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Federal Amended Tax Return Instructions

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Federal Amended Tax Return Instructions

Federal amended tax return instructions Publication 538 - Main Content Table of Contents Accounting PeriodsCalendar Year Fiscal Year Short Tax Year Improper Tax Year Change in Tax Year Individuals Partnerships, S Corporations, and Personal Service Corporations (PSCs) Corporations (Other Than S Corporations and PSCs) Accounting MethodsSpecial methods. Federal amended tax return instructions Hybrid method. Federal amended tax return instructions Cash Method Accrual Method Inventories Change in Accounting Method How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Federal amended tax return instructions Accounting Periods You must use a tax year to figure your taxable income. Federal amended tax return instructions A tax year is an annual accounting period for keeping records and reporting income and expenses. Federal amended tax return instructions An annual accounting period does not include a short tax year (discussed later). Federal amended tax return instructions You can use the following tax years: A calendar year; or A fiscal year (including a 52-53-week tax year). Federal amended tax return instructions Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. Federal amended tax return instructions A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. Federal amended tax return instructions You cannot adopt a tax year by merely: Filing an application for an extension of time to file an income tax return; Filing an application for an employer identification number (Form SS-4); or Paying estimated taxes. Federal amended tax return instructions This section discusses: A calendar year. Federal amended tax return instructions A fiscal year (including a period of 52 or 53 weeks). Federal amended tax return instructions A short tax year. Federal amended tax return instructions An improper tax year. Federal amended tax return instructions A change in tax year. Federal amended tax return instructions Special situations that apply to individuals. Federal amended tax return instructions Restrictions that apply to the accounting period of a partnership, S corporation, or personal service corporation. Federal amended tax return instructions Special situations that apply to corporations. Federal amended tax return instructions Calendar Year A calendar year is 12 consecutive months beginning on January 1st and ending on December 31st. Federal amended tax return instructions If you adopt the calendar year, you must maintain your books and records and report your income and expenses from January 1st through December 31st of each year. Federal amended tax return instructions If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you obtain approval from the IRS to change it, or are otherwise allowed to change it without IRS approval. Federal amended tax return instructions See Change in Tax Year, later. Federal amended tax return instructions Generally, anyone can adopt the calendar year. Federal amended tax return instructions However, you must adopt the calendar year if: You keep no books or records; You have no annual accounting period; Your present tax year does not qualify as a fiscal year; or You are required to use a calendar year by a provision in the Internal Revenue Code or the Income Tax Regulations. Federal amended tax return instructions Fiscal Year A fiscal year is 12 consecutive months ending on the last day of any month except December 31st. Federal amended tax return instructions If you are allowed to adopt a fiscal year, you must consistently maintain your books and records and report your income and expenses using the time period adopted. Federal amended tax return instructions 52-53-Week Tax Year You can elect to use a 52-53-week tax year if you keep your books and records and report your income and expenses on that basis. Federal amended tax return instructions If you make this election, your 52-53-week tax year must always end on the same day of the week. Federal amended tax return instructions Your 52-53-week tax year must always end on: Whatever date this same day of the week last occurs in a calendar month, or Whatever date this same day of the week falls that is nearest to the last day of the calendar month. Federal amended tax return instructions For example, if you elect a tax year that always ends on the last Monday in March, your 2012 tax year will end on March 25, 2013. Federal amended tax return instructions Election. Federal amended tax return instructions   To make the election for the 52-53-week tax year, attach a statement with the following information to your tax return. Federal amended tax return instructions The month in which the new 52-53-week tax year ends. Federal amended tax return instructions The day of the week on which the tax year always ends. Federal amended tax return instructions The date the tax year ends. Federal amended tax return instructions It can be either of the following dates on which the chosen day: Last occurs in the month in (1), above, or Occurs nearest to the last day of the month in (1), above. Federal amended tax return instructions   When you figure depreciation or amortization, a 52-53-week tax year is generally considered a year of 12 calendar months. Federal amended tax return instructions   To determine an effective date (or apply provisions of any law) expressed in terms of tax years beginning, including, or ending on the first or last day of a specified calendar month, a 52-53-week tax year is considered to: Begin on the first day of the calendar month beginning nearest to the first day of the 52-53-week tax year, and End on the last day of the calendar month ending nearest to the last day of the 52-53-week tax year. Federal amended tax return instructions Example. Federal amended tax return instructions Assume a tax provision applies to tax years beginning on or after July 1, 2012, which happens to be a Sunday. Federal amended tax return instructions For this purpose, a 52-53-week tax year that begins on the last Tuesday of June, which falls on June 26, 2012, is treated as beginning on July 1, 2012. Federal amended tax return instructions Short Tax Year A short tax year is a tax year of less than 12 months. Federal amended tax return instructions A short period tax return may be required when you (as a taxable entity): Are not in existence for an entire tax year, or Change your accounting period. Federal amended tax return instructions Tax on a short period tax return is figured differently for each situation. Federal amended tax return instructions Not in Existence Entire Year Even if a taxable entity was not in existence for the entire year, a tax return is required for the time it was in existence. Federal amended tax return instructions Requirements for filing the return and figuring the tax are generally the same as the requirements for a return for a full tax year (12 months) ending on the last day of the short tax year. Federal amended tax return instructions Example 1. Federal amended tax return instructions XYZ Corporation was organized on July 1, 2012. Federal amended tax return instructions It elected the calendar year as its tax year. Federal amended tax return instructions Therefore, its first tax return was due March 15, 2013. Federal amended tax return instructions This short period return will cover the period from July 1, 2012, through December 31, 2012. Federal amended tax return instructions Example 2. Federal amended tax return instructions A calendar year corporation dissolved on July 23, 2012. Federal amended tax return instructions Its final return is due by October 15, 2012. Federal amended tax return instructions It will cover the short period from January 1, 2012, through July 23, 2012. Federal amended tax return instructions Death of individual. Federal amended tax return instructions   When an individual dies, a tax return must be filed for the decedent by the 15th day of the 4th month after the close of the individual's regular tax year. Federal amended tax return instructions The decedent's final return will be a short period tax return that begins on January 1st, and ends on the date of death. Federal amended tax return instructions In the case of a decedent who dies on December 31st, the last day of the regular tax year, a full calendar-year tax return is required. Federal amended tax return instructions Example. Federal amended tax return instructions   Agnes Green was a single, calendar year taxpayer. Federal amended tax return instructions She died on March 6, 2012. Federal amended tax return instructions Her final income tax return must be filed by April 15, 2013. Federal amended tax return instructions It will cover the short period from January 1, 2012, to March 6, 2012. Federal amended tax return instructions Figuring Tax for Short Year If the IRS approves a change in your tax year or you are required to change your tax year, you must figure the tax and file your return for the short tax period. Federal amended tax return instructions The short tax period begins on the first day after the close of your old tax year and ends on the day before the first day of your new tax year. Federal amended tax return instructions Figure tax for a short year under the general rule, explained below. Federal amended tax return instructions You may then be able to use a relief procedure, explained later, and claim a refund of part of the tax you paid. Federal amended tax return instructions General rule. Federal amended tax return instructions   Income tax for a short tax year must be annualized. Federal amended tax return instructions However, self-employment tax is figured on the actual self-employment income for the short period. Federal amended tax return instructions Individuals. Federal amended tax return instructions   An individual must figure income tax for the short tax year as follows. Federal amended tax return instructions Determine your adjusted gross income (AGI) for the short tax year and then subtract your actual itemized deductions for the short tax year. Federal amended tax return instructions You must itemize deductions when you file a short period tax return. Federal amended tax return instructions Multiply the dollar amount of your exemptions by the number of months in the short tax year and divide the result by 12. Federal amended tax return instructions Subtract the amount in (2) from the amount in (1). Federal amended tax return instructions The result is your modified taxable income. Federal amended tax return instructions Multiply the modified taxable income in (3) by 12, then divide the result by the number of months in the short tax year. Federal amended tax return instructions The result is your annualized income. Federal amended tax return instructions Figure the total tax on your annualized income using the appropriate tax rate schedule. Federal amended tax return instructions Multiply the total tax by the number of months in the short tax year and divide the result by 12. Federal amended tax return instructions The result is your tax for the short tax year. Federal amended tax return instructions Relief procedure. Federal amended tax return instructions   Individuals and corporations can use a relief procedure to figure the tax for the short tax year. Federal amended tax return instructions It may result in less tax. Federal amended tax return instructions Under this procedure, the tax is figured by two separate methods. Federal amended tax return instructions If the tax figured under both methods is less than the tax figured under the general rule, you can file a claim for a refund of part of the tax you paid. Federal amended tax return instructions For more information, see section 443(b)(2) of the Internal Revenue Code. Federal amended tax return instructions Alternative minimum tax. Federal amended tax return instructions   To figure the alternative minimum tax (AMT) due for a short tax year: Figure the annualized alternative minimum taxable income (AMTI) for the short tax period by completing the following steps. Federal amended tax return instructions Multiply the AMTI by 12. Federal amended tax return instructions Divide the result by the number of months in the short tax year. Federal amended tax return instructions Multiply the annualized AMTI by the appropriate rate of tax under section 55(b)(1) of the Internal Revenue Code. Federal amended tax return instructions The result is the annualized AMT. Federal amended tax return instructions Multiply the annualized AMT by the number of months in the short tax year and divide the result by 12. Federal amended tax return instructions   For information on the AMT for individuals, see the Instructions for Form 6251, Alternative Minimum Tax–Individuals. Federal amended tax return instructions For information on the AMT for corporations, see the Instructions to Form 4626, Alternative Minimum Tax–Corporations. Federal amended tax return instructions Tax withheld from wages. Federal amended tax return instructions   You can claim a credit against your income tax liability for federal income tax withheld from your wages. Federal amended tax return instructions Federal income tax is withheld on a calendar year basis. Federal amended tax return instructions The amount withheld in any calendar year is allowed as a credit for the tax year beginning in the calendar year. Federal amended tax return instructions Improper Tax Year Taxpayers that have adopted an improper tax year must change to a proper tax year. Federal amended tax return instructions For example, if a taxpayer began business on March 15 and adopted a tax year ending on March 14 (a period of exactly 12 months), this would be an improper tax year. Federal amended tax return instructions See Accounting Periods, earlier, for a description of permissible tax years. Federal amended tax return instructions To change to a proper tax year, you must do one of the following. Federal amended tax return instructions If you are requesting a change to a calendar tax year, file an amended income tax return based on a calendar tax year that corrects the most recently filed tax return that was filed on the basis of an improper tax year. Federal amended tax return instructions Attach a completed Form 1128 to the amended tax return. Federal amended tax return instructions Write “FILED UNDER REV. Federal amended tax return instructions PROC. Federal amended tax return instructions 85-15” at the top of Form 1128 and file the forms with the Internal Revenue Service Center