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Cheap tax software 1. Cheap tax software   Bona Fide Residence Table of Contents Presence TestDays of Presence in the United States or Relevant Possession Significant Connection Tax HomeExceptions Closer ConnectionException for Year of Move Special Rules in the Year of a MoveYear of Moving to a Possession Year of Moving From a Possession Reporting a Change in Bona Fide ResidenceWho Must File Penalty for Not Filing Form 8898 In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year. Cheap tax software Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you: Meet the presence test, Do not have a tax home outside the relevant possession, and Do not have a closer connection to the United States or to a foreign country than to the relevant possession. Cheap tax software Special rule for members of the U. Cheap tax software S. Cheap tax software Armed Forces. Cheap tax software   If you are a member of the U. Cheap tax software S. Cheap tax software Armed Forces who qualified as a bona fide resident of the relevant possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. Cheap tax software Likewise, being in a possession solely in compliance with military orders will not qualify you for bona fide residency. Cheap tax software Also see the special income source rule for members of the U. Cheap tax software S. Cheap tax software Armed Forces in chapter 2, under Compensation for Labor or Personal Services . Cheap tax software Special rule for civilian spouse of active duty member of the U. Cheap tax software S. Cheap tax software Armed Forces. Cheap tax software   If you are the civilian spouse of an active duty servicemember, under Military Spouses Residency Relief Act (MSRRA) you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U. Cheap tax software S. Cheap tax software possession. Cheap tax software Before relocating, you and your spouse must have the same tax residence. Cheap tax software If you are a civilian spouse and choose to keep your prior tax residence after such relocation, the source of income for services performed (for example, wages, salaries, tips, or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. Cheap tax software As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U. Cheap tax software S. Cheap tax software possession return, may be affected. Cheap tax software For more information, consult with state, local, or U. Cheap tax software S. Cheap tax software possession tax authorities regarding your tax obligations under MSRRA. Cheap tax software Presence Test If you are a U. Cheap tax software S. Cheap tax software citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions. Cheap tax software You were present in the relevant possession for at least 183 days during the tax year. Cheap tax software You were present in the relevant possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. Cheap tax software During each year of the 3-year period, you must be present in the relevant possession for at least 60 days. Cheap tax software You were present in the United States for no more than 90 days during the tax year. Cheap tax software You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. Cheap tax software Earned income is pay for personal services performed, such as wages, salaries, or professional fees. Cheap tax software You had no significant connection to the United States during the tax year. Cheap tax software Special rule for nonresident aliens. Cheap tax software   Conditions (1) through (5) above do not apply to nonresident aliens of the United States. Cheap tax software Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. Cheap tax software In that discussion, substitute the name of the possession for “United States” and “U. Cheap tax software S. Cheap tax software ” wherever they appear. Cheap tax software Disregard the discussion in that chapter about a Closer Connection to a Foreign Country. Cheap tax software Days of Presence in the United States or Relevant Possession Generally, you are treated as being present in the United States or in the relevant possession on any day that you are physically present in that location at any time during the day. Cheap tax software Days of presence in a possession. Cheap tax software   You are considered to be present in the relevant possession on any of the following days. Cheap tax software Any day you are physically present in that possession at any time during the day. Cheap tax software Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment , later). Cheap tax software Your parent. Cheap tax software Your spouse. Cheap tax software Your child, who is your son, daughter, stepson, or stepdaughter. Cheap tax software This includes an adopted child or child lawfully placed with you for legal adoption. Cheap tax software This also includes a foster child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Cheap tax software Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. Cheap tax software   If, during a single day, you are physically present: In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home , later). Cheap tax software Days of presence in the United States. Cheap tax software   You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. Cheap tax software However, do not count the following days as days of presence in the United States. Cheap tax software Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. Cheap tax software “Child” is defined under item 2c earlier. Cheap tax software “Qualifying medical treatment” is defined later. Cheap tax software Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any: 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a federal declaration of a major disaster is issued in the Federal Register, or Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located. Cheap tax software Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States. Cheap tax software Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later). Cheap tax software Any day you are temporarily in the United States as a student (defined later). Cheap tax software Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). Cheap tax software Qualifying Medical Treatment Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. Cheap tax software The treatment generally involves: Any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary, or Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. Cheap