement arrangement (IRA) deduction. Aarp org taxaide   Do not take excluded income into account when figuring your deductible IRA contribution. Aarp org taxaide Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. Aarp org taxaide To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. Aarp org taxaide Then multiply your full standard deduction by the following fraction. Aarp org taxaide   Gross income subject to U. Aarp org taxaide S. Aarp org taxaide income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). Aarp org taxaide ” This calculation may not be the same as the one you used to determine if you need to file a U. Aarp org taxaide S. Aarp org taxaide tax return. Aarp org taxaide Itemized Deductions Most itemized deductions do not apply to a particular type of income. Aarp org taxaide However, itemized deductions can be divided into three categories. Aarp org taxaide Those that apply specifically to excluded income, such as employee business expenses, are not deductible. Aarp org taxaide Those that apply specifically to income subject to U. Aarp org taxaide S. Aarp org taxaide income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. Aarp org taxaide Those that do not apply to specific income must be allocated between your gross income subject to U. Aarp org taxaide S. Aarp org taxaide income tax and your total gross income from all sources. Aarp org taxaide The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. Aarp org taxaide Example. Aarp org taxaide In 2013, you and your spouse are both under 65 and U. Aarp org taxaide S. Aarp org taxaide citizens who are bona fide residents of Puerto Rico during the entire tax year. Aarp org taxaide You file a joint income tax return. Aarp org taxaide During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. Aarp org taxaide S. Aarp org taxaide gross income) and your spouse earned $60,000 from the U. Aarp org taxaide S. Aarp org taxaide Government. Aarp org taxaide You have $16,000 of itemized deductions that do not apply to any specific type of income. Aarp org taxaide These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). Aarp org taxaide You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. Aarp org taxaide   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. Aarp org taxaide Overall limitation on itemized deductions. Aarp org taxaide   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. Aarp org taxaide Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. Aarp org taxaide However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. Aarp org taxaide See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. Aarp org taxaide Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. Aarp org taxaide S. Aarp org taxaide tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. Aarp org taxaide However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. Aarp org taxaide S. Aarp org taxaide tax return. Aarp org taxaide The foreign tax credit is generally figured on Form 1116. Aarp org taxaide If you have income, such as U. Aarp org taxaide S. Aarp org taxaide Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. Aarp org taxaide You make this reduction for each separate income category. Aarp org taxaide To find the amount of this reduction, use the following formula for each income category. Aarp org taxaide Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. Aarp org taxaide For more information on the foreign tax credit, see Publication 514. Aarp org taxaide Example. Aarp org taxaide Jason and Lynn Reddy are U. Aarp org taxaide S. Aarp org taxaide citizens who were bona fide residents of Puerto Rico during all of 2013. Aarp org taxaide They file a joint tax return. Aarp org taxaide The following table shows their excludable and taxable income for U. Aarp org taxaide S. Aarp org taxaide federal income tax purposes. Aarp org taxaide   Taxable   Excludable Jason's wages from  U. Aarp org taxaide S. Aarp org taxaide Government $25,000     Lynn's wages from Puerto Rico  corp. Aarp org taxaide     $15,000 Dividend from Puerto Rico corp. Aarp org taxaide doing business in Puerto Rico     200 Dividend from U. Aarp org taxaide S. Aarp org taxaide  corp. Aarp org taxaide doing business  in U. Aarp org taxaide S. Aarp org taxaide * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. Aarp org taxaide   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. Aarp org taxaide They have gross income of $26,000 for U. Aarp org taxaide S. Aarp org taxaide tax purposes. Aarp org taxaide They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). Aarp org taxaide They figure their foreign tax credit on two Forms 1116, which they must attach to their U. Aarp org taxaide S. Aarp org taxaide return. Aarp org taxaide They fill out one Form 1116 for wages and one Form 1116 for the dividend. Aarp org taxaide Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. Aarp org taxaide   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. Aarp org taxaide Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. Aarp org taxaide A U. Aarp org taxaide S. Aarp org taxaide citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. Aarp org taxaide This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. Aarp org taxaide S. Aarp org taxaide income tax return must otherwise be filed). Aarp org taxaide Bona fide residents of the possessions discussed in this publication are considered U. Aarp org taxaide S. Aarp org taxaide residents for this