where you filed your original return. Federal amended tax return instructions If you are requesting a change to a fiscal tax year, file Form 1128 in accordance with the form instructions to request IRS approval for the change. Federal amended tax return instructions Change in Tax Year Generally, you must file Form 1128 to request IRS approval to change your tax year. Federal amended tax return instructions See the Instructions for Form 1128 for exceptions. Federal amended tax return instructions If you qualify for an automatic approval request, a user fee is not required. Federal amended tax return instructions Individuals Generally, individuals must adopt the calendar year as their tax year. Federal amended tax return instructions An individual can adopt a fiscal year provided that the individual maintains his or her books and records on the basis of the adopted fiscal year. Federal amended tax return instructions Partnerships, S Corporations, and Personal Service Corporations (PSCs) Generally, partnerships, S corporations (including electing S corporations), and PSCs must use a required tax year. Federal amended tax return instructions A required tax year is a tax year that is required under the Internal Revenue Code and Income Tax Regulations. Federal amended tax return instructions The entity does not have to use the required tax year if it receives IRS approval to use another permitted tax year or makes an election under section 444 of the Internal Revenue Code (discussed later). Federal amended tax return instructions The following discussions provide the rules for partnerships, S corporations, and PSCs. Federal amended tax return instructions Partnership A partnership must conform its tax year to its partners' tax years unless any of the following apply. Federal amended tax return instructions The partnership makes an election under section 444 of the Internal Revenue Code to have a tax year other than a required tax year by filing Form 8716. Federal amended tax return instructions The partnership elects to use a 52-53-week tax year that ends with reference to either its required tax year or a tax year elected under section 444. Federal amended tax return instructions The partnership can establish a business purpose for a different tax year. Federal amended tax return instructions The rules for the required tax year for partnerships are as follows. Federal amended tax return instructions If one or more partners having the same tax year own a majority interest (more than 50%) in partnership profits and capital, the partnership must use the tax year of those partners. Federal amended tax return instructions If there is no majority interest tax year, the partnership must use the tax year of all its principal partners. Federal amended tax return instructions A principal partner is one who has a 5% or more interest in the profits or capital of the partnership. Federal amended tax return instructions If there is no majority interest tax year and the principal partners do not have the same tax year, the partnership generally must use a tax year that results in the least aggregate deferral of income to the partners. Federal amended tax return instructions If a partnership changes to a required tax year because of these rules, it can get automatic approval by filing Form 1128. Federal amended tax return instructions Least aggregate deferral of income. Federal amended tax return instructions   The tax year that results in the least aggregate deferral of income is determined as follows. Federal amended tax return instructions Figure the number of months of deferral for each partner using one partner's tax year. Federal amended tax return instructions Find the months of deferral by counting the months from the end of that tax year forward to the end of each other partner's tax year. Federal amended tax return instructions Multiply each partner's months of deferral figured in step (1) by that partner's share of interest in the partnership profits for the year used in step (1). Federal amended tax return instructions Add the amounts in step (2) to get the aggregate (total) deferral for the tax year used in step (1). Federal amended tax return instructions Repeat steps (1) through (3) for each partner's tax year that is different from the other partners' years. Federal amended tax return instructions   The partner's tax year that results in the lowest aggregate (total) number is the tax year that must be used by the partnership. Federal amended tax return instructions If the calculation results in more than one tax year qualifying as the tax year with the least aggregate deferral, the partnership can choose any one of those tax years as its tax year. Federal amended tax return instructions However, if one of the tax years that qualifies is the partnership's existing tax year, the partnership must retain that tax year. Federal amended tax return instructions Example. Federal amended tax return instructions A and B each have a 50% interest in partnership P, which uses a fiscal year ending June 30. Federal amended tax return instructions A uses the calendar year and B uses a fiscal year ending November 30. Federal amended tax return instructions P must change its tax year to a fiscal year ending November 30 because this results in the least aggregate deferral of income to the partners, as shown in the following table. Federal amended tax return instructions Year End 12/31: Year End Profits Interest Months of Deferral Interest × Deferral A 12/31 0. Federal amended tax return instructions 5 -0- -0- B 11/30 0. Federal amended tax return instructions 5 11 5. Federal amended tax return instructions 5 Total Deferral 5. Federal amended tax return instructions 5 Year End 11/30: Year End Profits Interest Months of Deferral Interest × Deferral A 12/31 0. Federal amended tax return instructions 5 1 0. Federal amended tax return instructions 5 B 11/30 0. Federal amended tax return instructions 5 -0- -0- Total Deferral 0. Federal amended tax return instructions 5 When determination is made. Federal amended tax return instructions   The determination of the tax year under the least aggregate deferral rules must generally be made at the beginning of the partnership's current tax year. Federal amended tax return instructions However, the IRS can require the partnership to use another day or period that will more accurately reflect the ownership of the partnership. Federal amended tax return instructions This could occur, for example, if a partnership interest was transferred for the purpose of qualifying for a particular tax year. Federal amended tax return instructions Short period return. Federal amended tax return instructions   When a partnership changes its tax year, a short period return must be filed. Federal amended tax return instructions The short period return covers the months between the end of the partnership's prior tax year and the beginning of its new tax year. Federal amended tax return instructions   If a partnership changes to the tax year resulting in the least aggregate deferral, it must file a Form 1128 with the short period return showing the computations used to determine that tax year. Federal amended tax return instructions The short period return must indicate at the top of page 1, “FILED UNDER SECTION 1. Federal amended tax return instructions 706-1. Federal amended tax return instructions ” More information. Federal amended tax return instructions   For more information about changing a partnership's tax year, and information about ruling requests, see the Instructions for Form 1128. Federal amended tax return instructions S Corporation All S corporations, regardless of when they became an S corporation, must use a permitted tax year. Federal amended tax return instructions A permitted tax year is any of the following. Federal amended tax return instructions The calendar year. Federal amended tax return instructions A tax year elected under section 444 of the Internal Revenue Code. Federal amended tax return instructions See Section 444 Election, below for details. Federal amended tax return instructions A 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444. Federal amended tax return instructions Any other tax year for which the corporation establishes a business purpose. Federal amended tax return instructions If an electing S corporation wishes to adopt a tax year other than a calendar year, it must request IRS approval using Form 2553, instead of filing Form 1128. Federal amended tax return instructions For information about changing an S corporation's tax year and information about ruling requests, see the Instructions for Form 1128. Federal amended tax return instructions Personal Service Corporation (PSC) A PSC must use a calendar tax year unless any of the following apply. Federal amended tax return instructions The corporation makes an election under section 444 of the Internal Revenue Code. Federal amended tax return instructions See Section 444 Election, below for details. Federal amended tax return instructions The corporation elects to use a 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444. Federal amended tax return instructions The corporation establishes a business purpose for a fiscal year. Federal amended tax return instructions See the Instructions for Form 1120 for general information about PSCs. Federal amended tax return instructions For information on adopting or changing tax years for PSCs and information about ruling requests, see the Instructions for Form 1128. Federal amended tax return instructions Section 444 Election A partnership, S corporation, electing S corporation, or PSC can elect under section 444 of the Internal Revenue Code to use a tax year other than its required tax year. Federal amended tax return instructions Certain restrictions apply to the election. Federal amended tax return instructions A partnership or an S corporation that makes a section 444 election must make certain required payments and a PSC must make certain distributions (discussed later). Federal amended tax return instructions The section 444 election does not apply to any partnership, S corporation, or PSC that establishes a business purpose for a different period, explained later. Federal amended tax return instructions A partnership, S corporation, or PSC can make a section 444 election if it meets all the following requirements. Federal amended tax return instructions It is not a member of a tiered structure (defined in section 1. Federal amended tax return instructions 444-2T of the regulations). Federal amended tax return instructions It has not previously had a section 444 election in effect. Federal amended tax return instructions It elects a year that meets the deferral period requirement. Federal amended tax return instructions Deferral period. Federal amended tax return instructions   The determination of the deferral period depends on whether the partnership, S corporation, or PSC is retaining its tax year or adopting or changing its tax year with a section 444 election. Federal amended tax return instructions Retaining tax year. Federal amended tax return instructions   Generally, a partnership, S corporation, or PSC can make a section 444 election to retain its tax year only if the deferral period of the new tax year is 3 months or less. Federal amended tax return instructions This deferral period is the number of months between the beginning of the retained year and the close of the first required tax year. Federal amended tax return instructions Adopting or changing tax year. Federal amended tax return instructions   If the partnership, S corporation, or PSC is adopting or changing to a tax year other than its required year, the deferral period is the number of months from the end of the new tax year to the end of the required tax year. Federal amended tax return instructions The IRS will allow a section 444 election only if the deferral period of the new tax year is less than the shorter of: Three months, or The deferral period of the tax year being changed. Federal amended tax return instructions This is the tax year immediately preceding the year for which the partnership, S corporation, or PSC wishes to make the section 444 election. Federal amended tax return instructions If the partnership, S corporation, or PSC's tax year is the same as its required tax year, the deferral period is zero. Federal amended tax return instructions Example 1. Federal amended tax return instructions BD Partnership uses a calendar year, which is also its required tax year. Federal amended tax return instructions BD cannot make a section 444 election because the deferral period is zero. Federal amended tax return instructions Example 2. Federal amended tax return instructions E, a newly formed partnership, began operations on December 1. Federal amended tax return instructions E is owned by calendar year partners. Federal amended tax return instructions E wants to make a section 444 election to adopt a September 30 tax year. Federal amended tax return instructions E's deferral period for the tax year beginning December 1 is 3 months, the number of months between September 30 and December 31. Federal amended tax return instructions Making the election. Federal amended tax return instructions   Make a section 444 election by filing Form 8716 with the Internal Revenue Service Center where the entity will file its tax return. Federal amended tax return instructions Form 8716 must be filed by the earlier of: The due date (not including extensions) of the income tax return for the tax year resulting from the section 444 election, or The 15th day of the 6th month of the tax year for which the election will be effective. Federal amended tax return instructions For this purpose, count the month in which the tax year begins, even if it begins after the first day of that month. Federal amended tax return instructions Note. Federal amended tax return instructions If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Federal amended tax return instructions   Attach a copy of Form 8716 to Form 1065, Form 1120S, or Form 1120 for the first tax year for which the election is made. Federal amended tax return instructions Example 1. Federal amended tax return instructions AB, a partnership, begins operations on September 13, 2012, and is qualified to make a section 444 election to use a September 30 tax year for its tax year beginning September 13, 2012. Federal amended tax return instructions AB must file Form 8716 by January 15, 2013, which is the due date of the partnership's tax return for the period from September 13, 2012, to September 30, 2012. Federal