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Ez Form 2011

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Ez Form 2011

Ez form 2011 4. Ez form 2011   How Income of Aliens Is Taxed Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident Aliens Nonresident AliensTrade or Business in the United States Effectively Connected Income The 30% Tax Income From Real Property Transportation Tax Interrupted Period of Residence Expatriation TaxExpatriation Before June 4, 2004 Expatriation After June 3, 2004, and Before June 17, 2008 Expatriation After June 16, 2008 Introduction Resident and nonresident aliens are taxed in different ways. Ez form 2011 Resident aliens are generally taxed in the same way as U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Nonresident aliens are taxed based on the source of their income and whether or not their income is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 The following discussions will help you determine if income you receive during the tax year is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business and how it is taxed. Ez form 2011 Topics - This chapter discusses: Income that is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Income that is not effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Interrupted period of residence. Ez form 2011 Expatriation tax. Ez form 2011 Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 1212 List of Original Issue Discount Instruments Form (and Instructions) 6251 Alternative Minimum Tax—Individuals Schedule D (Form 1040) Capital Gains and Losses See chapter 12 for information about getting these publications and forms. Ez form 2011 Resident Aliens Resident aliens are generally taxed in the same way as U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 This means that their worldwide income is subject to U. Ez form 2011 S. Ez form 2011 tax and must be reported on their U. Ez form 2011 S. Ez form 2011 tax return. Ez form 2011 Income of resident aliens is subject to the graduated tax rates that apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U. Ez form 2011 S. Ez form 2011 citizens. Ez form 2011 Nonresident Aliens A nonresident alien's income that is subject to U. Ez form 2011 S. Ez form 2011 income tax must be divided into two categories: Income that is effectively connected with a trade or business in the United States, and Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later). Ez form 2011 The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. Ez form 2011 These are the same rates that apply to U. Ez form 2011 S. Ez form 2011 citizens and residents. Ez form 2011 Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate. Ez form 2011 If you were formerly a U. Ez form 2011 S. Ez form 2011 citizen or resident alien, these rules may not apply. Ez form 2011 See Expatriation Tax, later, in this chapter. Ez form 2011 Trade or Business in the United States Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Ez form 2011 Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Ez form 2011 The discussions that follow will help you determine whether you are engaged in a trade or business in the United States. Ez form 2011 Personal Services If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States. Ez form 2011 Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. Ez form 2011 For more information, see Services Performed for Foreign Employer in chapter 3. Ez form 2011 Other Trade or Business Activities Other examples of being engaged in a trade or business in the United States follow. Ez form 2011 Students and trainees. Ez form 2011   You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an “F,” “J,” “M,” or “Q” visa. Ez form 2011 A nonresident alien temporarily present in the United States under a “J” visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Ez form 2011 The taxable part of any scholarship or fellowship grant that is U. Ez form 2011 S. Ez form 2011 source income is treated as effectively connected with a trade or business in the United States. Ez form 2011 Business operations. Ez form 2011   If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. Ez form 2011 Partnerships. Ez form 2011   If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. Ez form 2011 Beneficiary of an estate or trust. Ez form 2011   If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business. Ez form 2011 Trading in stocks, securities, and commodities. Ez form 2011   If your only U. Ez form 2011 S. Ez form 2011 business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U. Ez form 2011 S. Ez form 2011 resident broker or other agent, you are not engaged in a trade or business in the United States. Ez form 2011   For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities. Ez form 2011   For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange. Ez form 2011   This discussion does not apply if you have a U. Ez form 2011 S. Ez form 2011 office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities. Ez form 2011 Trading for a nonresident alien's own account. Ez form 2011   You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U. Ez form 2011 S. Ez form 2011 business activity. Ez form 2011 This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent. Ez form 2011   This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. Ez form 2011 This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Ez form 2011 Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities . Ez form 2011 Effectively Connected Income If you are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Ez form 2011 This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year. Ez form 2011 Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business. Ez form 2011 In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Ez form 2011 For a discussion of these rules, see Foreign Income , later. Ez form 2011 Investment Income Investment income from U. Ez form 2011 S. Ez form 2011 sources that may or may not be treated as effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business generally falls into the following three categories. Ez form 2011 Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc. Ez form 2011 ). Ez form 2011 Gains (some of which are considered capital gains) from the sale or exchange of the following types of property. Ez form 2011 Timber, coal, or domestic iron ore with a retained economic interest. Ez form 2011 Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966. Ez form 2011 Patents transferred before October 5, 1966. Ez form 2011 Original issue discount obligations. Ez form 2011 Capital gains (and losses). Ez form 2011 Use the two tests, described next, to determine whether an item of U. Ez form 2011 S. Ez form 2011 source income falling in one of the three categories above and received during the tax year is effectively connected with your U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. Ez form 2011 If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter. Ez form 2011 Asset-use test. Ez form 2011   This test usually applies to income that is not directly produced by trade or business activities. Ez form 2011 Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected. Ez form 2011   An asset is used in, or held for use in, the trade or business in the United States if the asset is: Held for the principal purpose of promoting the conduct of a trade or business in the United States, Acquired and held in the ordinary course of the trade or business conducted in the United States (for example, an account receivable or note receivable arising from that trade or business), or Otherwise held to meet the present needs of the trade or business in the United States and not its anticipated future needs. Ez form 2011 Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States. Ez form 2011 Business-activities test. Ez form 2011   This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. Ez form 2011 The business-activities test is most important when: Dividends or interest are received by a dealer in stocks or securities, Royalties are received in the trade or business of licensing patents or similar property, or Service fees are earned by a servicing business. Ez form 2011 Under this test, if the conduct of the U. Ez form 2011 S. Ez form 2011 trade or business was a material factor in producing the income, the income is considered effectively connected. Ez form 2011 Personal Service Income You usually are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business when you perform personal services in the United States. Ez form 2011 Personal service income you receive in a tax year in which you are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Ez form 2011 Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. Ez form 2011 The income may be paid to you in the form of cash, services, or property. Ez form 2011 If you are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. Ez form 2011 However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected. Ez form 2011 Pensions. Ez form 2011   If you were a nonresident alien engaged in a U. Ez form 2011 S. Ez form 2011 trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. Ez form 2011 This is true whether or not you are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business in the year you receive the retirement pay. Ez form 2011 Transportation Income Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions. Ez form 2011 You had a fixed place of business in the United States involved in earning the income. Ez form 2011 At least 90% of your U. Ez form 2011 S. Ez form 2011 source transportation income is attributable to regularly scheduled transportation. Ez form 2011 “Fixed place of