purpose and are subject to the self-employment tax. Aarp org taxaide Forms to file. Aarp org taxaide   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. Aarp org taxaide If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. Aarp org taxaide If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. Aarp org taxaide If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. Aarp org taxaide Do not file forms 1040-SS or 1040-PR with Form 1040. Aarp org taxaide If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. Aarp org taxaide Chapter 11 Bankruptcy cases. Aarp org taxaide   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. Aarp org taxaide S. Aarp org taxaide Income Tax Return for Estates and Trusts) of the bankruptcy estate. Aarp org taxaide However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. Aarp org taxaide   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. Aarp org taxaide   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. Aarp org taxaide Additional Medicare Tax Beginning in 2013, a 0. Aarp org taxaide 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). Aarp org taxaide Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Aarp org taxaide A self-employment loss should not be considered for purposes of this tax. Aarp org taxaide RRTA compensation should be separately compared to the threshold. Aarp org taxaide Your employer is responsible for withholding the 0. Aarp org taxaide 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. Aarp org taxaide You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. Aarp org taxaide There are no special rules for U. Aarp org taxaide S. Aarp org taxaide citizens and nonresident aliens living abroad for purposes of this provision. Aarp org taxaide Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. Aarp org taxaide For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. Aarp org taxaide irs. Aarp org taxaide gov and enter the following words in the search box: Additional Medicare Tax. Aarp org taxaide You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Aarp org taxaide Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. Aarp org taxaide 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. Aarp org taxaide Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. Aarp org taxaide The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. Aarp org taxaide Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. Aarp org taxaide Forms to file. Aarp org taxaide   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. Aarp org taxaide For more information, see Form 8960 and its instructions. Aarp org taxaide Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. Aarp org taxaide This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. Aarp org taxaide In this situation, you may need to make estimated tax payments. Aarp org taxaide Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. Aarp org taxaide Include the Additional Medicare Tax and Net Investment Income Tax if applicable. Aarp org taxaide If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. Aarp org taxaide Or, you can make your payments electronically and not have to file any paper forms. Aarp org taxaide See the Form 1040-ES instructions for information on making payments. Aarp org taxaide Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. Aarp org taxaide American Samoa. Aarp org taxaide The Commonwealth of Puerto Rico. Aarp org taxaide The Commonwealth of the Northern Mariana Islands. Aarp org taxaide Guam. Aarp org taxaide The U. Aarp org taxaide S. Aarp org taxaide Virgin Islands. Aarp org taxaide These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. Aarp org taxaide Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. Aarp org taxaide How to make your request. Aarp org taxaide   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. Aarp org taxaide R. Aarp org taxaide B. Aarp org taxaide 900 available at www. Aarp org taxaide irs. Aarp org taxaide gov/pub/irs-irbs/irb06-49. Aarp org taxaide pdf. Aarp org taxaide    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Aarp org taxaide S. Aarp org taxaide competent authority assistance under tax treaties. Aarp org taxaide As noted, an update to Revenue Procedure 2006-23 will be published in the future. Aarp org taxaide   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. Aarp org taxaide It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. Aarp org taxaide You (or a person having authority to sign your federal return) must sign and date the request. Aarp org taxaide    Send your written request for U. Aarp org taxaide S. Aarp org taxaide assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. Aarp org taxaide W. Aarp org taxaide  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. Aarp org taxaide Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. Aarp org taxaide S. Aarp org taxaide tax paid on the income in question, you should file a claim on Form 1040X, Amended U. Aarp org taxaide S. Aarp org taxaide Individual Income Tax Return. Aarp org taxaide Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Aarp org taxaide Attach a copy of the request to the form. Aarp org taxaide Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. Aarp org taxaide See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. Aarp org taxaide Prev  Up  Next   Home   More Online Publications
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U.S. Citizens and Resident Aliens Abroad