amended tax return instructions Example 2. Federal amended tax return instructions The facts are the same as in Example 1 except that AB begins operations on October 21, 2012. Federal amended tax return instructions AB must file Form 8716 by March 17, 2013. Federal amended tax return instructions Example 3. Federal amended tax return instructions B is a corporation that first becomes a PSC for its tax year beginning September 1, 2012. Federal amended tax return instructions B qualifies to make a section 444 election to use a September 30 tax year for its tax year beginning September 1, 2012. Federal amended tax return instructions B must file Form 8716 by December 17, 2012, the due date of the income tax return for the short period from September 1, 2012, to September 30, 2012. Federal amended tax return instructions Note. Federal amended tax return instructions The due dates in Examples 2 and 3 are adjusted because the dates fall on a Saturday, Sunday or legal holiday. Federal amended tax return instructions Extension of time for filing. Federal amended tax return instructions   There is an automatic extension of 12 months to make this election. Federal amended tax return instructions See the Form 8716 instructions for more information. Federal amended tax return instructions Terminating the election. Federal amended tax return instructions   The section 444 election remains in effect until it is terminated. Federal amended tax return instructions If the election is terminated, another section 444 election cannot be made for any tax year. Federal amended tax return instructions   The election ends when any of the following applies to the partnership, S corporation, or PSC. Federal amended tax return instructions The entity changes to its required tax year. Federal amended tax return instructions The entity liquidates. Federal amended tax return instructions The entity becomes a member of a tiered structure. Federal amended tax return instructions The IRS determines that the entity willfully failed to comply with the required payments or distributions. Federal amended tax return instructions   The election will also end if either of the following events occur. Federal amended tax return instructions An S corporation's S election is terminated. Federal amended tax return instructions However, if the S corporation immediately becomes a PSC, the PSC can continue the section 444 election of the S corporation. Federal amended tax return instructions A PSC ceases to be a PSC. Federal amended tax return instructions If the PSC elects to be an S corporation, the S corporation can continue the election of the PSC. Federal amended tax return instructions Required payment for partnership or S corporation. Federal amended tax return instructions   A partnership or an S corporation must make a required payment for any tax year: The section 444 election is in effect. Federal amended tax return instructions The required payment for that year (or any preceding tax year) is more than $500. Federal amended tax return instructions    This payment represents the value of the tax deferral the owners receive by using a tax year different from the required tax year. Federal amended tax return instructions   Form 8752, Required Payment or Refund Under Section 7519, must be filed each year the section 444 election is in effect, even if no payment is due. Federal amended tax return instructions If the required payment is more than $500 (or the required payment for any prior year was more than $500), the payment must be made when Form 8752 is filed. Federal amended tax return instructions If the required payment is $500 or less and no payment was required in a prior year, Form 8752 must be filed showing a zero amount. Federal amended tax return instructions Applicable election year. Federal amended tax return instructions   Any tax year a section 444 election is in effect, including the first year, is called an applicable election year. Federal amended tax return instructions Form 8752 must be filed and the required payment made (or zero amount reported) by May 15th of the calendar year following the calendar year in which the applicable election year begins. Federal amended tax return instructions Required distribution for PSC. Federal amended tax return instructions   A PSC with a section 444 election in effect must distribute certain amounts to employee-owners by December 31 of each applicable year. Federal amended tax return instructions If it fails to make these distributions, it may be required to defer certain deductions for amounts paid to owner-employees. Federal amended tax return instructions The amount deferred is treated as paid or incurred in the following tax year. Federal amended tax return instructions   For information on the minimum distribution, see the instructions for Part I of Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC). Federal amended tax return instructions Back-up election. Federal amended tax return instructions   A partnership, S corporation, or PSC can file a back-up section 444 election if it requests (or plans to request) permission to use a business purpose tax year, discussed later. Federal amended tax return instructions If the request is denied, the back-up section 444 election must be activated (if the partnership, S corporation, or PSC otherwise qualifies). Federal amended tax return instructions Making back-up election. Federal amended tax return instructions   The general rules for making a section 444 election, as discussed earlier, apply. Federal amended tax return instructions When filing Form 8716, type or print “BACK-UP ELECTION” at the top of the form. Federal amended tax return instructions However, if Form 8716 is filed on or after the date Form 1128 (or Form 2553) is filed, type or print “FORM 1128 (or FORM 2553) BACK-UP ELECTION” at the top of Form 8716. Federal amended tax return instructions Activating election. Federal amended tax return instructions   A partnership or S corporation activates its back-up election by filing the return required and making the required payment with Form 8752. Federal amended tax return instructions The due date for filing Form 8752 and making the payment is the later of the following dates. Federal amended tax return instructions May 15 of the calendar year following the calendar year in which the applicable election year begins. Federal amended tax return instructions 60 days after the partnership or S corporation has been notified by the IRS that the business year request has been denied. Federal amended tax return instructions   A PSC activates its back-up election by filing Form 8716 with its original or amended income tax return for the tax year in which the election is first effective and printing on the top of the income tax return, “ACTIVATING BACK-UP ELECTION. Federal amended tax return instructions ” 52-53-Week Tax Year A partnership, S corporation, or PSC can use a tax year other than its required tax year if it elects a 52-53-week tax year (discussed earlier) that ends with reference to either its required tax year or a tax year elected under section 444 (discussed earlier). Federal amended tax return instructions A newly formed partnership, S corporation, or PSC can adopt a 52-53-week tax year ending with reference to either its required tax year or a tax year elected under section 444 without IRS approval. Federal amended tax return instructions However, if the entity wishes to change to a 52-53-week tax year or change from a 52-53-week tax year that references a particular month to a non-52-53-week tax year that ends on the last day of that month, it must request IRS approval by filing Form 1128. Federal amended tax return instructions Business Purpose Tax Year A partnership, S corporation, or PSC establishes the business purpose for a tax year by filing Form 1128. Federal amended tax return instructions See the Instructions for Form 1128 for details. Federal amended tax return instructions Corporations (Other Than S Corporations and PSCs) A new corporation establishes its tax year when it files its first tax return. Federal amended tax return instructions A newly reactivated corporation that has been inactive for a number of years is treated as a new taxpayer for the purpose of adopting a tax year. Federal amended tax return instructions An S corporation or a PSC must use the required tax year rules, discussed earlier, to establish a tax year. Federal amended tax return instructions Generally, a corporation that wants to change its tax year must obtain approval from the IRS under either the: (a) automatic approval procedures; or (b) ruling request procedures. Federal amended tax return instructions See the Instructions for Form 1128 for details. Federal amended tax return instructions Accounting Methods An accounting method is a set of rules used to determine when income and expenses are reported on your tax return. Federal amended tax return instructions Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. Federal amended tax return instructions You choose an accounting method when you file your first tax return. Federal amended tax return instructions If you later want to change your accounting method, you must get IRS approval. Federal amended tax return instructions See Change in Accounting Method, later. Federal amended tax return instructions No single accounting method is required of all taxpayers. Federal amended tax return instructions You must use a system that clearly reflects your income and expenses and you must maintain records that will enable you to file a correct return. Federal amended tax return instructions In addition to your permanent accounting books, you must keep any other records necessary to support the entries on your books and tax returns. Federal amended tax return instructions You must use the same accounting method from year to year. Federal amended tax return instructions An accounting method clearly reflects income only if all items of gross income and expenses are treated the same from year to year. Federal amended tax return instructions If you do not regularly use an accounting method that clearly reflects your income, your income will be refigured under the method that, in the opinion of the IRS, does clearly reflect income. Federal amended tax return instructions Methods you can use. Federal amended tax return instructions   In general, you can compute your taxable income under any of the following accounting methods. Federal amended tax return instructions Cash method. Federal amended tax return instructions Accrual method. Federal amended tax return instructions Special methods of accounting for certain items of income and expenses. Federal amended tax return instructions A hybrid method which combines elements of two or more of the above accounting methods. Federal amended tax return instructions The cash and accrual methods of accounting are explained later. Federal amended tax return instructions Special methods. Federal amended tax return instructions   This publication does not discuss special methods of accounting for certain items of income or expenses. Federal amended tax return instructions For information on reporting income using one of the long-term contract methods, see section 460 of the Internal Revenue Code and the related regulations. Federal amended tax return instructions The following publications also discuss special methods of reporting income or expenses. Federal amended tax return instructions Publication 225, Farmer's Tax Guide. Federal amended tax return instructions Publication 535, Business Expenses. Federal amended tax return instructions Publication 537, Installment Sales. Federal amended tax return instructions Publication 946, How To Depreciate Property. Federal amended tax return instructions Hybrid method. Federal amended tax return instructions   Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly reflects your income and you use it consistently. Federal amended tax return instructions However, the following restrictions apply. Federal amended tax return instructions If an inventory is necessary to account for your income, you must use an accrual method for purchases and sales. Federal amended tax return instructions See Exceptions under Inventories, later. Federal amended tax return instructions Generally, you can use the cash method for all other items of income and expenses. Federal amended tax return instructions See Inventories, later. Federal amended tax return instructions If you use the cash method for reporting your income, you must use the cash method for reporting your expenses. Federal amended tax return instructions If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Federal amended tax return instructions Any combination that includes the cash method is treated as the cash method for purposes of section 448 of the Internal Revenue Code. Federal amended tax return instructions Business and personal items. Federal amended tax return instructions   You can account for business and personal items using different accounting methods. Federal amended tax return instructions For example, you can determine your business income and expenses under an accrual method, even if you use the cash method to figure personal items. Federal amended tax return instructions Two or more businesses. Federal amended tax return instructions   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. Federal amended tax return instructions No business is separate and distinct, unless a complete and separate set of books and records is maintained for each business. Federal amended tax return instructions Note. Federal amended tax return instructions If you use different accounting methods to create or shift profits or losses between businesses (for example, through inventory adjustments, sales, purchases, or expenses) so that income is not clearly reflected, the businesses will not be considered separate and distinct. Federal amended tax return instructions Cash Method Most individuals and many small businesses use the cash method of accounting. Federal amended tax return instructions Generally, if you produce, purchase, or sell merchandise, you must keep an inventory and use an accrual method for sales and purchases of merchandise. Federal amended tax return instructions See Inventories, later, for exceptions to this rule. Federal amended tax return instructions Income Under the cash method, you include in your gross income all items of income you actually or constructively receive during the tax year. Federal amended tax return instructions If you receive property and services, you must include their fair