business” generally means a place, site, structure, or other similar facility through which you engage in a trade or business. Ez form 2011 “Regularly scheduled transportation” means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. Ez form 2011 This definition applies to both scheduled and chartered air transportation. Ez form 2011 If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. Ez form 2011 See Transportation Tax, later, in this chapter. Ez form 2011 Business Profits and Losses and Sales Transactions All profits or losses from U. Ez form 2011 S. Ez form 2011 sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. Ez form 2011 For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Ez form 2011 A share of U. Ez form 2011 S. Ez form 2011 source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States. Ez form 2011 Real Property Gain or Loss Gains and losses from the sale or exchange of U. Ez form 2011 S. Ez form 2011 real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. Ez form 2011 You must treat the gain or loss as effectively connected with that trade or business. Ez form 2011 U. Ez form 2011 S. Ez form 2011 real property interest. Ez form 2011   This is any interest in real property located in the United States or the U. Ez form 2011 S. Ez form 2011 Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U. Ez form 2011 S. Ez form 2011 real property holding corporation. Ez form 2011 Real property includes the following. Ez form 2011 Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits. Ez form 2011 Improvements on land, including buildings, other permanent structures, and their structural components. Ez form 2011 Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is: Disposed of more than one year before or after the disposition of the real property, or Separately sold to persons unrelated either to the seller or to the buyer of the real property. Ez form 2011 U. Ez form 2011 S. Ez form 2011 real property holding corporation. Ez form 2011   A corporation is a U. Ez form 2011 S. Ez form 2011 real property holding corporation if the fair market value of the corporation's U. Ez form 2011 S. Ez form 2011 real property interests are at least 50% of the total fair market value of: The corporation's U. Ez form 2011 S. Ez form 2011 real property interests, plus The corporation's interests in real property located outside the United States, plus The corporation's other assets that are used in, or held for use in, a trade or business. Ez form 2011   Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U. Ez form 2011 S. Ez form 2011 trade or business unless you establish that the corporation is not a U. Ez form 2011 S. Ez form 2011 real property holding corporation. Ez form 2011   A U. Ez form 2011 S. Ez form 2011 real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. Ez form 2011 An interest in a foreign corporation owning U. Ez form 2011 S. Ez form 2011 real property generally is not a U. Ez form 2011 S. Ez form 2011 real property interest unless the corporation chooses to be treated as a domestic corporation. Ez form 2011 Qualified investment entities. Ez form 2011   Special rules apply to qualified investment entities (QIEs). Ez form 2011 A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U. Ez form 2011 S. Ez form 2011 real property holding corporation. Ez form 2011    Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest is treated as a U. Ez form 2011 S. Ez form 2011 real property gain by the shareholder receiving the distribution. Ez form 2011 A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. Ez form 2011 A distribution that you do not treat as gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest is included in your gross income as a regular dividend. Ez form 2011 Note. Ez form 2011 Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U. Ez form 2011 S. Ez form 2011 real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. Ez form 2011 Domestically controlled QIE. Ez form 2011   The sale of an interest in a domestically controlled QIE is not the sale of a U. Ez form 2011 S. Ez form 2011 real property interest. Ez form 2011 The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. Ez form 2011 The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence. Ez form 2011 Wash sale. Ez form 2011    If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. Ez form 2011 An applicable wash sale transaction is one in which you: Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest, and Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period. Ez form 2011 If this occurs, you are treated as having gain from the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. Ez form 2011 This also applies to any substitute dividend payment. Ez form 2011   A transaction is not treated as an applicable wash sale transaction if: You actually receive the distribution from the domestically controlled QIE related to the interest disposed of, or acquired, in the transaction, or You dispose of any class of stock in a QIE that is regularly traded on an established securities market in the United States but only if you did not own more than 5% of that class of stock at any time during the 1-year period ending on the date of the distribution. Ez form 2011 Alternative minimum tax. Ez form 2011   There may be a minimum tax on your net gain from the disposition of U. Ez form 2011 S. Ez form 2011 real property interests. Ez form 2011 Figure the amount of this tax, if any, on Form 6251. Ez form 2011 Withholding of tax. Ez form 2011   If you dispose of a U. Ez form 2011 S. Ez form 2011 real property interest, the buyer may have to withhold tax. Ez form 2011 See the discussion of Tax Withheld on Real Property Sales in chapter 8. Ez form 2011 Foreign Income You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if: You have an office or other fixed place of business in the United States to which the income can be attributed, That office or place of business is a material factor in producing the income, and The income is produced in the ordinary course of the trade or business carried on through that office or other fixed place of business. Ez form 2011 An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income. Ez form 2011 The three kinds of foreign source income are listed below. Ez form 2011 Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Ez form 2011 Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States. Ez form 2011 Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. Ez form 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Ez form 2011 Income, gain, or loss from the sale outside the United States, through the U. Ez form 2011 S. Ez form 2011 office or other fixed place of business, of: Stock in trade, Property that would be included in inventory if on hand at the end of the tax year, or Property held primarily for sale to customers in the ordinary course of business. Ez form 2011 Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale. Ez form 2011 Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 For example, foreign source interest and dividend equivalents are treated as U. Ez form 2011 S. Ez form 2011 effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States. Ez form 2011 Tax on Effectively Connected Income Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U. Ez form 2011 S. Ez form 2011 citizens and residents. Ez form 2011 Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. Ez form 2011 However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services. Ez form 2011 Example. Ez form 2011 Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U. Ez form 2011 S. Ez form 2011 office of his overseas employer. Ez form 2011 He worked in the U. Ez form 2011 S. Ez form 2011 office until December 25, 2012, but did not leave this country until January 11, 2013. Ez form 2011 On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. Ez form 2011 All of Ted's income during his stay here is U. Ez form 2011 S. Ez form 2011 source income. Ez form 2011 During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Ez form 2011 Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012. Ez form 2011 The salary payment Ted received in January 2013 is U. Ez form 2011 S. Ez form 2011 source income to him in 2013. Ez form 2011 It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income. Ez form 2011 Real property income. Ez form 2011   You may be able to choose to treat all income from real property as effectively connected. Ez form 2011 See Income From Real Property , later, in this chapter. Ez form 2011 The 30% Tax Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U. Ez form 2011 S. Ez form 2011 sources but only if the items are not effectively connected with your U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Fixed or Determinable Income The 30% (or lower treaty) rate applies to the gross amount of U. Ez form 2011 S. Ez form 2011 source fixed or determinable annual or periodic gains, profits, or income. Ez form 2011 Income is fixed when it is paid in amounts known ahead of time. Ez form 2011 Income is determinable whenever there is a basis for figuring the amount to be paid. Ez form 2011 Income can be periodic if it is paid from time to time. Ez form 2011 It does not have to be paid annually or at regular intervals. Ez form 2011 Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased. Ez form 2011 Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. Ez form 2011 A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Ez form 2011 Other items of income, such as royalties, also may be subject to the 30% tax. Ez form 2011 Some fixed or determinable income may be exempt from U. Ez form 2011 S. Ez form 2011 tax. Ez form 2011 