tax software With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. Cheap tax software You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession. Cheap tax software You must keep the following documentation. Cheap tax software Records that provide: The patient's name and relationship to you (if the medical treatment is provided to a person you accompany); The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided; The name, address, and telephone number of the physician who provided the medical treatment; The date(s) on which the medical treatment was provided; and Receipt(s) of payment for the medical treatment. Cheap tax software Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth: The patient's name, A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician, The dates on which the medical treatment was provided, and The medical facts that support the physician's certification and determination that the treatment was medically necessary. Cheap tax software Charitable Sports Event A charitable sports event is one that meets all of the following conditions. Cheap tax software The main purpose is to benefit a qualified charitable organization. Cheap tax software The entire net proceeds go to charity. Cheap tax software Volunteers perform substantially all the work. Cheap tax software In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in the charitable sports event. Cheap tax software You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. Cheap tax software Student To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by a school described in (1) above or by a state, county, or local government agency. Cheap tax software The 5 calendar months do not have to be consecutive. Cheap tax software Full-time student. Cheap tax software   A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance. Cheap tax software However, school attendance exclusively at night is not considered full-time attendance. Cheap tax software School. Cheap tax software   The term “school” includes elementary schools, middle schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. Cheap tax software It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet. Cheap tax software Significant Connection One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. Cheap tax software This section looks at the factors that determine if a significant connection exists. Cheap tax software You are treated as having a significant connection to the United States if you: Have a permanent home in the United States, Are currently registered to vote in any political subdivision of the United States, or Have a spouse or child (see item 2c under Days of presence in a possession , earlier) who is under age 18 whose main home is in the United States, other than: A child who is in the United States because he or she is the child of divorced or legally separated parents and is living with a custodial parent under a custodial decree or multiple support agreement, or A child who is in the United States as a student. Cheap tax software For the purpose of determining if you have a significant connection to the United States, the term “spouse” does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance. Cheap tax software Permanent home. Cheap tax software   A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. Cheap tax software The dwelling unit must be available at all times, continuously, not only for short stays. Cheap tax software Exception for rental property. Cheap tax software   If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered your permanent home only if you or your spouse use that property for personal purposes for more than the greater of: 14 days, or 10% of the number of days during that tax year that the property is rented to others at a fair rental value. Cheap tax software   You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day. Cheap tax software   A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons. Cheap tax software You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement. Cheap tax software A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Cheap tax software Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc. Cheap tax software ), and lineal descendants (children, grandchildren, etc. Cheap tax software ). Cheap tax software Anyone under an arrangement that lets you use some other dwelling unit. Cheap tax software Anyone at less than a fair rental price. Cheap tax software   However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Cheap tax software Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as: The amount of time you devote to repair and maintenance work, How often during the tax year you perform repair and maintenance work on this property, and The presence and activities of companions. Cheap tax software   See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit. Cheap tax software Example—significant connection. Cheap tax software Ann Green, a U. Cheap tax software S. Cheap tax software citizen, is a sales representative for a company based in Guam. Cheap tax software Ann lives with her spouse and young children in their house in Guam, where she is also registered to vote. Cheap tax software Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. Cheap tax software When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. Cheap tax software Ann's stays are always of short duration and she asks her brother's permission to stay with him. Cheap tax software Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. Cheap tax software Ann satisfies the presence test because she has no significant connection to the United States. Cheap tax software Example—presence test. Cheap tax software Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. Cheap tax software They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. Cheap tax software The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. Cheap tax software In 2013, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia. Cheap tax software Thus, in 2013, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. Cheap tax software However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States. Cheap tax software Tax Home You will have met the tax home test if you did not have a tax home outside the relevant possession during any part of the tax year. Cheap tax software Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. Cheap tax software