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.

If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2-month extension date. However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.

Where to File

If you are a U.S. citizen or resident alien (Green Card Holder) and you live in a foreign country, mail your U.S. tax return to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA

Estimated tax payments should be mailed with form 1040-ES to:

Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
USA

Taxpayers with an AGI (Adjusted Gross Income) of $58,000 or less can electronically file their tax return for free using freefile. Taxpayers with an AGI greater than $58,000 can either use the Free File Fillable Forms or efile by purchasing commercial software. A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best for you, view the complete Free File Software list and the services provided.

Taxpayer Identification Number

Each taxpayer who files, or is claimed as a dependent on, a U.S. tax return will need a social security number (SSN) or individual taxpayer identification number (ITIN). To obtain a SSN, use form SS-5, Application for a Social Security Card. To get form SS-5, or to find out if you are eligible for a social security card, contact a Social Security Office or visit Social Security International Operations. If you, or your spouse, are not eligible for a SSN, you can obtain an ITIN by filing form W-7 along with appropriate documentation.

Exchange Rates

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars. Taxpayers generally use the yearly average exchange rate to report foreign-earned income that was received regularly throughout the year. However, if you had foreign transactions on specific days, you may also use the exchange rates for those days. Exchange rates can be found at Foreign Currency and Currency Exchange Rates. Yearly average currency exchange rates for most countries can be found at Yearly Average Currency Exchange Rates.

How to Get Tax Help

The IRS Office in Philadelphia provides international tax assistance. This office is open Monday through Friday from 6:00 a.m. to 11:00 p.m. EST and can be contacted by:

  • Phone: 1 (267) 941-1000 (not toll-free)
  • FAX:1 (267) 941-1055
  • Email: Email the IRS
    (e-mail is for general tax questions; NOT questions regarding your tax account)
  • Mail: Internal Revenue Service
    Philadelphia, Pa 19255-0725

The IRS has customer service personnel available to provide tax assistance in the following Embassies and Consulates abroad:

 

Permanent IRS Offices Outside the United States
Office Address Office Phone Numbers and Email

U.S. Consulate
Internal Revenue Service
Frankfurt
Giessener Str.
30
60435 Frankfurt am Main
Germany

Walk-in assistance by appointment only
Tuesdays 9:00 a.m.-12:30 p.m.
Call (49) (69) 7535-3811 to request an appointment.

Phone Service
Tel: [49] (69) 7535-3823
9:00 a.m.-12:30 p.m. and 1:30 p.m.-3:30 p.m.
Monday through Thursday
U.S. Embassy
Internal Revenue Service
London
24/31 Grosvenor Square
London W1A 1 AE
England
Walk-in assistance
Tuesday through Thursday
9:00 a.m. - 1:00 p.m. and 2:00 p.m. - 4:00 p.m.

Phone Service
Tel: [44] (207) 894-0477
Monday 9 a.m. to 4 p.m.
Tuesday through Thursday 9 a.m. to 12:00 noon.
Fax: [44] (207) 495-4224
U.S. Embassy
Internal Revenue Service
2 Avenue Gabriel
75382 Paris Cedex 08
France
Walk-in assistance
Monday through Friday
9:00 a.m.- 12:00 noon

Phone Service
Tel. [33] (1) 4312-2555
Monday - Friday 9:00 a.m. - 12:00 noon and 1:30 p.m. - 3:30 p.m.
Fax: +33-1-4312-2303
Email: irs.paris@irs.gov
U.S. Embassy Beijing
Internal Revenue Service
No. 55 An Jia Lou Lu
Beijing 100600
Peoples Republic of China
Walk-in assistance by appointment only.
Wednesdays 1:00 p.m. – 4:00 p.m.
Call or email to request an appointment.

Phone Service
Tel: [86] (10) 8531-3983
Fax: [86] (10) 8531-4287
Email: irs.beijing@irs.gov (for all inquiries)

 

Help with Unresolved Tax Problems

If you are experiencing a tax problem that is causing you economic harm or has not been resolved through normal channels, you can contact the Taxpayer Advocate.

References/Related Topics

Page Last Reviewed or Updated: 31-Jan-2014

The Aarp Org Taxaide

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