See chapter 3 if you are not sure whether the income is taxable. Ez form 2011 Original issue discount (OID). Ez form 2011   If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. Ez form 2011 The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. Ez form 2011 The 30% tax applies in the following circumstances. Ez form 2011 You received a payment on a debt instrument. Ez form 2011 In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. Ez form 2011 But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument. Ez form 2011 You sold or exchanged the debt instrument. Ez form 2011 The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above. Ez form 2011   Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U. Ez form 2011 S. Ez form 2011 Source Income Subject to Withholding, if you bought the debt instrument at original issue. Ez form 2011 However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. Ez form 2011 You bought the debt instrument at a premium or paid an acquisition premium. Ez form 2011 The debt instrument is a stripped bond or a stripped coupon (including zero coupon instruments backed by U. Ez form 2011 S. Ez form 2011 Treasury securities). Ez form 2011 The debt instrument is a contingent payment or inflation-indexed debt instrument. Ez form 2011 For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212. Ez form 2011   If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. Ez form 2011 See chapter 12. Ez form 2011 Gambling Winnings In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business and is not exempted by treaty. Ez form 2011 However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. Ez form 2011 Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 Social Security Benefits A nonresident alien must include 85% of any U. Ez form 2011 S. Ez form 2011 social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U. Ez form 2011 S. Ez form 2011 source fixed or determinable annual or periodic income. Ez form 2011 Social security benefits include monthly retirement, survivor, and disability benefits. Ez form 2011 This income is exempt under some tax treaties. Ez form 2011 See Table 1 in Publication 901, U. Ez form 2011 S. Ez form 2011 Tax Treaties, for a list of tax treaties that exempt U. Ez form 2011 S. Ez form 2011 social security benefits from U. Ez form 2011 S. Ez form 2011 tax. Ez form 2011 Sales or Exchanges of Capital Assets These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. Ez form 2011 They apply even if you are engaged in a trade or business in the United States. Ez form 2011 These rules do not apply to the sale or exchange of a U. Ez form 2011 S. Ez form 2011 real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. Ez form 2011 See Real Property Gain or Loss , earlier, under Effectively Connected Income. Ez form 2011 A capital asset is everything you own except: Inventory. Ez form 2011 Business accounts or notes receivable. Ez form 2011 Depreciable property used in a trade or business. Ez form 2011 Real property used in a trade or business. Ez form 2011 Supplies regularly used in a trade or business. Ez form 2011 Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property. Ez form 2011 Certain U. Ez form 2011 S. Ez form 2011 government publications. Ez form 2011 Certain commodities derivative financial instruments held by a commodities derivatives dealer. Ez form 2011 Hedging transactions. Ez form 2011 A capital gain is a gain on the sale or exchange of a capital asset. Ez form 2011 A capital loss is a loss on the sale or exchange of a capital asset. Ez form 2011 If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U. Ez form 2011 S. Ez form 2011 currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively. Ez form 2011 You may want to read Publication 544. Ez form 2011 However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Ez form 2011 Specific tax treatment that applies to U. Ez form 2011 S. Ez form 2011 citizens or residents generally does not apply to you. Ez form 2011 The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. Ez form 2011 Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. Ez form 2011 Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966. Ez form 2011 Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. Ez form 2011 Gains on the sale or exchange of original issue discount obligations. Ez form 2011 Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 See Income From Real Property , later. Ez form 2011 183-day rule. Ez form 2011   If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. Ez form 2011 For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U. Ez form 2011 S. Ez form 2011 sources over your capital losses from U. Ez form 2011 S. Ez form 2011 sources. Ez form 2011 This rule applies even if any of the transactions occurred while you were not in the United States. Ez form 2011   To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U. Ez form 2011 S. Ez form 2011 trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year. Ez form 2011   In arriving at your net gain, do not take the following into consideration. Ez form 2011 The four types of gains listed earlier. Ez form 2011 The deduction for a capital loss carryover. Ez form 2011 Capital losses in excess of capital gains. Ez form 2011 Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion). Ez form 2011 Losses from the sale or exchange of property held for personal use. Ez form 2011 However, losses resulting from casualties or thefts may be deductible on Schedule A (Form 1040NR). Ez form 2011 See Itemized Deductions in chapter 5. Ez form 2011   If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Ez form 2011 Also, you must file your tax return on a calendar-year basis. Ez form 2011   If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year. Ez form 2011 Reporting. Ez form 2011   Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Ez form 2011 Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Ez form 2011 Attach them to Form 1040NR. Ez form 2011 Income From Real Property If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. Ez form 2011 The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. Ez form 2011 This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. Ez form 2011 It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest. Ez form 2011 You can make this choice only for real property income that is not otherwise effectively connected with your U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed. Ez form 2011 This choice does not treat a nonresident alien, who is not otherwise engaged in a U. Ez form 2011 S. Ez form 2011 trade or business, as being engaged in a trade or business in the United States during the year. Ez form 2011 Example. Ez form 2011 You are a nonresident alien and are not engaged in a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 You own a single-family house in the United States that you rent out. Ez form 2011 Your rental income for the year is $10,000. Ez form 2011 This is your only U. Ez form 2011 S. Ez form 2011 source income. Ez form 2011 As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. Ez form 2011 You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. Ez form 2011 You do not have to file a U. Ez form 2011 S. Ez form 2011 tax return (Form 1040NR) because your U. Ez form 2011 S. Ez form 2011 tax liability is satisfied by the withholding of tax. Ez form 2011 If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. Ez form 2011 (See Publication 527, Residential Rental Property, for information on rental expenses. Ez form 2011 ) Any resulting net income is taxed at graduated rates. Ez form 2011 If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. Ez form 2011 For the first year you make the choice, also attach the statement discussed next. Ez form 2011 Making the choice. Ez form 2011   Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Ez form 2011 Include the following in your statement. Ez form 2011 That you are making the choice. Ez form 2011 Whether the choice is under Internal Revenue Code section 871(d) (explained earlier) or a tax treaty. Ez form 2011 A complete list of all your real property, or any interest in real property, located in the United States. Ez form 2011 Give the legal identification of U. Ez form 2011 S. Ez form 2011 timber, coal, or iron ore in which you have an interest. Ez form 2011 The extent of your ownership in the property. Ez form 2011 The location of the property. Ez form 2011 A description of any major improvements to the property. Ez form 2011 The dates you owned the property. Ez form 2011 Your income from the property. Ez form 2011 Details of any previous choices and revocations of the real property income choice. Ez form 2011   This choice stays in effect for all later tax years unless you revoke it. Ez form 2011 Revoking the choice. Ez form 2011   You can revoke the choice without IRS approval by filing Form 1040X, Amended U. Ez form 2011 S. Ez form 2011 Individual Income Tax Return, for the year you made the choice and for later tax years. Ez form 2011 You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. Ez form 2011 If this time period has expired for the year of choice, you cannot revoke the choice for that year. Ez form 2011 However, you may revoke the choice for later tax years only if you have IRS approval. Ez form 2011 For information on how to get IRS approval, see Regulation section 1. Ez form 2011 871-10(d)(2). Ez form 2011 Transportation Tax A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income . Ez form 2011 If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Ez form 2011 Attach a statement to your return that includes the following information (if applicable). Ez