If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. Cheap tax software If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Cheap tax software Exceptions There are some special rules regarding tax home that provide exceptions to the general rule stated above. Cheap tax software Students and Government Officials Disregard the following days when determining whether you have a tax home outside the relevant possession. Cheap tax software Days you were temporarily in the United States as a student (see Student under Days of Presence in the United States or Relevant Possession, earlier). Cheap tax software Days you were in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions). Cheap tax software Seafarers You will not be considered to have a tax home outside the relevant possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. Cheap tax software For this purpose, a vessel is considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in the waters within 3 miles of the relevant possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country. Cheap tax software Example. Cheap tax software In 2013, Sean Silverman, a U. Cheap tax software S. Cheap tax software citizen, was employed by a fishery and spent 250 days at sea on a fishing vessel. Cheap tax software When not at sea, Sean lived with his spouse at a house they own in American Samoa. Cheap tax software The fishing vessel on which Sean works departs and arrives at various ports in American Samoa, other possessions, and foreign countries, but was in international or American Samoa's local waters for 225 days. Cheap tax software For purposes of determining bona fide residency of American Samoa, Sean will not be considered to have a tax home outside that possession solely because of his employment on board the fishing vessel. Cheap tax software Year of Move If you are moving to or from a possession during the year, you may still be able to meet the tax home test for that year. Cheap tax software See Special Rules in the Year of a Move , later in this chapter. Cheap tax software Closer Connection You will have met the closer connection test if, during any part of the tax year, you do not have a closer connection to the United States or a foreign country than to the relevant U. Cheap tax software S. Cheap tax software possession. Cheap tax software You will be considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. Cheap tax software In determining if you have maintained more significant contacts with the relevant possession, the facts and circumstances to be considered include, but are not limited to, the following. Cheap tax software The location of your permanent home. Cheap tax software The location of your family. Cheap tax software The location of personal belongings, such as automobiles, furniture, clothing, and jewelry owned by you and your family. Cheap tax software The location of social, political, cultural, professional, or religious organizations with which you have a current relationship. Cheap tax software The location where you conduct your routine personal banking activities. Cheap tax software The location where you conduct business activities (other than those that go into determining your tax home). Cheap tax software The location of the jurisdiction in which you hold a driver's license. Cheap tax software The location of the jurisdiction in which you vote. Cheap tax software The location of charitable organizations to which you contribute. Cheap tax software The country of residence you designate on forms and documents. Cheap tax software The types of official forms and documents you file, such as Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), or Form W-9, Request for Taxpayer Identification Number and Certification. Cheap tax software Your connections to the relevant possession will be compared to the total of your connections with the United States and foreign countries. Cheap tax software Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection. Cheap tax software Example—closer connection to the United States. Cheap tax software Marcos Reyes, a U. Cheap tax software S. Cheap tax software citizen, moved to Puerto Rico in 2013 to start an investment consulting and venture capital business. Cheap tax software His spouse and two teenage children remained in California to allow the children to complete high school. Cheap tax software He traveled back to the United States regularly to see his spouse and children, to engage in business activities, and to take vacations. Cheap tax software Marcos had an apartment available for his full-time use in Puerto Rico, but remained a joint owner of the residence in California where his spouse and children lived. Cheap tax software Marcos and his family had automobiles and personal belongings such as furniture, clothing, and jewelry located at both residences. Cheap tax software Although Marcos was a member of the Puerto Rico Chamber of Commerce, he also belonged to and had current relationships with social, political, cultural, and religious organizations in California. Cheap tax software Marcos received mail in California, including bank and brokerage statements and credit card bills. Cheap tax software He conducted his personal banking activities in California. Cheap tax software He held a California driver's license and was also registered to vote there. Cheap tax software Based on all of the particular facts and circumstances pertaining to Marcos, he was not a bona fide resident of Puerto Rico in 2013 because he had a closer connection to the United States than to Puerto Rico. Cheap tax software Closer connection to another possession. Cheap tax software   Generally, possessions are not treated as foreign countries. Cheap tax software Therefore, a closer connection to a possession other than the relevant possession will not be treated as a closer connection to a foreign country. Cheap tax software Example—tax home and closer connection to possession. Cheap tax software Pearl Blackmon, a U. Cheap tax software S. Cheap tax software citizen, is a permanent employee of a hotel in Guam, but works only during the tourist season. Cheap tax software For the remainder of each year, Pearl lives with her spouse and children in the CNMI, where she has no outside employment. Cheap tax software Most of Pearl's personal belongings, including her automobile, are located in the CNMI. Cheap tax software She is registered to