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Best Tax Preparation Software

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Best Tax Preparation Software

Best tax preparation software 6. Best tax preparation software   How To Get Tax Help Table of Contents Low Income Taxpayer Clinics Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Best tax preparation software Free help with your tax return. Best tax preparation software   You can get free help preparing your return nationwide from IRS-certified volunteers. Best tax preparation software The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Best tax preparation software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Best tax preparation software Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Best tax preparation software In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Best tax preparation software To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Best tax preparation software gov, download the IRS2Go app, or call 1-800-906-9887. Best tax preparation software   As part of the TCE program, AARP offers the Tax-Aide counseling program. Best tax preparation software To find the nearest AARP Tax-Aide site, visit AARP's website at www. Best tax preparation software aarp. Best tax preparation software org/money/taxaide or call 1-888-227-7669. Best tax preparation software For more information on these programs, go to IRS. Best tax preparation software gov and enter “VITA” in the search box. Best tax preparation software Internet. Best tax preparation software    IRS. Best tax preparation software gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Best tax preparation software Download the free IRS2Go app from the iTunes app store or from Google Play. Best tax preparation software Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Best tax preparation software Check the status of your 2013 refund with the Where's My Refund? application on IRS. Best tax preparation software gov or download the IRS2Go app and select the Refund Status option. Best tax preparation software The IRS issues more than 9 out of 10 refunds in less than 21 days. Best tax preparation software Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Best tax preparation software You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Best tax preparation software The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Best tax preparation software Use the Interactive Tax Assistant (ITA) to research your tax questions. Best tax preparation software No need to wait on the phone or stand in line. Best tax preparation software The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Best tax preparation software When you reach the response screen, you can print the entire interview and the final response for your records. Best tax preparation software New subject areas are added on a regular basis. Best tax preparation software  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Best tax preparation software gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Best tax preparation software You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Best tax preparation software The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Best tax preparation software When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Best tax preparation software Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Best tax preparation software You can also ask the IRS to mail a return or an account transcript to you. Best tax preparation software Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Best tax preparation software gov or by calling 1-800-908-9946. Best tax preparation software Tax return and tax account transcripts are generally available for the current year and the past three years. Best tax preparation software Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Best tax preparation software Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Best tax preparation software If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Best tax preparation software Check the status of your amended return using Where's My Amended Return? Go to IRS. Best tax preparation software gov and enter Where's My Amended Return? in the search box. Best tax preparation software You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Best tax preparation software It can take up to 3 weeks from the date you mailed it to show up in our system. Best tax preparation software Make a payment using one of several safe and convenient electronic payment options available on IRS. Best tax preparation software gov. Best tax preparation software Select the Payment tab on the front page of IRS. Best tax preparation software gov for more information. Best tax preparation software Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Best tax preparation software Figure your income tax withholding with the IRS Withholding Calculator on IRS. Best tax preparation software gov. Best tax preparation software Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Best tax preparation software Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Best tax preparation software gov. Best tax preparation software Request an Electronic Filing PIN by going to IRS. Best tax preparation software gov and entering Electronic Filing PIN in the search box. Best tax preparation software Download forms, instructions and publications, including accessible versions for people with disabilities. Best tax preparation software Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Best tax preparation software gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Best tax preparation software An employee can answer questions about your tax account or help you set up a payment plan. Best tax preparation software Before you visit, check the Office Locator on IRS. Best tax preparation software gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Best tax preparation software If you have a special need, such as a disability, you can request an appointment. Best tax preparation software Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Best tax preparation software Apply for an Employer Identification Number (EIN). Best tax preparation software Go to IRS. Best tax preparation software gov and enter Apply for an EIN in the search box. Best tax preparation software Read the Internal Revenue Code, regulations, or other official guidance. Best tax preparation software Read Internal Revenue Bulletins. Best tax preparation software Sign up to receive local and national tax news and more by email. Best tax preparation software Just click on “subscriptions” above the search box on IRS. Best tax preparation software gov and choose from a variety of options. Best tax preparation software Phone. Best tax preparation software    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Best tax preparation software Download the free IRS2Go app from the iTunes app store or from Google Play. Best tax preparation software Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Best tax preparation software gov, or download the IRS2Go app. Best tax preparation software Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Best tax preparation software The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Best tax preparation software Most VITA and TCE sites offer free electronic filing. Best tax preparation software Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Best tax preparation software Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Best tax preparation software Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Best tax preparation software If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Best tax preparation software The IRS issues more than 9 out of 10 refunds in less than 21 days. Best tax preparation software Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Best tax preparation software Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Best tax preparation software The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Best tax preparation software Note, the above information is for our automated hotline. Best tax preparation software Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Best tax preparation software Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Best tax preparation software You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Best tax preparation software It can take up to 3 weeks from the date you mailed it to show up in our system. Best tax preparation software Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Best tax preparation software You should receive your order within 10 business days. Best tax preparation software Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Best tax preparation software If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Best tax preparation software Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Best tax preparation software The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Best tax preparation software These individuals can also contact the IRS through relay services such as the Federal Relay Service. Best tax preparation software Walk-in. Best tax preparation software   You can find a selection of forms, publications and services — in-person. Best tax preparation software Products. Best tax preparation software You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Best tax preparation software Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Best tax preparation software Services. Best tax preparation software You can walk in to your local TAC for face-to-face tax help. Best tax preparation software An employee can answer questions about your tax account or help you set up a payment plan. Best tax preparation software Before visiting, use the Office Locator tool on IRS. Best tax preparation software gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Best tax preparation software Mail. Best tax preparation software   You can send your order for forms, instructions, and publications to the address below. Best tax preparation software You should receive a response within 10 business days after your request is received. Best tax preparation software Internal Revenue Service 1201 N. Best tax preparation software Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Best tax preparation software The Taxpayer Advocate Service (TAS) is your voice at the IRS. Best tax preparation software Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Best tax preparation software   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Best tax preparation software We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Best tax preparation software You face (or your business is facing) an immediate threat of adverse action. Best tax preparation software You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Best tax preparation software   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Best tax preparation software Here's why we can help: TAS is an independent organization within the IRS. Best tax preparation software Our advocates know how to work with the IRS. Best tax preparation software Our services are free and tailored to meet your needs. Best tax preparation software We have offices in every state, the District of Columbia, and Puerto Rico. Best tax preparation software   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Best tax preparation software   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Best tax preparation software If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Best tax preparation software Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Best tax preparation software Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Best tax preparation software Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Best tax preparation software Prev  Up  Next   Home   More Online Publications
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Small Business Tax Workshops and Webinars

Small Business Webinars

The IRS broadcasts webinars on a variety of subjects aimed at educating small business owners on issues affecting them. Online access provides the convenience of viewing webinars whenever and wherever you choose.

Visit Webinars for Small Businesses for a list of upcoming webinars.

Small Business Tax Workshops

Small Business Taxes: The Virtual Workshop is available on online to help new small business owners understand and meet their federal tax obligations.

Small business workshops, designed to help the small business owner understand and fulfill their federal tax responsibilities, are held at various locations throughout the country. Workshops are sponsored and presented by IRS partners specializing in federal tax.

Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. Although most are free, some workshops have fees paid directly to the sponsoring organization, not the IRS.

Workshops in Spanish (Talleres en español)

If you live near a state line, please look for workshops in nearby cities of the bordering state.

Rate the Small Business and Self-Employed Web Site

Page Last Reviewed or Updated: 03-Dec-2013

The Best Tax Preparation Software

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