form 2011 Your name, taxpayer identification number, and tax year. Ez form 2011 A description of the types of services performed (whether on or off board). Ez form 2011 Names of vessels or registration numbers of aircraft on which you performed the services. Ez form 2011 Amount of U. Ez form 2011 S. Ez form 2011 source transportation income derived from each type of service for each vessel or aircraft for the calendar year. Ez form 2011 Total amount of U. Ez form 2011 S. Ez form 2011 source transportation income derived from all types of services for the calendar year. Ez form 2011 This 4% tax applies to your U. Ez form 2011 S. Ez form 2011 source gross transportation income. Ez form 2011 This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. Ez form 2011 For transportation income from personal services, the transportation must be between the United States and a U. Ez form 2011 S. Ez form 2011 possession. Ez form 2011 For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft. Ez form 2011 Interrupted Period of Residence You are subject to tax under a special rule if you interrupt your period of U. Ez form 2011 S. Ez form 2011 residence with a period of nonresidence. Ez form 2011 The special rule applies if you meet all of the following conditions. Ez form 2011 You were a U. Ez form 2011 S. Ez form 2011 resident for a period that includes at least 3 consecutive calendar years. Ez form 2011 You were a U. Ez form 2011 S. Ez form 2011 resident for at least 183 days in each of those years. Ez form 2011 You ceased to be treated as a U. Ez form 2011 S. Ez form 2011 resident. Ez form 2011 You then again became a U. Ez form 2011 S. Ez form 2011 resident before the end of the third calendar year after the end of the period described in (1) above. Ez form 2011 Under this special rule, you are subject to tax on your U. Ez form 2011 S. Ez form 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) for the period you were a nonresident alien, unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 For information on how to figure the special tax, see How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) under Expatriation Tax , below. Ez form 2011 Example. Ez form 2011 John Willow, a citizen of New Zealand, entered the United States on April 1, 2008, as a lawful permanent resident. Ez form 2011 On August 1, 2010, John ceased to be a lawful permanent resident and returned to New Zealand. Ez form 2011 During his period of residence, he was present in the United States for at least 183 days in each of three consecutive years (2008, 2009, and 2010). Ez form 2011 He returned to the United States on October 5, 2013, as a lawful permanent resident. Ez form 2011 He became a resident before the close of the third calendar year (2013) beginning after the end of his first period of residence (August 1, 2010). Ez form 2011 Therefore, he is subject to tax under the special rule for the period of nonresidence (August 2, 2010, through October 4, 2013) if it is more than the tax that would normally apply to him as a nonresident alien. Ez form 2011 Reporting requirements. Ez form 2011   If you are subject to this tax for any year in the period you were a nonresident alien, you must file Form 1040NR for that year. Ez form 2011 The return is due by the due date (including extensions) for filing your U. Ez form 2011 S. Ez form 2011 income tax return for the year that you again become a U. Ez form 2011 S. Ez form 2011 resident. Ez form 2011 If you already filed returns for that period, you must file amended returns. Ez form 2011 You must attach a statement to your return that identifies the source of all of your U. Ez form 2011 S. Ez form 2011 and foreign gross income and the items of income subject to this special rule. Ez form 2011 Expatriation Tax The expatriation tax provisions apply to U. Ez form 2011 S. Ez form 2011 citizens who have renounced their citizenship and long-term residents who have ended their residency. Ez form 2011 The rules that apply are based on the dates of expatriation, which are described in the following sections. Ez form 2011 Expatriation Before June 4, 2004. Ez form 2011 Expatriation After June 3, 2004, and Before June 17, 2008. Ez form 2011 Expatriation After June 16, 2008. Ez form 2011 Long-term resident defined. Ez form 2011   You are a long-term resident if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your residency ends. Ez form 2011 In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits. Ez form 2011 Expatriation Before June 4, 2004 If you expatriated before June 4, 2004, the expatriation rules apply if one of the principal purposes of the action is the avoidance of U. Ez form 2011 S. Ez form 2011 taxes. Ez form 2011 Unless you received a ruling from the IRS that you did not expatriate to avoid U. Ez form 2011 S. Ez form 2011 taxes, you are presumed to have tax avoidance as a principal purpose if: Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $100,000, or Your net worth on the date of your action was $500,000 or more. Ez form 2011 The amounts above are adjusted for inflation if your expatriation action is after 1997 (see Table 4-1). Ez form 2011 Table 4-1. Ez form 2011 Inflation-Adjusted Amounts for Expatriation Actions Before June 4, 2004 IF you expatriated during . Ez form 2011 . Ez form 2011 . Ez form 2011   THEN the rules outlined on this page apply if . Ez form 2011 . Ez form 2011 . Ez form 2011     Your 5-year average annual net income tax was more than . Ez form 2011 . Ez form 2011 . Ez form 2011 OR Your net worth equaled or exceeded . Ez form 2011 . Ez form 2011 . Ez form 2011 1999   110,000   552,000 2000   112,000   562,000 2001   116,000   580,000 2002   120,000   599,000 2003   122,000   608,000 2004 (before June 4)*   124,000   622,000 *If you expatriated after June 3, 2004, see Expatriation After June 3, 2004, and Before June 17, 2008 or Expatriation After June 16, 2008. Ez form 2011 Reporting requirements. Ez form 2011   If you lost your U. Ez form 2011 S. Ez form 2011 citizenship, you should have filed Form 8854 with a consular office or a federal court at the time of loss of citizenship. Ez form 2011 If you ended your long-term residency, you should have filed Form 8854 with the Internal Revenue Service when you filed your dual-status tax return for the year your residency ended. Ez form 2011   Your U. Ez form 2011 S. Ez form 2011 residency is considered to have ended when you ceased to be a lawful permanent resident or you began to be treated as a resident of another country under a tax treaty and do not waive treaty benefits. Ez form 2011 Penalties. Ez form 2011   If you failed to file Form 8854, you may have to pay a penalty equal to the greater of 5% of the expatriation tax or $1,000. Ez form 2011 The penalty will be assessed for each year of the 10-year period beginning on the date of expatriation during which your failure to file continues. Ez form 2011 The penalty will not be imposed if you can show that the failure is due to reasonable cause and not willful neglect. Ez form 2011 Expatriation tax. Ez form 2011   The expatriation tax applies to the 10-year period following the date of expatriation or termination of residency. Ez form 2011 It is figured in the same way as for those expatriating after June 3, 2004, and before June 17, 2008. Ez form 2011 See How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) in the next section. Ez form 2011 Expatriation After June 3, 2004, and Before June 17, 2008 If you expatriated after June 3, 2004, and before June 17, 2008, the expatriation rules apply to you if any of the following statements apply. Ez form 2011 Your average annual net income tax for the 5 tax years ending before the date of expatriation or termination of residency is more than: $124,000 if you expatriated or terminated residency in 2004. Ez form 2011 $127,000 if you expatriated or terminated residency in 2005. Ez form 2011 $131,000 if you expatriated or terminated residency in 2006. Ez form 2011 $136,000 if you expatriated or terminated residency in 2007. Ez form 2011 $139,000 if you expatriated or terminated residency in 2008. Ez form 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Ez form 2011 You fail to certify on Form 8854 that you have complied with all U. Ez form 2011 S. Ez form 2011 federal tax obligations for the 5 tax years preceding the date of your expatriation or termination of residency. Ez form 2011 Exception for dual-citizens and certain minors. Ez form 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) earlier. Ez form 2011 However, they still must provide the certification required in (3). Ez form 2011 Certain dual-citizens. Ez form 2011   You may qualify for the exception described above if all of the following apply. Ez form 2011 You became at birth a U. Ez form 2011 S. Ez form 2011 citizen and a citizen of another country and you continue to be a citizen of that other country. Ez form 2011 You were never a resident alien of the United States (as defined in chapter 1). Ez form 2011 You never held a U. Ez form 2011 S. Ez form 2011 passport. Ez form 2011 You were present in the United States for no more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your loss of U. Ez form 2011 S. Ez form 2011 citizenship. Ez form 2011 Certain minors. Ez form 2011   You may qualify for the exception described above if you meet all of the following requirements. Ez form 2011 You became a U. Ez form 2011 S. Ez form 2011 citizen at birth. Ez form 2011 Neither of your parents was a U. Ez form 2011 S. Ez form 2011 citizen at the time of your birth. Ez form 2011 You expatriated before you were 18½. Ez form 2011 You were present in the United States for not more than 30 days during any