vote in, and has a driver's license issued by, the CNMI. Cheap tax software She does her personal banking in the CNMI and routinely lists her CNMI address as her permanent address on forms and documents. Cheap tax software Pearl satisfies the presence test with respect to both Guam and the CNMI. Cheap tax software She satisfies the tax home test with respect to Guam, because her regular place of business is in Guam. Cheap tax software Pearl satisfies the closer connection test with respect to both Guam and the CNMI, because she does not have a closer connection to the United States or to any foreign country. Cheap tax software Pearl is considered a bona fide resident of Guam, the location of her tax home. Cheap tax software Exception for Year of Move If you are moving to or from a possession during the year, you may still be able to meet the closer connection test for that year. Cheap tax software See Special Rules in the Year of a Move , next. Cheap tax software Special Rules in the Year of a Move If you are moving to or from a possession during the year, you may still be able to meet the tax home and closer connection tests for that year. Cheap tax software Year of Moving to a Possession You will satisfy the tax home and closer connection tests in the tax year of changing your residence to the relevant possession if you meet all of the following. Cheap tax software You have not been a bona fide resident of the relevant possession in any of the 3 tax years immediately preceding your move. Cheap tax software In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the last 183 days of the tax year. Cheap tax software You are a bona fide resident of the relevant possession for each of the 3 tax years immediately following your move. Cheap tax software Example. Cheap tax software Dwight Wood, a U. Cheap tax software S. Cheap tax software citizen, files returns on a calendar year basis. Cheap tax software He lived in the United States from January 2007 through May 2013. Cheap tax software In June 2013 he moved to the USVI, purchased a house, and accepted a permanent job with a local employer. Cheap tax software From July 1 through December 31, 2013 (more than 183 days), Dwight's principal place of business was in the USVI and, during that time, he did not have a closer connection to the United States or a foreign country than to the USVI. Cheap tax software If he is a bona fide resident of the USVI during all of 2014 through 2016, he will satisfy the tax home and closer connection tests for 2013. Cheap tax software If Dwight also satisfies the presence test in 2013, he will be considered a bona fide resident of the USVI for the entire 2013 tax year. Cheap tax software Year of Moving From a Possession In the year you cease to be a bona fide resident of American Samoa, the CNMI, Guam, or the USVI, you will satisfy the tax home and closer connection tests with respect to the relevant possession if you meet all of the following. Cheap tax software You have been a bona fide resident of the relevant possession for each of the 3 tax years immediately preceding your change of residence. Cheap tax software In the year of the move, you do not have a tax home outside the relevant possession or a closer connection to the United States or a foreign country than to the relevant possession during any of the first 183 days of the tax year. Cheap tax software You are not a bona fide resident of the relevant possession for any of the 3 tax years immediately following your move. Cheap tax software Example. Cheap tax software Jean Aspen, a U. Cheap tax software S. Cheap tax software citizen, files returns on a calendar year basis. Cheap tax software From January 2010 through December 2012, Jean was a bona fide resident of American Samoa. Cheap tax software Jean continued to live there until September 6, 2013, when she accepted new employment and moved to Hawaii. Cheap tax software Jean's principal place of business from January 1 through September 5, 2013 (more than 183 days), was in American Samoa, and during that period Jean did not have a closer connection to the United States or a foreign country than to American Samoa. Cheap tax software If Jean continues to live and work in Hawaii for the rest of 2013 and throughout years 2014 through 2016, she will satisfy the tax home and closer connection tests for 2013 with respect to American Samoa. Cheap tax software If Jean also satisfies the presence test in 2013, she will be considered a bona fide resident for the entire 2013 tax year. Cheap tax software Puerto Rico You will be considered a bona fide resident of Puerto Rico for the part of the tax year preceding the date on which you move if you: Are a U. Cheap tax software S. Cheap tax software citizen, Are a bona fide resident of Puerto Rico for at least 2 tax years immediately preceding the tax year of the move, Cease to be a bona fide resident of Puerto Rico during the tax year, Cease to have a tax home in Puerto Rico during the tax year, and Have a closer connection to Puerto Rico than to the United States or a foreign country throughout the part of the tax year preceding the date on which you cease to have a tax home in Puerto Rico. Cheap tax software Example. Cheap tax software Randy White, a U. Cheap tax software S. Cheap tax software citizen, files returns on a calendar year basis. Cheap tax software For all of 2011 and 2012, Randy was a bona fide resident of Puerto Rico. Cheap tax software From January through April 2013, Randy continued to reside and maintain his principal place of business in and closer connection to Puerto Rico. Cheap tax software On May 5, 2013, Randy moved and changed his tax home to Nevada. Cheap tax software Later that year he established a closer connection to the United States than to Puerto Rico. Cheap tax software Randy did not satisfy the presence test for 2013 with respect to Puerto Rico, nor the tax home or closer connection tests. Cheap tax software However, because Randy was a bona fide resident of Puerto Rico for at least 2 tax years before he moved to Nevada in 2013, he was a bona fide resident of Puerto Rico from January 1 through May 4, 2013. Cheap tax software Reporting a Change in Bona Fide Residence If you became or ceased to be a bona fide resident of a U. Cheap tax software S. Cheap tax software possession, you may need to file Form 8898. Cheap tax software This applies to the U. Cheap tax software S. Cheap tax