market value (FMV) in income. Federal amended tax return instructions Constructive receipt. Federal amended tax return instructions   Income is constructively received when an amount is credited to your account or made available to you without restriction. Federal amended tax return instructions You need not have possession of it. Federal amended tax return instructions If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Federal amended tax return instructions Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations. Federal amended tax return instructions Example. Federal amended tax return instructions You are a calendar year taxpayer. Federal amended tax return instructions Your bank credited, and made available, interest to your bank account in December 2012. Federal amended tax return instructions You did not withdraw it or enter it into your books until 2013. Federal amended tax return instructions You must include the amount in gross income for 2012, the year you constructively received it. Federal amended tax return instructions You cannot hold checks or postpone taking possession of similar property from one tax year to another to postpone paying tax on the income. Federal amended tax return instructions You must report the income in the year the property is received or made available to you without restriction. Federal amended tax return instructions Expenses Under the cash method, generally, you deduct expenses in the tax year in which you actually pay them. Federal amended tax return instructions This includes business expenses for which you contest liability. Federal amended tax return instructions However, you may not be able to deduct an expense paid in advance. Federal amended tax return instructions Instead, you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. Federal amended tax return instructions Expense paid in advance. Federal amended tax return instructions   An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule. Federal amended tax return instructions   Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following. Federal amended tax return instructions 12 months after the right or benefit begins, or The end of the tax year after the tax year in which payment is made. Federal amended tax return instructions   If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must obtain approval from the IRS before using the general rule and/or the 12-month rule. Federal amended tax return instructions See Change in Accounting Method, later. Federal amended tax return instructions Example 1. Federal amended tax return instructions You are a calendar year taxpayer and pay $3,000 in 2012 for a business insurance policy that is effective for three years (36 months), beginning on July 1, 2012. Federal amended tax return instructions The general rule that an expense paid in advance is deductible only in the year to which it applies is applicable to this payment because the payment does not qualify for the 12-month rule. Federal amended tax return instructions Therefore, only $500 (6/36 x $3,000) is deductible in 2012, $1,000 (12/36 x $3,000) is deductible in 2013, $1,000 (12/36 x $3,000) is deductible in 2014, and the remaining $500 is deductible in 2015. Federal amended tax return instructions Example 2. Federal amended tax return instructions You are a calendar year taxpayer and pay $10,000 on July 1, 2012, for a business insurance policy that is effective for only one year beginning on July 1, 2012. Federal amended tax return instructions The 12-month rule applies. Federal amended tax return instructions Therefore, the full $10,000 is deductible in 2012. Federal amended tax return instructions Excluded Entities The following entities cannot use the cash method, including any combination of methods that includes the cash method. Federal amended tax return instructions (See Special rules for farming businesses, later. Federal amended tax return instructions ) A corporation (other than an S corporation) with average annual gross receipts exceeding $5 million. Federal amended tax return instructions See Gross receipts test, below. Federal amended tax return instructions A partnership with a corporation (other than an S corporation) as a partner, and with the partnership having average annual gross receipts exceeding $5 million. Federal amended tax return instructions See Gross receipts test, below. Federal amended tax return instructions A tax shelter. Federal amended tax return instructions Exceptions The following entities are not prohibited from using the cash method of accounting. Federal amended tax return instructions Any corporation or partnership, other than a tax shelter, that meets the gross receipts test for all tax years after 1985. Federal amended tax return instructions A qualified personal service corporation (PSC). Federal amended tax return instructions Gross receipts test. Federal amended tax return instructions   A corporation or partnership, other than a tax shelter, that meets the gross receipts test can generally use the cash method. Federal amended tax return instructions A corporation or a partnership meets the test if, for each prior tax year beginning after 1985, its average annual gross receipts are $5 million or less. Federal amended tax return instructions    An entity's average annual gross receipts for a prior tax year is determined by: Adding the gross receipts for that tax year and the 2 preceding tax years; and Dividing the total by 3. Federal amended tax return instructions See Gross receipts test for qualifying taxpayers, for more information. Federal amended tax return instructions Generally, a partnership applies the test at the partnership level. Federal amended tax return instructions Gross receipts for a short tax year are annualized. Federal amended tax return instructions Aggregation rules. Federal amended tax return instructions   Organizations that are members of an affiliated service group or a controlled group of corporations treated as a single employer for tax purposes are required to aggregate their gross receipts to determine whether the gross receipts test is met. Federal amended tax return instructions Change to accrual method. Federal amended tax return instructions   A corporation or partnership that fails to meet the gross receipts test for any tax year is prohibited from using the cash method and must change to an accrual method of accounting, effective for the tax year in which the entity fails to meet this test. Federal amended tax return instructions Special rules for farming businesses. Federal amended tax return instructions   Generally, a taxpayer engaged in the trade or business of farming is allowed to use the cash method for its farming business. Federal amended tax return instructions However, certain corporations (other than S corporations) and partnerships that have a partner that is a corporation must use an accrual method for their farming business. Federal amended tax return instructions For this purpose, farming does not include the operation of a nursery or sod farm or the raising or harvesting of trees (other than fruit and nut trees). Federal amended tax return instructions   There is an exception to the requirement to use an accrual method for corporations with gross receipts of $1 million or less for each prior tax year after 1975. Federal amended tax return instructions For family corporations engaged in farming, the exception applies if gross receipts were $25 million or less for each prior tax year after 1985. Federal amended tax return instructions See chapter 2 of Publication 225, Farmer's Tax Guide, for more information. Federal amended tax return instructions Qualified PSC. Federal amended tax return instructions   A PSC that meets the following function and ownership tests can use the cash method. Federal amended tax return instructions Function test. Federal amended tax return instructions   A corporation meets the function test if at least 95% of its activities are in the performance of services in the fields of health, veterinary services, law, engineering (including surveying and mapping), architecture, accounting, actuarial science, performing arts, or consulting. Federal amended tax return instructions Ownership test. Federal amended tax return instructions   A corporation meets the ownership test if at least 95% of its stock is owned, directly or indirectly, at all times during the year by one or more of the following. Federal amended tax return instructions Employees performing services for the corporation in a field qualifying under the function test. Federal amended tax return instructions Retired employees who had performed services in those fields. Federal amended tax return instructions The estate of an employee described in (1) or (2). Federal amended tax return instructions Any other person who acquired the stock by reason of the death of an employee referred to in (1) or (2), but only for the 2-year period beginning on the date of death. Federal amended tax return instructions   Indirect ownership is generally taken into account if the stock is owned indirectly through one or more partnerships, S corporations, or qualified PSCs. Federal amended tax return instructions Stock owned by one of these entities is considered owned by the entity's owners in proportion to their ownership interest in that entity. Federal amended tax return instructions Other forms of indirect stock ownership, such as stock owned by family members, are generally not considered when determining if the ownership test is met. Federal amended tax return instructions   For purposes of the ownership test, a person is not considered an employee of a corporation unless that person performs more than minimal services for the corporation. Federal amended tax return instructions Change to accrual method. Federal amended tax return instructions   A corporation that fails to meet the function test for any tax year; or fails to meet the ownership test at any time during any tax year must change to an accrual method of accounting, effective for the year in which the corporation fails to meet either test. Federal amended tax return instructions A corporation that fails to meet the function test or the ownership test is not treated as a qualified PSC for any part of that tax year. Federal amended tax return instructions Accrual Method Under the accrual method of accounting, generally you report income in the year it is earned and deduct or capitalize expenses in the year incurred. Federal amended tax return instructions The purpose of an accrual method of accounting is to match income and expenses in the correct year. Federal amended tax return instructions Income Generally, you include an amount in gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. Federal amended tax return instructions Under this rule, you report an amount in your gross income on the earliest of the following dates. Federal amended tax return instructions When you receive payment. Federal amended tax return instructions When the income amount is due to you. Federal amended tax return instructions When you earn the income. Federal amended tax return instructions When title has passed. Federal amended tax return instructions Estimated income. Federal amended tax return instructions   If you include a reasonably estimated amount in gross income and later determine the exact amount is different, take the difference into account in the tax year you make that determination. Federal amended tax return instructions Change in payment schedule. Federal amended tax return instructions   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a reduced rate. Federal amended tax return instructions Continue this procedure until you complete the services, then account for the difference. Federal amended tax return instructions Advance Payment for Services Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. Federal amended tax return instructions However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. Federal amended tax return instructions However, you cannot postpone including any payment beyond that tax year. Federal amended tax return instructions Service agreement. Federal amended tax return instructions   You can postpone reporting income from an advance payment you receive for a service agreement on property you sell, lease, build, install, or construct. Federal amended tax return instructions This includes an agreement providing for incidental replacement of parts or materials. Federal amended tax return instructions However, this applies only if you offer the property without a service agreement in the normal course of business. Federal amended tax return instructions Postponement not allowed. Federal amended tax return instructions   Generally, one cannot postpone including an advance payment in income for services if either of the following applies. Federal amended tax return instructions You are to perform any part of the service after the end of the tax year immediately following the year you receive the advance payment. Federal amended tax return instructions You are to perform any part of the service at any unspecified future date that may be after the end of the tax year immediately following the year you receive the advance payment. Federal amended tax return instructions Examples. Federal amended tax return instructions   In each of the following examples, assume the tax year is a calendar year and that the accrual method of accounting is used. Federal amended tax return instructions Example 1. Federal amended tax return instructions You manufacture, sell, and service computers. Federal amended tax return instructions You received payment in 2012 for a one-year contingent service contract on a computer you sold. Federal amended tax return instructions You can postpone including in income the part of the payment you did not earn in 2012 if, in the normal course of your business, you offer computers for sale without a contingent service contract. Federal amended tax return instructions Example 2. Federal amended tax return instructions You are in the television repair business. Federal amended tax return instructions You received payments in 2012 for one-year contracts under which you agree to repair or replace certain parts that fail to function properly in television sets manufactured and sold by unrelated parties. Federal amended tax return instructions You include the payments in gross income as you earn them. Federal amended tax return instructions Example 3. Federal amended tax return instructions You own a dance studio. Federal amended tax return instructions On October 1, 2012, you receive