calendar year that is 1 of the 10 calendar years preceding your expatriation. Ez form 2011 Tax consequences of presence in the United States. Ez form 2011   The following rules apply if you do not meet the exception above for dual-citizens and certain minors and the expatriation rules would otherwise apply to you. Ez form 2011   The expatriation tax does not apply to any tax year during the 10-year period if you are physically present in the United States for more than 30 days during the calendar year ending in that year. Ez form 2011 Instead, you are treated as a U. Ez form 2011 S. Ez form 2011 citizen or resident and taxed on your worldwide income for that tax year. Ez form 2011 You must file Form 1040, 1040A, or 1040EZ and figure your tax as prescribed in the instructions for those forms. Ez form 2011   When counting the number of days of presence during a calendar year, count any day you were physically present in the United States at any time during the day. Ez form 2011 However, do not count any days (up to a limit of 30 days) on which you performed personal services in the United States for an employer who is not related to you if either of the following apply. Ez form 2011 You have ties with other countries. Ez form 2011 You have ties with other countries if: You became (within a reasonable period after your expatriation or termination of residency) a citizen or resident of the country in which you, your spouse, or either of your parents were born, and You became fully liable for income tax in that country. Ez form 2011 You were physically present in the United States for 30 days or less during each year in the 10-year period ending on the date of expatriation or termination of residency. Ez form 2011 Do not count any day you were an exempt individual or were unable to leave the United States because of a medical condition that arose while you were in the United States. Ez form 2011 See Exempt individual and Medical condition in chapter 1 under Substantial Presence Test, but disregard the information about Form 8843. Ez form 2011 Related employer. Ez form 2011   If your employer in the United States is any of the following, then your employer is related to you. Ez form 2011 You must count any days you performed services in the United States for that employer as days of presence in the United States. Ez form 2011 Members of your family. Ez form 2011 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Ez form 2011 ), and lineal descendants (children, grandchildren, etc. Ez form 2011 ). Ez form 2011 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Ez form 2011 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Ez form 2011 (See Publication 550, chapter 4, Constructive ownership of stock, for how to determine whether you directly or indirectly own outstanding stock. Ez form 2011 ) A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Ez form 2011 Date of tax expatriation. Ez form 2011   For purposes of U. Ez form 2011 S. Ez form 2011 tax rules, the date of your expatriation or termination of residency is the later of the dates on which you perform the following actions. Ez form 2011 You notify either the Department of State or the Department of Homeland Security (whichever is appropriate) of your expatriating act or termination of residency. Ez form 2011 You file Form 8854 in accordance with the form instructions. Ez form 2011 Annual return. Ez form 2011   If the expatriation tax applies to you, you must file Form 8854 each year during the 10-year period following the date of expatriation. Ez form 2011 You must file this form even if you owe no U. Ez form 2011 S. Ez form 2011 tax. Ez form 2011 Penalty. Ez form 2011   If you fail to file Form 8854 for any tax year, fail to include all information required to be shown on the form, or include incorrect information, you may have to pay a penalty of $10,000. Ez form 2011 You will not have to pay a penalty if you show that the failure is due to reasonable cause and not to willful neglect. Ez form 2011 How To Figure the Expatriation Tax (If You Expatriated Before June 17, 2008) If the expatriation tax applies to you, you are generally subject to tax on your U. Ez form 2011 S. Ez form 2011 source gross income and gains on a net basis at the graduated rates applicable to individuals (with allowable deductions) unless you would be subject to a higher tax under the 30% tax (discussed earlier) on income not connected with a U. Ez form 2011 S. Ez form 2011 trade or business. Ez form 2011 For this purpose, U. Ez form 2011 S. Ez form 2011 source gross income (defined in chapter 2) includes gains from the sale or exchange of: Property (other than stock or debt obligations) located in the United States, Stock issued by a U. Ez form 2011 S. Ez form 2011 domestic corporation, and Debt obligations of U. Ez form 2011 S. Ez form 2011 persons or of the United States, a state or political subdivision thereof, or the District of Columbia. Ez form 2011 U. Ez form 2011 S. Ez form 2011 source income also includes any income or gain derived from stock in certain controlled foreign corporations if you owned, or were considered to own, at any time during the 2-year period ending on the date of expatriation, more than 50% of: The total combined voting power of all classes of that corporation's stock, or The total value of the stock. Ez form 2011 The income or gain is considered U. Ez form 2011 S. Ez form 2011 source income only to the extent of your share of earnings and profits earned or accumulated before the date of expatriation and during the periods you met the ownership requirements discussed above. Ez form 2011 Any exchange of property is treated as a sale of the property at its fair market value on the date of the exchange and any gain is treated as U. Ez form 2011 S. Ez form 2011 source gross income in the tax year of the exchange unless you enter into a gain recognition agreement under Notice 97-19. Ez form 2011 Other information. Ez form 2011   For more information on the expatriation tax provisions, including exceptions to the tax and special U. Ez form 2011 S. Ez form 2011 source rules, see section 877 of the Internal Revenue Code. Ez form 2011 Expatriation Tax Return If you expatriated or terminated your U. Ez form 2011 S. Ez form 2011 residency, or you are subject to the expatriation tax, you must file Form 8854, Initial and Annual Expatriation Statement. Ez form 2011 Attach it to Form 1040NR if you are required to file that form. Ez form 2011 If you are present in the United States following your expatriation and are subject to tax as a U. Ez form 2011 S. Ez form 2011 citizen or resident, file Form 8854 with Form 1040. Ez form 2011 Expatriation After June 16, 2008 If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions. Ez form 2011 Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than: $139,000 if you expatriated or terminated residency in 2008. Ez form 2011 $145,000 if you expatriated or terminated residency in 2009 or 2010. Ez form 2011 $147,000 if you expatriated or terminated residency in 2011. Ez form 2011 $151,000 if you expatriated or terminated residency in 2012. Ez form 2011 $155,000 if you expatriated or terminated residency in 2013. Ez form 2011 Your net worth is $2 million or more on the date of your expatriation or termination of residency. Ez form 2011 You fail to certify on Form 8854 that you have complied with all U. Ez form 2011 S. Ez form 2011 federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency. Ez form 2011 Exception for dual-citizens and certain minors. Ez form 2011   Certain dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. Ez form 2011 However, they still must provide the certification required in (3) above. Ez form 2011 Certain dual-citizens. Ez form 2011   You may qualify for the exception described above if both of the following apply. Ez form 2011 You became at birth a U. Ez form 2011 S. Ez form 2011 citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country. Ez form 2011 You have been a resident of the United States for not more than 10 years during the 15-year tax period ending with the tax year during which the expatriation occurs. Ez form 2011 For the purpose of determining U. Ez form 2011 S. Ez form 2011 residency, use the substantial presence test described in chapter 1. Ez form 2011 Certain minors. Ez form 2011   You may qualify for the exception described earlier if you meet both of the following requirements. Ez form 2011 You expatriated before you were 18½. Ez form 2011 You have been a resident of the United States for not more than 10 tax years before the expatriation occurs. Ez form 2011 For the purpose of determining U. Ez form 2011 S. Ez form 2011 residency, use the substantial presence test described in chapter 1. Ez form 2011 Expatriation date. Ez form 2011   Your expatriation date is the date you relinquish U. Ez form 2011 S. Ez form 2011 citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U. Ez form 2011 S. Ez form 2011 resident). Ez form 2011 Former U. Ez form 2011 S. Ez form 2011 citizen. Ez form 2011   You are considered to have relinquished your U. Ez form 2011 S. Ez form 2011 citizenship on the earliest of the following dates. Ez form 2011 The date you renounced U. Ez form 2011 S. Ez form 2011 citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality). Ez form 2011 The date you furnished to the State Department a signed statement of voluntary relinquishment of U. Ez form 2011 S. Ez form 2011 nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality). Ez form 2011 The date the State Department issued a certificate of loss of nationality. Ez form 2011 The date that a U. Ez form 2011 S. Ez form 2011 court canceled your certificate