software possessions of American Samoa, the CNMI, Guam, Puerto Rico, and the USVI. Cheap tax software Who Must File You must file Form 8898 for the tax year in which you meet both of the following conditions. Cheap tax software Your worldwide gross income (defined below) in that tax year is more than $75,000. Cheap tax software You meet one of the following. Cheap tax software You take a position for U. Cheap tax software S. Cheap tax software tax purposes that you became a bona fide resident of a U. Cheap tax software S. Cheap tax software possession after a tax year for which you filed a U. Cheap tax software S. Cheap tax software income tax return as a citizen or resident alien of the United States but not as a bona fide resident of the possession. Cheap tax software You are a citizen or resident alien of the United States who takes the position for U. Cheap tax software S. Cheap tax software tax purposes that you ceased to be a bona fide resident of a U. Cheap tax software S. Cheap tax software possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authority, or both) as a bona fide resident of the possession. Cheap tax software You take the position for U. Cheap tax software S. Cheap tax software tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the CNMI, Guam, or the USVI. Cheap tax software Worldwide gross income. Cheap tax software   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you can exclude part or all of it) and before any deductions, credits, or rebates. Cheap tax software Example. Cheap tax software You are a U. Cheap tax software S. Cheap tax software citizen who moved to the CNMI in December 2012, but did not become a bona fide resident of that possession until the 2013 tax year. Cheap tax software You must file Form 8898 for the 2013 tax year if your worldwide gross income for that year was more than $75,000. Cheap tax software Penalty for Not Filing Form 8898 If you are required to file Form 8898 for any tax year and you fail to file it, you may owe a penalty of $1,000. Cheap tax software You may also owe this penalty if you do not include all the information required by the form or the form includes incorrect information. Cheap tax software In either case, you will not owe this penalty if you can show that such failure is due to reasonable cause and not willful neglect. Cheap tax software This is in addition to any criminal penalty that may be imposed. Cheap tax software Prev  Up  Next   Home   More Online Publications
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Online Videos and Podcasts of the Appeals Process

2011 IRS Nationwide Tax Forum Videos

2009 IRS Nationwide Tax Forum Videos

The Appeals Process-Videos
The first video provides an overview of appealing a tax dispute and the IRS Office of Appeals. The other two videos, each approximately 9 to 10 minutes long, take you through the Appeals process and your appeal rights.

The Appeals Process-Podcasts 
The following audio podcasts, less than 5 minutes long, offers you general information about Appeals.

Page Last Reviewed or Updated: 21-Mar-2013

The Cheap Tax Software

Cheap tax software 3. Cheap tax software   Gifts Table of Contents If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Cheap tax software This chapter explains the limits and rules for deducting the costs of gifts. Cheap tax software $25 limit. Cheap tax software   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Cheap tax software A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Cheap tax software   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Cheap tax software This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use. Cheap tax software   If you and your spouse both give gifts, both of you are treated as one taxpayer. Cheap tax software It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Cheap tax software If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Cheap tax software Example. Cheap tax software Bob Jones sells products to Local Company. Cheap tax software He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. Cheap tax software They paid $80 for each gift basket, or $240 total. Cheap tax software Three of Local Company's executives took the gift baskets home for their families' use. Cheap tax software Bob and Jan have no independent business relationship with any of the executives' other family members. Cheap tax software They can deduct a total of $75 ($25 limit × 3) for the gift baskets. Cheap tax software Incidental costs. Cheap tax software   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Cheap tax software   A cost is incidental only if it does not add substantial value to the gift. Cheap tax software For example, the cost of gift wrapping is an incidental cost. Cheap tax software However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Cheap tax software Exceptions. Cheap tax software   The following items are not considered gifts for purposes of the $25 limit. Cheap tax software An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Cheap tax software Examples include pens, desk sets, and plastic bags and cases. Cheap tax software Signs, display racks, or other promotional material to be used on the business premises of the recipient. Cheap tax software    Figure B. Cheap tax software When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Cheap tax software (Do not use this chart if your home is your principal place of business. Cheap tax software See Office in the home . Cheap tax software ) Please click here for the text description of the image. Cheap tax software Figure B. Cheap tax software When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1. Cheap tax software 162-1(a); RR 55–109; RR 94–47 Gift or entertainment. Cheap tax software   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Cheap tax software However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Cheap tax software    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Cheap tax software You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Cheap tax software   You can change your treatment of the tickets at a later date by filing an amended return. Cheap tax software Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Cheap tax software    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Cheap tax software You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Cheap tax software Prev  Up  Next   Home   More Online Publications