payment for a one-year contract for 48 one-hour lessons beginning on that date. Federal amended tax return instructions You give eight lessons in 2012. Federal amended tax return instructions Under this method of including advance payments, you must include one-sixth (8/48) of the payment in income for 2012, and five-sixths (40/48) of the payment in 2013, even if you do not give all the lessons by the end of 2013. Federal amended tax return instructions Example 4. Federal amended tax return instructions Assume the same facts as in Example 3, except the payment is for a two-year contract for 96 lessons. Federal amended tax return instructions You must include the entire payment in income in 2012 since part of the services may be performed after the following year. Federal amended tax return instructions Guarantee or warranty. Federal amended tax return instructions   Generally, you cannot postpone reporting income you receive under a guarantee or warranty contract. Federal amended tax return instructions Prepaid rent. Federal amended tax return instructions   You cannot postpone reporting income from prepaid rent. Federal amended tax return instructions Prepaid rent does not include payment for the use of a room or other space when significant service is also provided for the occupant. Federal amended tax return instructions You provide significant service when you supply space in a hotel, boarding house, tourist home, motor court, motel, or apartment house that furnishes hotel services. Federal amended tax return instructions Books and records. Federal amended tax return instructions   Any advance payment you include in gross receipts on your tax return for the year you receive payment must not be less than the payment you include in income for financial reports under the method of accounting used for those reports. Federal amended tax return instructions Financial reports include reports to shareholders, partners, beneficiaries, and other proprietors for credit purposes and consolidated financial statements. Federal amended tax return instructions IRS approval. Federal amended tax return instructions   You must file Form 3115 to obtain IRS approval to change your method of accounting for advance payment for services. Federal amended tax return instructions Advance Payment for Sales Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods held primarily for sale to customers in the ordinary course of your trade or business. Federal amended tax return instructions However, the rules do not apply to a payment (or part of a payment) for services that are not an integral part of the main activities covered under the agreement. Federal amended tax return instructions An agreement includes a gift certificate that can be redeemed for goods. Federal amended tax return instructions Amounts due and payable are considered received. Federal amended tax return instructions How to report payments. Federal amended tax return instructions   Generally, include an advance payment in income in the year in which you receive it. Federal amended tax return instructions However, you can use the alternative method, discussed next. Federal amended tax return instructions Alternative method of reporting. Federal amended tax return instructions   Under the alternative method, generally include an advance payment in income in the earlier tax year in which you: Include advance payments in gross receipts under the method of accounting you use for tax purposes, or Include any part of advance payments in income for financial reports under the method of accounting used for those reports. Federal amended tax return instructions Financial reports include reports to shareholders, partners, beneficiaries, and other proprietors for credit purposes and consolidated financial statements. Federal amended tax return instructions Example 1. Federal amended tax return instructions You are a retailer. Federal amended tax return instructions You use an accrual method of accounting and account for the sale of goods when you ship the goods. Federal amended tax return instructions You use this method for both tax and financial reporting purposes. Federal amended tax return instructions You can include advance payments in gross receipts for tax purposes in either: (a) the tax year in which you receive the payments; or (b) the tax year in which you ship the goods. Federal amended tax return instructions However, see Exception for inventory goods, later. Federal amended tax return instructions Example 2. Federal amended tax return instructions You are a calendar year taxpayer. Federal amended tax return instructions You manufacture household furniture and use an accrual method of accounting. Federal amended tax return instructions Under this method, you accrue income for your financial reports when you ship the furniture. Federal amended tax return instructions For tax purposes, you do not accrue income until the furniture has been delivered and accepted. Federal amended tax return instructions In 2012, you received an advance payment of $8,000 for an order of furniture to be manufactured for a total price of $20,000. Federal amended tax return instructions You shipped the furniture to the customer in December 2012, but it was not delivered and accepted until January 2013. Federal amended tax return instructions For tax purposes, you include the $8,000 advance payment in gross income for 2012; and include the remaining $12,000 of the contract price in gross income for 2013. Federal amended tax return instructions Information schedule. Federal amended tax return instructions   If you use the alternative method of reporting advance payments, you must attach a statement with the following information to your tax return each year. Federal amended tax return instructions Total advance payments received in the current tax year. Federal amended tax return instructions Total advance payments received in earlier tax years and not included in income before the current tax year. Federal amended tax return instructions Total payments received in earlier tax years included in income for the current tax year. Federal amended tax return instructions Exception for inventory goods. Federal amended tax return instructions   If you have an agreement to sell goods properly included in inventory, you can postpone including the advance payment in income until the end of the second tax year following the year you receive an advance payment if, on the last day of the tax year, you meet the following requirements. Federal amended tax return instructions You account for the advance payment under the alternative method (discussed earlier). Federal amended tax return instructions You have received a substantial advance payment on the agreement (discussed next). Federal amended tax return instructions You have enough substantially similar goods on hand, or available through your normal source of supply, to satisfy the agreement. Federal amended tax return instructions These rules also apply to an agreement, such as a gift certificate, that can be satisfied with goods that cannot be identified in the tax year you receive an advance payment. Federal amended tax return instructions   If you meet these conditions, all advance payments you receive by the end of the second tax year, including payments received in prior years but not reported, must be included in income by the second tax year following the tax year of receipt of substantial advance payments. Federal amended tax return instructions You must also deduct in that second year all actual or estimated costs for the goods required to satisfy the agreement. Federal amended tax return instructions If you estimated the cost, you must take into account any difference between the estimate and the actual cost when the goods are delivered. Federal amended tax return instructions Note. Federal amended tax return instructions You must report any advance payments you receive after the second year in the year received. Federal amended tax return instructions No further deferral is allowed. Federal amended tax return instructions Substantial advance payments. Federal amended tax return instructions   Under an agreement for a future sale, you have substantial advance payments if, by the end of the tax year, the total advance payments received during that year and preceding tax years are equal to or more than the total costs reasonably estimated to be includible in inventory because of the agreement. Federal amended tax return instructions Example. Federal amended tax return instructions You are a calendar year, accrual method taxpayer who accounts for advance payments under the alternative method. Federal amended tax return instructions In 2008, you entered into a contract for the sale of goods properly includible in your inventory. Federal amended tax return instructions The total contract price is $50,000 and you estimate that your total inventoriable costs for the goods will be $25,000. Federal amended tax return instructions You receive the following advance payments under the contract. Federal amended tax return instructions 2009 $17,500 2010 10,000 2011 7,500 2012 5,000 2013 5,000 2014 5,000 Total contract price $50,000   Your customer asked you to deliver the goods in 2015. Federal amended tax return instructions In your 2010 closing inventory, you had on hand enough of the type of goods specified in the contract to satisfy the contract. Federal amended tax return instructions Since the advance payments you had received by the end of 2010 were more than the costs you estimated, the payments are substantial advance payments. Federal amended tax return instructions   For 2012, include in income all payments you received by the end of 2012, the second tax year following the tax year in which you received substantial advance payments. Federal amended tax return instructions You must include $40,000 in sales for 2012 (the total amounts received from 2009 through 2012) and include in inventory the cost of the goods (or similar goods) on hand. Federal amended tax return instructions If no such goods are on hand, then estimate the cost necessary to satisfy the contract. Federal amended tax return instructions   No further deferral is allowed. Federal amended tax return instructions You must include in gross income the advance payment you receive each remaining year of the contract. Federal amended tax return instructions Take into account the difference between any estimated cost of goods sold and the actual cost when you deliver the goods in 2015. Federal amended tax return instructions IRS approval. Federal amended tax return instructions   You must file Form 3115 to obtain IRS approval to change your method of accounting for advance payments for sales. Federal amended tax return instructions Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. Federal amended tax return instructions The all-events test has been met. Federal amended tax return instructions The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Federal amended tax return instructions Economic performance has occurred. Federal amended tax return instructions Economic Performance Generally, you cannot deduct or capitalize a business expense until economic performance occurs. Federal amended tax return instructions If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or the property is used. Federal amended tax return instructions If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Federal amended tax return instructions Example. Federal amended tax return instructions You are a calendar year taxpayer. Federal amended tax return instructions You buy office supplies in December 2012. Federal amended tax return instructions You receive the supplies and the bill in December, but you pay the bill in January 2013. Federal amended tax return instructions You can deduct the expense in 2012 because all events have occurred to fix the liability, the amount of the liability can be determined, and economic performance occurred in 2012. Federal amended tax return instructions Your office supplies may qualify as a recurring item, discussed later. Federal amended tax return instructions If so, you can deduct them in 2012, even if the supplies are not delivered until 2013 (when economic performance occurs). Federal amended tax return instructions Workers' compensation and tort liability. Federal amended tax return instructions   If you are required to make payments under workers' compensation laws or in satisfaction of any tort liability, economic performance occurs as you make the payments. Federal amended tax return instructions If you are required to make payments to a special designated settlement fund established by court order for a tort liability, economic performance occurs as you make the payments. Federal amended tax return instructions Taxes. Federal amended tax return instructions   Economic performance generally occurs as estimated income tax, property taxes, employment taxes, etc. Federal amended tax return instructions are paid. Federal amended tax return instructions However, you can elect to treat taxes as a recurring item, discussed later. Federal amended tax return instructions You can also elect to ratably accrue real estate taxes. Federal amended tax return instructions See chapter 5 of Publication 535 for information about real estate taxes. Federal amended tax return instructions Other liabilities. Federal amended tax return instructions   Other liabilities for which economic performance occurs as you make payments include liabilities for breach of contract (to the extent of incidental, consequential, and liquidated damages), violation of law, rebates and refunds, awards, prizes, jackpots, insurance, and warranty and service contracts. Federal amended tax return instructions Interest. Federal amended tax return instructions   Economic performance occurs with the passage of time (as the borrower uses, and the lender forgoes use of, the lender's money) rather than as payments are made. Federal amended tax return instructions Compensation for services. Federal amended tax return instructions   Generally, economic performance occurs as an employee renders service to the employer. Federal amended tax return instructions However, deductions for compensation or other benefits paid to an employee in a year subsequent to economic performance are subject to the rules governing deferred compensation, deferred benefits, and funded welfare benefit plans. Federal amended tax return instructions For information on employee benefit programs, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Federal amended tax return instructions Vacation