of naturalization. Ez form 2011 Former long-term resident. Ez form 2011   You are considered to have terminated your long-term residency on the earliest of the following dates. Ez form 2011 The date you voluntarily relinquished your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U. Ez form 2011 S. Ez form 2011 consular or immigration officer, and the Department of Homeland Security determined that you have, in fact, abandoned your lawful permanent resident status. Ez form 2011 The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order. Ez form 2011 If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you began to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and notify the IRS of that treatment on Forms 8833 and 8854. Ez form 2011 See Effect of Tax Treaties in chapter 1 for more information about dual residents. Ez form 2011 How To Figure the Expatriation Tax (If You Expatriate After June 16, 2008) In the year you expatriate, you are subject to income tax on the net unrealized gain (or loss) in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). Ez form 2011 This applies to most types of property interests you held on the date of relinquishment of citizenship or termination of residency. Ez form 2011 But see Exceptions , later. Ez form 2011 Gains arising from deemed sales must be taken into account for the tax year of the deemed sale without regard to other U. Ez form 2011 S. Ez form 2011 internal revenue laws. Ez form 2011 Losses from deemed sales must be taken into account to the extent otherwise provided under U. Ez form 2011 S. Ez form 2011 internal revenue laws. Ez form 2011 However, Internal Revenue Code section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. Ez form 2011 The net gain that you otherwise must include in your income is reduced (but not below zero) by: $600,000 if you expatriated or terminated residency before January 1, 2009. Ez form 2011 $626,000 if you expatriated or terminated residency in 2009. Ez form 2011 $627,000 if you expatriated or terminated residency in 2010. Ez form 2011 $636,000 if you expatriated or terminated residency in 2011. Ez form 2011 $651,000 if you expatriated or terminated residency in 2012. Ez form 2011 $668,000 if you expatriated or terminated residency in 2013. Ez form 2011 Exceptions. Ez form 2011   The mark-to-market tax does not apply to the following. Ez form 2011 Eligible deferred compensation items. Ez form 2011 Ineligible deferred compensation items. Ez form 2011 Interests in nongrantor trusts. Ez form 2011 Specified tax deferred accounts. Ez form 2011 Instead, items (1) and (3) may be subject to withholding at source. Ez form 2011 In the case of item (2), you are treated as receiving the present value of your accrued benefit as of the day before the expatriation date. Ez form 2011 In the case of item (4), you are treated as receiving a distribution of your entire interest in the account on the day before your expatriation date. Ez form 2011 See paragraphs (d), (e), and (f) of section 877A for more information. Ez form 2011 Expatriation Tax Return If you expatriated or terminated your U. Ez form 2011 S. Ez form 2011 residency, or you are subject to the expatriation rules (as discussed earlier in the first paragraph under Expatriation After June 16, 2008), you must file Form 8854. Ez form 2011 Attach it to Form 1040 or Form 1040NR if you are required to file either of those forms. Ez form 2011 Deferral of payment of mark-to-market tax. Ez form 2011   You can make an irrevocable election to defer payment of the mark-to-market tax imposed on the deemed sale of property. Ez form 2011 If you make this election, the following rules apply. Ez form 2011 You can make the election on a property-by-property basis. Ez form 2011 The deferred tax attributable to a particular property is due on the return for the tax year in which you dispose of the property. Ez form 2011 Interest is charged for the period the tax is deferred. Ez form 2011 The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates. Ez form 2011 The due date of the return required for the year of death. Ez form 2011 The time that the security provided for the property fails to be adequate. Ez form 2011 See item (6) below. Ez form 2011 You make the election on Form 8854. Ez form 2011 You must provide adequate security (such as a bond). Ez form 2011 You must make an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of the mark-to-market tax. Ez form 2011   For more information about the deferral of payment, see the Instructions for Form 8854. Ez form 2011 Prev  Up  Next   Home   More Online Publications
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IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

 City Street Address  Days/Hours of Service  Telephone* 
Overland Park  6717 Shawnee Mission Pkwy
Overland Park, KS 66202 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(816) 966-2840 
Topeka  120 S.E. Sixth Ave.
Topeka, KS 66603 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(785) 235-3053 
Wichita  555 N. Woodlawn
Building 4
Wichita, KS 67208 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(316) 352-7401 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (316) 651-2100 in Wichita or 1-877-777-4778 elsewhere, or see  Publication 1546 , The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
271 W. 3rd St N.
Wichita, KS 67202

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Ez Form 2011

Ez form 2011 22. Ez form 2011   Taxes Table of Contents IntroductionIndian tribal government. Ez form 2011 Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Ez form 2011 Real Estate TaxesReal estate taxes for prior years. Ez form 2011 Examples. Ez form 2011 Form 1099-S. Ez form 2011 Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Ez form 2011 It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Ez form 2011 This chapter covers the following topics. Ez form 2011 Income taxes (federal, state, local, and foreign). Ez form 2011 General sales taxes (state and local). Ez form 2011 Real estate taxes (state, local, and foreign). Ez form 2011 Personal property taxes (state and local). Ez form 2011 Taxes and fees you cannot deduct. Ez form 2011 Use Table 22-1 as a guide to determine which taxes you can deduct. Ez form 2011 The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Ez form 2011 Business taxes. Ez form 2011   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Ez form 2011 For information on these taxes, see Publication 535, Business Expenses. Ez form 2011 State or local taxes. Ez form 2011   These are taxes imposed by the 50 states, U. Ez form 2011 S. Ez form 2011 possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Ez form 2011 Indian tribal government. Ez form 2011   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Ez form 2011 Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Ez form 2011 General sales taxes. Ez form 2011   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Ez form 2011 Foreign taxes. Ez form 2011   These are taxes imposed by a foreign country or any of its political subdivisions. Ez form 2011 Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Ez form 2011 The tax must be imposed on you. Ez form 2011 You must pay the tax during your tax year. Ez form 2011 The tax must be imposed on you. Ez form 2011   In general, you can deduct only taxes imposed on you. Ez form 2011   Generally, you can deduct property taxes only if you are an owner of the property. Ez form 2011 If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Ez form 2011 You must pay the tax during your tax year. Ez form 2011   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Ez form 2011 If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Ez form 2011 If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Ez form 2011 If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Ez form 2011 See Publication 538, Accounting Periods and Methods, for details. Ez form 2011    If you use an accrual method of accounting, see Publication 538 for more information. Ez form 2011 Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Ez form 2011 State and Local Income Taxes You can deduct state and local income taxes. Ez form 2011 However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Ez form 2011 See General Sales Taxes , later. Ez form 2011 Exception. Ez form 2011    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Ez form 2011 For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Ez form 2011 What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Ez form 2011 Withheld taxes. Ez form 2011   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Ez form 2011 Your Form(s) W-2 will show these amounts. Ez form 2011 Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Ez form 2011 Estimated tax payments. Ez form 2011   You can deduct estimated tax payments you made during the year to a state or local government. Ez form 2011 However, you must have a reasonable basis for making the estimated tax payments. Ez form 2011 Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Ez form 2011 For example, you made an estimated state income tax payment. Ez form 2011 However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Ez form 2011 You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Ez form 2011 Refund applied to taxes. Ez form 2011   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Ez form 2011    Do not reduce your deduction by either of the following items. Ez form 2011 Any state or local income tax refund (or credit) you expect to receive for 2013. Ez form 2011 Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Ez form 2011   However, part or all of this refund (or credit) may be taxable. Ez form 2011 See Refund (or credit) of state or local income taxes , later. Ez form 2011 Separate federal returns. Ez form 2011   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Ez form 2011 Joint state and local returns. Ez form 2011   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Ez form 2011 You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Ez form 2011 However, you cannot deduct more than the amount you actually paid during the year. Ez form 2011 You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Ez form 2011 If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Ez form 2011 Joint federal return. Ez form 2011   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Ez form 2011 Contributions to state benefit funds. Ez form 2011    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Ez form 2011 For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Ez form 2011 Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Ez form 2011 Alaska Unemployment Compensation Fund. Ez form 2011 California Nonoccupational Disability Benefit Fund. Ez form 2011 New Jersey Nonoccupational Disability Benefit Fund. Ez form 2011 New Jersey Unemployment Compensation Fund. Ez form 2011 New York Nonoccupational Disability Benefit Fund. Ez form 2011 Pennsylvania Unemployment Compensation Fund. Ez form 2011 Rhode Island Temporary Disability Benefit Fund. Ez form 2011 Washington State Supplemental Workmen's Compensation Fund. Ez form 2011    Employee contributions to private or voluntary disability plans are not deductible. Ez form 2011 Refund (or credit) of state or local income taxes. Ez form 2011   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Ez form 2011 This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Ez form 2011 If you did not itemize your deductions in the previous year, do not include the refund in income. Ez form 2011 If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Ez form 2011 For a discussion of how much to include, see Recoveries in chapter 12. Ez form 2011 Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Ez form 2011 S. Ez form 2011 possession. Ez form 2011 However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Ez form 2011 S. Ez form 2011 tax under the foreign earned income exclusion or the foreign housing exclusion. Ez form 2011 For information on these exclusions, see Publication 54, Tax Guide for U. Ez form 2011 S. Ez form 2011 Citizens and Resident Aliens Abroad. Ez form 2011 For information on the foreign tax credit, see Publication 514. Ez form 2011 General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Ez form 2011 You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Ez form 2011 Actual expenses. Ez form 2011   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Ez form 2011 However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Ez form 2011 If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Ez form 2011 If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Ez form 2011 Do not include sales taxes paid on items used in your trade or business. Ez form 2011 Motor vehicles. Ez form 2011   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Ez form 2011 This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Ez form 2011 Optional sales tax tables. Ez form 2011   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Ez form 2011 You may also be able to add the state and local general sales taxes paid on certain specified items. Ez form 2011   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Ez form 2011 Your income is your adjusted gross income plus any nontaxable items such as the following. Ez form 2011 Tax-exempt interest. Ez form 2011 Veterans' benefits. Ez form 2011 Nontaxable combat pay. Ez form 2011 Workers' compensation. Ez form 2011 Nontaxable part of social security and railroad retirement benefits. Ez form 2011 Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Ez form 2011 Public assistance payments. Ez form 2011 If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Ez form 2011 See the Instructions for Schedule A (Form 1040), line 5, for details. Ez form 2011 Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Ez form 2011 You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Ez form 2011 Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Ez form 2011 They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Ez form 2011 For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Ez form 2011 Tenant-shareholders in a cooperative housing corporation. Ez form 2011   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Ez form 2011 The corporation should provide you with a statement showing your share of the taxes. Ez form 2011 For more information, see Special Rules for Cooperatives in Publication 530. Ez form 2011 Division of real estate taxes between buyers and sellers. Ez form 2011   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Ez form 2011   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Ez form 2011 The seller is treated as paying the taxes up to, but not including, the date of sale. Ez form 2011 The buyer is treated as paying the taxes beginning with the date of sale. Ez form 2011 This applies regardless of the lien dates under local law. Ez form 2011 Generally, this information is included on the settlement statement provided at the closing. Ez form 2011    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Ez form 2011 This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Ez form 2011 However, you must also include the amount of that tax in the selling price of the property. Ez form 2011 The buyer must include the same amount in his or her cost of the property. Ez form 2011   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Ez form 2011 Worksheet 22-1. Ez form 2011 Figuring Your Real Estate Tax Deduction 1. Ez form 2011 Enter the total real estate taxes for the real property tax year   2. Ez form 2011 Enter the number of days in the real property tax year that you owned the property   3. Ez form 2011 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Ez form 2011 4. Ez form 2011 Multiply line 1 by line 3. Ez form 2011 This is your deduction. Ez form 2011 Enter it on Schedule A (Form 1040), line 6   Note. Ez form 2011 Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Ez form 2011 Your total deduction is the sum of the line 4 amounts for all of the properties. Ez form 2011 Real estate taxes for prior years. Ez form 2011   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Ez form 2011 Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Ez form 2011 The buyer must add them to the cost of the property. Ez form 2011 The seller can deduct these taxes paid by the buyer. Ez form 2011 However, the seller must include them in the selling price. Ez form 2011 Examples. Ez form 2011   The following examples illustrate how real estate taxes are divided between buyer and seller. Ez form 2011 Example 1. Ez form 2011 Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Ez form 2011 The tax on their old home, sold on May 7, was $620. Ez form 2011 The tax on their new home, bought on May 3, was $732. Ez form 2011 Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Ez form 2011 On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Ez form 2011 Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Ez form 2011 They figure their deduction for taxes on their old home as follows. Ez form 2011 Worksheet 22-1. Ez form 2011 Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Ez form 2011 Enter the total real estate taxes for the real property tax year $620 2. Ez form 2011 Enter the number of days in the real property tax year that you owned the property 126 3. Ez form 2011 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Ez form 2011 3452 4. Ez form 2011 Multiply line 1 by line 3. Ez form 2011 This is your deduction. Ez form 2011 Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Ez form 2011 (The buyers add the $214 to their cost of the home. Ez form 2011 ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Ez form 2011 They figure their deduction for taxes on their new home as follows. Ez form 2011 Worksheet 22-1. Ez form 2011 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Ez form 2011 Enter the total real estate taxes for the real property tax year $732 2. Ez form 2011 Enter the number of days in the real property tax year that you owned the property 243 3. Ez form 2011 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Ez form 2011 6658 4. Ez form 2011 Multiply line 1 by line 3. Ez form 2011 This is your deduction. Ez form 2011 Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Ez form 2011 (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Ez form 2011 ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Ez form 2011 They will enter this amount on Schedule A (Form 1040), line 6. Ez form 2011 Example 2. Ez form 2011 George and Helen Brown bought a new home on May 3, 2013. Ez form 2011 Their real property tax year for the new home is the calendar year. Ez form 2011 Real estate taxes for 2012 were assessed in their state on January 1, 2013. Ez form 2011 The taxes became due on May 31, 2013, and October 31, 2013. Ez form 2011 The Browns agreed to pay all taxes due after the date of purchase. Ez form 2011 Real estate taxes for 2012 were $680. Ez form 2011 They paid $340 on May 31, 2013, and $340 on October 31, 2013. Ez form 2011 These taxes were for the 2012 real property tax year. Ez form 2011 The Browns cannot deduct them since they did not own the property until 2013. Ez form 2011 Instead, they must add $680 to the cost of their new home. Ez form 2011 In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Ez form 2011 