pay. Federal amended tax return instructions   You can take a current deduction for vacation pay earned by your employees if you pay it during the year or, if the amount is vested, within 2½ months after the end of the year. Federal amended tax return instructions If you pay it later than this, you must deduct it in the year actually paid. Federal amended tax return instructions An amount is vested if your right to it cannot be nullified or cancelled. Federal amended tax return instructions Exception for recurring items. Federal amended tax return instructions   An exception to the economic performance rule allows certain recurring items to be treated as incurred during the tax year even though economic performance has not occurred. Federal amended tax return instructions The exception applies if all the following requirements are met. Federal amended tax return instructions The all-events test, discussed earlier, is met. Federal amended tax return instructions Economic performance occurs by the earlier of the following dates. Federal amended tax return instructions 8½ months after the close of the year. Federal amended tax return instructions The date you file a timely return (including extensions) for the year. Federal amended tax return instructions The item is recurring in nature and you consistently treat similar items as incurred in the tax year in which the all-events test is met. Federal amended tax return instructions Either: The item is not material, or Accruing the item in the year in which the all-events test is met results in a better match against income than accruing the item in the year of economic performance. Federal amended tax return instructions This exception does not apply to workers' compensation or tort liabilities. Federal amended tax return instructions Amended return. Federal amended tax return instructions   You may be able to file an amended return and treat a liability as incurred under the recurring item exception. Federal amended tax return instructions You can do so if economic performance for the liability occurs after you file your tax return for the year, but within 8½ months after the close of the tax year. Federal amended tax return instructions Recurrence and consistency. Federal amended tax return instructions   To determine whether an item is recurring and consistently reported, consider the frequency with which the item and similar items are incurred (or expected to be incurred) and how you report these items for tax purposes. Federal amended tax return instructions A new expense or an expense not incurred every year can be treated as recurring if it is reasonable to expect that it will be incurred regularly in the future. Federal amended tax return instructions Materiality. Federal amended tax return instructions   Factors to consider in determining the materiality of a recurring item include the size of the item (both in absolute terms and in relation to your income and other expenses) and the treatment of the item on your financial statements. Federal amended tax return instructions   An item considered material for financial statement purposes is also considered material for tax purposes. Federal amended tax return instructions However, in certain situations an immaterial item for financial accounting purposes is treated as material for purposes of economic performance. Federal amended tax return instructions Matching expenses with income. Federal amended tax return instructions   Costs directly associated with the revenue of a period are properly allocable to that period. Federal amended tax return instructions To determine whether the accrual of an expense in a particular year results in a better match with the income to which it relates, generally accepted accounting principles (GAAP; visit www. Federal amended tax return instructions fasab. Federal amended tax return instructions gov/accepted. Federal amended tax return instructions html) are an important factor. Federal amended tax return instructions   For example, if you report sales income in the year of sale, but you do not ship the goods until the following year, the shipping costs are more properly matched to income in the year of sale than the year the goods are shipped. Federal amended tax return instructions Expenses that cannot be practically associated with income of a particular period, such as advertising costs, should be assigned to the period the costs are incurred. Federal amended tax return instructions However, the matching requirement is considered met for certain types of expenses. Federal amended tax return instructions These expenses include taxes, payments under insurance, warranty, and service contracts, rebates, refunds, awards, prizes, and jackpots. Federal amended tax return instructions Expenses Paid in Advance An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule. Federal amended tax return instructions Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following. Federal amended tax return instructions 12 months after the right or benefit begins, or The end of the tax year after the tax year in which payment is made. Federal amended tax return instructions If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must get IRS approval before using the general rule and/or the 12-month rule. Federal amended tax return instructions See Change in Accounting Method, later, for information on how to get IRS approval. Federal amended tax return instructions See Expense paid in advance under Cash Method, earlier, for examples illustrating the application of the general and 12-month rules. Federal amended tax return instructions Related Persons Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Federal amended tax return instructions Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. Federal amended tax return instructions See section 267 of the Internal Revenue Code and Publication 542, Corporations, for the definition of related person. Federal amended tax return instructions Inventories An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. Federal amended tax return instructions If you must account for an inventory in your business, you must use an accrual method of accounting for your purchases and sales. Federal amended tax return instructions However, see Exceptions, next. Federal amended tax return instructions See also Accrual Method, earlier. Federal amended tax return instructions To figure taxable income, you must value your inventory at the beginning and end of each tax year. Federal amended tax return instructions To determine the value, you need a method for identifying the items in your inventory and a method for valuing these items. Federal amended tax return instructions See Identifying Cost and Valuing Inventory, later. Federal amended tax return instructions The rules for valuing inventory are not the same for all businesses. Federal amended tax return instructions The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Federal amended tax return instructions Your inventory practices must be consistent from year to year. Federal amended tax return instructions The rules discussed here apply only if they do not conflict with the uniform capitalization rules of section 263A and the mark-to-market rules of section 475. Federal amended tax return instructions Exceptions The following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. Federal amended tax return instructions These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). Federal amended tax return instructions A qualifying taxpayer under Revenue Procedure 2001-10 on page 272 of Internal Revenue Bulletin 2001-2, available at www. Federal amended tax return instructions irs. Federal amended tax return instructions gov/pub/irs-irbs/irb01–02. Federal amended tax return instructions pdf. Federal amended tax return instructions A qualifying small business taxpayer under Revenue Procedure 2002-28, on page 815 of Internal Revenue Bulletin 2002-18, available at www. Federal amended tax return instructions irs. Federal amended tax return instructions gov/pub/irs-irbs/irb02–18. Federal amended tax return instructions pdf. Federal amended tax return instructions In addition to the information provided in this publication, you should see the revenue procedures referenced in the list, above, and the instructions for Form 3115 for information you will need to adopt or change to these accounting methods (see Changing methods, later). Federal amended tax return instructions Qualifying taxpayer. Federal amended tax return instructions   You are a qualifying taxpayer under Revenue Procedure 2001-10 only if: You satisfy the gross receipts test for each prior tax year ending on or after December 17, 1998 (see Gross receipts test for qualifying taxpayers, next). Federal amended tax return instructions Your average annual gross receipts for each test year (explained in Step 1, listed next) must be $1 million or less. Federal amended tax return instructions You are not a tax shelter as defined under section 448(d)(3) of the Internal Revenue Code. Federal amended tax return instructions Gross receipts test for qualifying taxpayers. Federal amended tax return instructions   To determine if you meet the gross receipts test for qualifying taxpayers, use the following steps: Step 1. Federal amended tax return instructions List each of the test years. Federal amended tax return instructions For qualifying taxpayers under Revenue Procedure 2001-10, the test years are each prior tax year ending on or after December 17, 1998. Federal amended tax return instructions Step 2. Federal amended tax return instructions Determine your average annual gross receipts for each test year listed in Step 1. Federal amended tax return instructions Your average annual gross receipts for a tax year is determined by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Federal amended tax return instructions Step 3. Federal amended tax return instructions You meet the gross receipts test for qualifying taxpayers if your average annual gross receipts for each test year listed in Step 1 is $1 million or less. Federal amended tax return instructions Qualifying small business taxpayer. Federal amended tax return instructions   You are a qualifying small business taxpayer under Revenue Procedure 2002-28 only if: You satisfy the gross receipts test for each prior tax year ending on or after December 31, 2000 (see Gross receipts test for qualifying small business taxpayers, next). Federal amended tax return instructions Your average annual gross receipts for each test year (explained in Step 1, listed next) must be $10 million or less. Federal amended tax return instructions You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. Federal amended tax return instructions Your principle business activity is an eligible business. Federal amended tax return instructions See Eligible business, later. Federal amended tax return instructions You have not changed (or have not been required to change) from the cash method because you became ineligible to use the cash method under Revenue Procedure 2002-28. Federal amended tax return instructions Note. Federal amended tax return instructions Revenue Procedure 2002-28 does not apply to a farming business of a qualifying small business taxpayer. Federal amended tax return instructions A taxpayer engaged in the trade or business of farming generally is allowed to use the cash method for any farming business. Federal amended tax return instructions See Special rules for farming businesses under Cash Method, earlier. Federal amended tax return instructions Gross receipts test for qualifying small business taxpayers. Federal amended tax return instructions   To determine if you meet the gross receipts test for qualifying small business taxpayers, use the following steps: Step 1. Federal amended tax return instructions List each of the test years. Federal amended tax return instructions For qualifying small business taxpayers under Revenue Procedure 2002-28, the test years are each prior tax year ending on or after December 31, 2000. Federal amended tax return instructions Step 2. Federal amended tax return instructions Determine your average annual gross receipts for each test year listed in Step 1. Federal amended tax return instructions Your average annual gross receipts for a tax year is determined by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Federal amended tax return instructions Step 3. Federal amended tax return instructions You meet the gross receipts test for qualifying small business taxpayers if your average annual gross receipts for each test year listed in Step 1 is $10 million or less. Federal amended tax return instructions Eligible business. Federal amended tax return instructions   An eligible business is any business for which a qualified small business taxpayer can use the cash method and choose to not keep an inventory. Federal amended tax return instructions You have an eligible business if you meet any of the following requirements. Federal amended tax return instructions Your principal business activity is described in a North American Industry Classification System (NAICS) code other than any of the following NAICS subsector codes: NAICS codes 211 and 212 (mining activities). Federal amended tax return instructions NAICS codes 31-33 (manufacturing). Federal amended tax return instructions NAICS code 42 (wholesale trade). Federal amended tax return instructions NAICS codes 44-45 (retail trade). Federal amended tax return instructions NAICS codes 5111 and 5122 (information industries). Federal amended tax return instructions Your principal business activity is the provision of services, including the provision of property incident to those services. Federal amended tax return instructions Your principal business activity is the fabrication or modification of tangible personal property upon demand in accordance with customer design or specifications. Federal amended tax return instructions   Information about the NAICS codes can be found at http://www. Federal amended tax return instructions census. Federal amended tax return instructions gov/naics or in the instructions for your federal income tax return. Federal amended tax return instructions Gross receipts. Federal amended tax return instructions   In general, gross receipts must include all receipts from all your trades or businesses that must be recognized under the method of accounting you used for that tax year for federal income tax purposes. Federal amended tax return instructions See the definit
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Contact My Local Office in Indiana