The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Ez form 2011 They will figure their 2014 deduction for taxes as follows. Ez form 2011 Worksheet 22-1. Ez form 2011 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Ez form 2011 Enter the total real estate taxes for the real property tax year $752 2. Ez form 2011 Enter the number of days in the real property tax year that you owned the property 243 3. Ez form 2011 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Ez form 2011 6658 4. Ez form 2011 Multiply line 1 by line 3. Ez form 2011 This is your deduction. Ez form 2011 Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Ez form 2011 Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Ez form 2011 This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Ez form 2011 The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Ez form 2011 The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Ez form 2011 Form 1099-S. Ez form 2011   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Ez form 2011 Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Ez form 2011 The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Ez form 2011   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Ez form 2011 The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Ez form 2011 See Refund (or rebate) , later. Ez form 2011 Taxes placed in escrow. Ez form 2011   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Ez form 2011 You can deduct only the real estate tax that the third party actually paid to the taxing authority. Ez form 2011 If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Ez form 2011 Tenants by the entirety. Ez form 2011   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Ez form 2011 Divorced individuals. Ez form 2011   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Ez form 2011 See Taxes and insurance in chapter 18 for more information. Ez form 2011 Ministers' and military housing allowances. Ez form 2011   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Ez form 2011 Refund (or rebate). Ez form 2011   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Ez form 2011 If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Ez form 2011 However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Ez form 2011 For more information, see Recoveries in chapter 12. Ez form 2011 Table 22-1. Ez form 2011 Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Ez form 2011 Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Ez form 2011     Fines and penalties. Ez form 2011 Income Taxes State and local income taxes. Ez form 2011 Federal income taxes. Ez form 2011   Foreign income taxes. Ez form 2011     Employee contributions to state funds listed under Contributions to state benefit funds . Ez form 2011 Employee contributions to private or voluntary disability plans. Ez form 2011     State and local general sales taxes if you choose to deduct state and local income taxes. Ez form 2011 General Sales Taxes State and local general sales taxes, including compensating use taxes. Ez form 2011 State and local income taxes if you choose to deduct state and local general sales taxes. Ez form 2011 Other Taxes Taxes that are expenses of your trade or business. Ez form 2011 Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Ez form 2011   Taxes on property producing rent or royalty income. Ez form 2011 Per capita taxes. Ez form 2011   Occupational taxes. Ez form 2011 See chapter 28. Ez form 2011     One-half of self-employment tax paid. Ez form 2011   Personal Property Taxes State and local personal property taxes. Ez form 2011 Customs duties that are not expenses of your trade or business or of producing income. Ez form 2011 Real Estate Taxes State and local real estate taxes. Ez form 2011 Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Ez form 2011   Foreign real estate taxes. Ez form 2011 Taxes for local benefits (with exceptions). Ez form 2011 See Real Estate-Related Items You Cannot Deduct . Ez form 2011   Tenant's share of real estate taxes paid by  cooperative housing corporation. Ez form 2011 Trash and garbage pickup fees (with exceptions). Ez form 2011 See Real Estate-Related Items You Cannot Deduct . Ez form 2011     Rent increase due to higher real estate taxes. Ez form 2011     Homeowners' association charges. Ez form 2011 Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Ez form 2011 Taxes for local benefits. Ez form 2011 Itemized charges for services (such as trash and garbage pickup fees). Ez form 2011 Transfer taxes (or stamp taxes). Ez form 2011 Rent increases due to higher real estate taxes. Ez form 2011 Homeowners' association charges. Ez form 2011 Taxes for local benefits. Ez form 2011   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Ez form 2011 These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Ez form 2011 You should increase the basis of your property by the amount of the assessment. Ez form 2011   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Ez form 2011 If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Ez form 2011 If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Ez form 2011    Taxes for local benefits may be included in your real estate tax bill. Ez form 2011 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Ez form 2011 You should use the rules above to determine if the local benefit tax is deductible. Ez form 2011 Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Ez form 2011 Itemized charges for services. Ez form 2011    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Ez form 2011 For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Ez form 2011    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Ez form 2011 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Ez form 2011 Exception. Ez form 2011   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Ez form 2011 Transfer taxes (or stamp taxes). Ez form 2011   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Ez form 2011 If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Ez form 2011 If paid by the buyer, they are included in the cost basis of the property. Ez form 2011 Rent increase due to higher real estate taxes. Ez form 2011   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Ez form 2011 Homeowners' association charges. Ez form 2011   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Ez form 2011 Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Ez form 2011 A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Ez form 2011 For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Ez form 2011 If the tax is partly based on value and partly based on other criteria, it may qualify in part. Ez form 2011 Example. Ez form 2011 Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Ez form 2011 You paid $32 based on the value ($1,500) and weight (3,400 lbs. Ez form 2011 ) of your car. Ez form 2011 You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Ez form 2011 The remaining $17 ($. Ez form 2011 50 × 34), based on the weight, is not deductible. Ez form 2011 Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Ez form 2011 Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Ez form 2011 See Table 22-1. Ez form 2011 Taxes and fees that are generally not deductible include the following items. Ez form 2011 Employment taxes. Ez form 2011 This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Ez form 2011 However, one-half of self-employment tax you pay is deductible. Ez form 2011 In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Ez form 2011 For more information, see chapters 21 and 32. Ez form 2011 Estate, inheritance, legacy, or succession taxes. Ez form 2011 However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Ez form 2011 In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Ez form 2011 For more information, see Publication 559, Survivors, Executors, and Administrators. Ez form 2011 Federal income taxes. Ez form 2011 This includes income taxes withheld from your pay. Ez form 2011 Fines and penalties. Ez form 2011 You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Ez form 2011 Gift taxes. Ez form 2011 License fees. Ez form 2011 You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Ez form 2011 Per capita taxes. Ez form 2011 You cannot deduct state or local per capita taxes. Ez form 2011 Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Ez form 2011 For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Ez form 2011 Where To Deduct You deduct taxes on the following schedules. Ez form 2011 State and local income taxes. Ez form 2011    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Ez form 2011 Check box a on line 5. Ez form 2011 General sales taxes. Ez form 2011   Sales taxes are deducted on Schedule A (Form 1040), line 5. Ez form 2011 You must check box b on line 5. Ez form 2011 If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Ez form 2011 Foreign income taxes. Ez form 2011   Generally, income taxes you pay to a foreign country or U. Ez form 2011 S. Ez form 2011 possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Ez form 2011 S. Ez form 2011 income tax on Form 1040, line 47. Ez form 2011 To claim the credit, you may have to complete and attach Form 1116. Ez form 2011 For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Ez form 2011 Real estate taxes and personal property taxes. Ez form 2011    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Ez form 2011 Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Ez form 2011 Self-employment tax. Ez form 2011    Deduct one-half of your self-employment tax on Form 1040, line 27. Ez form 2011 Other taxes. Ez form 2011    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Ez form 2011 Prev  Up  Next   Home   More Online Publications