Face-to-face Tax Help

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*
Bloomington 2017 S. Liberty Dr.
Bloomington, IN 47403

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

**This office will be open 9:00 a.m. - 3:30 p.m. on 4/2**

 

Services Provided

(812) 337-7600
Columbus 2425 Northpark Dr.
Columbus, IN 47203

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)
 

Services Provided

(812) 379-7400
Evansville 7409 Eagle Crest Blvd.
Evansville, IN 47715

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

(812) 474-4800
Ft. Wayne 201 E. Rudisill Blvd.
Fort Wayne, IN 46806

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(260) 458-5000
Indianapolis 575 N. Pennsylvania St.
Indianapolis, IN 46204

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

(317) 685-7500 
Lafayette  955 Mezzanine Drive
Suite B
Lafayette, IN 47905 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(765) 449-3880 
Merrillville  233 E. 84th Dr.
Merrillville, IN 46410 

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


Services Provided

(219) 736-4378
 
Muncie  225 N. High St.
Muncie, IN 47305 

Monday-Friday 8:30 a.m.- 4:30 p.m. 
(Closed for lunch 12:30 p.m.- 1:30 p.m.)
 

Services Provided

(765) 747-5533 
South Bend  100 E Wayne St
South Bend, IN 46601 

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

Services Provided

(574) 236-8149 
Terre Haute  801 Wabash Ave. 
Terre Haute, IN 47807 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(812) 231-6521 

* 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 (317) 685-7840 in Indianapolis 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
575 N. Pennsylvania St.
Room 573, Stop WI-665
Indianapolis, IN 46204

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 Federal Amended Tax Return Instructions

Federal amended tax return instructions Publication 54 - Additional Material Questions and AnswersThis section answers tax- related questions commonly asked by taxpayers living abroad. Federal amended tax return instructions 1. Federal amended tax return instructions Filing Requirements—Where, When, and How . Federal amended tax return instructions 1) When are U. Federal amended tax return instructions S. Federal amended tax return instructions income tax returns due? . Federal amended tax return instructions 2) I am going abroad this year and expect to qualify for the foreign earned income exclusion. Federal amended tax return instructions How can I secure an extension of time to file my return, when should I file my return, and what forms are required? . Federal amended tax return instructions 3) My entire income qualifies for the foreign earned income exclusion. Federal amended tax return instructions Must I file a tax return? . Federal amended tax return instructions 4) I was sent abroad by my company in November of last year. Federal amended tax return instructions I plan to secure an extension of time on Form 2350 to file my tax return for last year because I expect to qualify for the foreign earned income exclusion under the physical presence test. Federal amended tax return instructions However, if my company recalls me to the United States before the end of the qualifying period and I find I will not qualify for the exclusion, how and when should I file my return? . Federal amended tax return instructions 5) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen and have no taxable income from the United States, but I have substantial income from a foreign source. Federal amended tax return instructions Am I required to file a U. Federal amended tax return instructions S. Federal amended tax return instructions income tax return? . Federal amended tax return instructions 6) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen who has retired, and I expect to remain in a foreign country. Federal amended tax return instructions Do I have any further U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligations? . Federal amended tax return instructions 7) I have been a bona fide resident of a foreign country for over 5 years. Federal amended tax return instructions Is it necessary for me to pay estimated tax? . Federal amended tax return instructions 8) Will a check payable in foreign currency be acceptable in payment of my U. Federal amended tax return instructions S. Federal amended tax return instructions tax? . Federal amended tax return instructions 9) I have met the test for physical presence in a foreign country and am filing returns for 2 years. Federal amended tax return instructions Must I file a separate Form 2555 (or Form 2555-EZ) with each return? . Federal amended tax return instructions 10) Does a Form 2555 (or 2555-EZ) with a Schedule C or Form W-2 attached constitute a return? . Federal amended tax return instructions 11) On Form 2350, Application for Extension of Time To File U. Federal amended tax return instructions S. Federal amended tax return instructions Income Tax Return, I stated that I would qualify for the foreign earned income exclusion under the physical presence test. Federal amended tax return instructions If I qualify under the bona fide residence test, can I file my return on that basis? . Federal amended tax return instructions 12) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen who worked in the United States for 6 months last year. Federal amended tax return instructions I accepted employment overseas in July of last year and expect to qualify for the foreign earned income exclusion. Federal amended tax return instructions Should I file a return and pay tax on the income earned in the United States during the first 6 months and then, when I qualify, file another return covering the last 6 months of the year? . Federal amended tax return instructions 13) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen. Federal amended tax return instructions I have lived abroad for a number of years and recently realized that I should have been filing U. Federal amended tax return instructions S. Federal amended tax return instructions income tax returns. Federal amended tax return instructions How do I correct this oversight in not having filed returns for these years? . Federal amended tax return instructions 14) In 2008, I qualified to exclude my foreign earned income, but I did not claim this exclusion on the return I filed in 2009. Federal amended tax return instructions I paid all outstanding taxes with the return. Federal amended tax return instructions Can I file a claim for refund now? . Federal amended tax return instructions 1) When are U. Federal amended tax return instructions S. Federal amended tax return instructions income tax returns due? Generally, for calendar year taxpayers, U. Federal amended tax return instructions S. Federal amended tax return instructions income tax returns are due on April 15. Federal amended tax return instructions If you are a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen or resident and both your tax home and your abode are outside the United States and Puerto Rico on the regular due date, an automatic extension is granted to June 15 for filing the return. Federal amended tax return instructions Interest will be charged on any tax due, as shown on the return, from April 15. Federal amended tax return instructions a) You should file Form 2350 by the due date of your return to request an extension of time to file. Federal amended tax return instructions Form 2350 is a special form for those U. Federal amended tax return instructions S. Federal amended tax return instructions citizens or residents abroad who expect to qualify for the foreign earned income exclusion or the housing exclusion or deduction under either the bona fide residence test or physical presence test and would like to have an extension of time to delay filing until after they have qualified. Federal amended tax return instructions b) If the extension is granted, you should file your return after you qualify, but by the approved extension date. Federal amended tax return instructions c) You must file your Form 1040 with Form 2555 (or Form 2555-EZ). Federal amended tax return instructions Generally, yes. Federal amended tax return instructions Every U. Federal amended tax return instructions S. Federal amended tax return instructions citizen or resident who receives income must file a U. Federal amended tax return instructions S. Federal amended tax return instructions income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Federal amended tax return instructions The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Federal amended tax return instructions If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Federal amended tax return instructions Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Federal amended tax return instructions You must report your worldwide income on the return. Federal amended tax return instructions If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax. Federal amended tax return instructions However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Federal amended tax return instructions Yes. Federal amended tax return instructions All U. Federal amended tax return instructions S. Federal amended tax return instructions citizens and resident aliens are subject to U. Federal amended tax return instructions S. Federal amended tax return instructions tax on their worldwide income. Federal amended tax return instructions If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax liability for the foreign taxes paid. Federal amended tax return instructions Form 1116 is used to figure the allowable credit. Federal amended tax return instructions Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 2) I am going abroad this year and expect to qualify for the foreign earned income exclusion. Federal amended tax return instructions How can I secure an extension of time to file my return, when should I file my return, and what forms are required? a) You should file Form 2350 by the due date of your return to request an extension of time to file. Federal amended tax return instructions Form 2350 is a special form for those U. Federal amended tax return instructions S. Federal amended tax return instructions citizens or residents abroad who expect to qualify for the foreign earned income exclusion or the housing exclusion or deduction under either the bona fide residence test or physical presence test and would like to have an extension of time to delay filing until after they have qualified. Federal amended tax return instructions b) If the extension is granted, you should file your return after you qualify, but by the approved extension date. Federal amended tax return instructions c) You must file your Form 1040 with Form 2555 (or Form 2555-EZ). Federal amended tax return instructions Generally, yes. Federal amended tax return instructions Every U. Federal amended tax return instructions S. Federal amended tax return instructions citizen or resident who receives income must file a U. Federal amended tax return instructions S. Federal amended tax return instructions income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Federal amended tax return instructions The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Federal amended tax return instructions If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Federal amended tax return instructions Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Federal amended tax return instructions You must report your worldwide income on the return. Federal amended tax return instructions If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax. Federal amended tax return instructions However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Federal amended tax return instructions Yes. Federal amended tax return instructions All U. Federal amended tax return instructions S. Federal amended tax return instructions citizens and resident aliens are subject to U. Federal amended tax return instructions S. Federal amended tax return instructions tax on their worldwide income. Federal amended tax return instructions If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax liability for the foreign taxes paid. Federal amended tax return instructions Form 1116 is used to figure the allowable credit. Federal amended tax return instructions Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 3) My entire income qualifies for the foreign earned income exclusion. Federal amended tax return instructions Must I file a tax return? Generally, yes. Federal amended tax return instructions Every U. Federal amended tax return instructions S. Federal amended tax return instructions citizen or resident who receives income must file a U. Federal amended tax return instructions S. Federal amended tax return instructions income tax return unless total income without regard to the foreign earned income exclusion is below an amount based on filing status. Federal amended tax return instructions The income levels for filing purposes are discussed under Filing Requirements in chapter 1. Federal amended tax return instructions If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Federal amended tax return instructions Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Federal amended tax return instructions You must report your worldwide income on the return. Federal amended tax return instructions If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax. Federal amended tax return instructions However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Federal amended tax return instructions Yes. Federal amended tax return instructions All U. Federal amended tax return instructions S. Federal amended tax return instructions citizens and resident aliens are subject to U. Federal amended tax return instructions S. Federal amended tax return instructions tax on their worldwide income. Federal amended tax return instructions If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax liability for the foreign taxes paid. Federal amended tax return instructions Form 1116 is used to figure the allowable credit. Federal amended tax return instructions Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 4) I was sent abroad by my company in November of last year. Federal amended tax return instructions I plan to secure an extension of time on Form 2350 to file my tax return for last year because I expect to qualify for the foreign earned income exclusion under the physical presence test. Federal amended tax return instructions However, if my company recalls me to the United States before the end of the qualifying period and I find I will not qualify for the exclusion, how and when should I file my return? If your regular filing date has passed, you should file a return, Form 1040, as soon as possible for last year. Federal amended tax return instructions Include a statement with this return noting that you have returned to the United States and will not qualify for the foreign earned income exclusion. Federal amended tax return instructions You must report your worldwide income on the return. Federal amended tax return instructions If you paid a foreign tax on the income earned abroad, you may be able to either deduct this tax as an itemized deduction or claim it as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax. Federal amended tax return instructions However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Federal amended tax return instructions Yes. Federal amended tax return instructions All U. Federal amended tax return instructions S. Federal amended tax return instructions citizens and resident aliens are subject to U. Federal amended tax return instructions S. Federal amended tax return instructions tax on their worldwide income. Federal amended tax return instructions If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax liability for the foreign taxes paid. Federal amended tax return instructions Form 1116 is used to figure the allowable credit. Federal amended tax return instructions Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 5) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen and have no taxable income from the United States, but I have substantial income from a foreign source. Federal amended tax return instructions Am I required to file a U. Federal amended tax return instructions S. Federal amended tax return instructions income tax return? Yes. Federal amended tax return instructions All U. Federal amended tax return instructions S. Federal amended tax return instructions citizens and resident aliens are subject to U. Federal amended tax return instructions S. Federal amended tax return instructions tax on their worldwide income. Federal amended tax return instructions If you paid taxes to a foreign government on income from sources outside the United States, you may be able to claim a foreign tax credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions income tax liability for the foreign taxes paid. Federal amended tax return instructions Form 1116 is used to figure the allowable credit. Federal amended tax return instructions Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 6) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen who has retired, and I expect to remain in a foreign country. Federal amended tax return instructions Do I have any further U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligations? Your U. Federal amended tax return instructions S. Federal amended tax return instructions tax obligation on your income is the same as that of a retired person living in the United States. Federal amended tax return instructions (See the discussion on filing requirements in chapter 1 of this publication. Federal amended tax return instructions ) U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 7) I have been a bona fide resident of a foreign country for over 5 years. Federal amended tax return instructions Is it necessary for me to pay estimated tax? U. Federal amended tax return instructions S. Federal amended tax return instructions taxpayers overseas have the same requirements for paying estimated tax as those in the United States. Federal amended tax return instructions See the discussion under Estimated Tax in chapter 1. Federal amended tax return instructions Overseas taxpayers should not include in their estimated income any income they receive that is, or will be, exempt from U. Federal amended tax return instructions S. Federal amended tax return instructions taxation. Federal amended tax return instructions Overseas taxpayers can deduct their estimated housing deduction in figuring their estimated tax. Federal amended tax return instructions The first installment of estimated tax is due on April 15 of the year for which the income is earned. Federal amended tax return instructions Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 8) Will a check payable in foreign currency be acceptable in payment of my U. Federal amended tax return instructions S. Federal amended tax return instructions tax? Generally, only U. Federal amended tax return instructions S. Federal amended tax return instructions currency is acceptable for payment of income tax. Federal amended tax return instructions However, if you are a Fulbright grantee, see Fulbright Grant in chapter 1. Federal amended tax return instructions Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 9) I have met the test for physical presence in a foreign country and am filing returns for 2 years. Federal amended tax return instructions Must I file a separate Form 2555 (or Form 2555-EZ) with each return? Yes. Federal amended tax return instructions A Form 2555 (or Form 2555-EZ) must be filed with each Form 1040 tax return on which the benefits of income earned abroad are claimed. Federal amended tax return instructions No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 10) Does a Form 2555 (or 2555-EZ) with a Schedule C or Form W-2 attached constitute a return? No. Federal amended tax return instructions The Form 2555 (or 2555-EZ), Schedule C, and Form W-2 are merely attachments and do not relieve you of the requirement to file a Form 1040 to show the sources of income reported and the exclusions or deductions claimed. Federal amended tax return instructions Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 11) On Form 2350, Application for Extension of Time To File U. Federal amended tax return instructions S. Federal amended tax return instructions Income Tax Return, I stated that I would qualify for the foreign earned income exclusion under the physical presence test. Federal amended tax return instructions If I qualify under the bona fide residence test, can I file my return on that basis? Yes. Federal amended tax return instructions You can claim the foreign earned income exclusion and the foreign housing exclusion or deduction under either test as long as you meet the requirements. Federal amended tax return instructions You are not bound by the test indicated in the application for extension of time. Federal amended tax return instructions You must be sure, however, that you file the Form 1040 by the date approved on Form 2350, since a return filed after that date may be subject to a failure to file penalty. Federal amended tax return instructions If you will not qualify under the bona fide residence test until a date later than the extension granted under the physical presence rule, apply for a new extension to a date 30 days beyond the date you expect to qualify as a bona fide resident. Federal amended tax return instructions No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 12) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen who worked in the United States for 6 months last year. Federal amended tax return instructions I accepted employment overseas in July of last year and expect to qualify for the foreign earned income exclusion. Federal amended tax return instructions Should I file a return and pay tax on the income earned in the United States during the first 6 months and then, when I qualify, file another return covering the last 6 months of the year? No. Federal amended tax return instructions You have the choice of one of the following two methods of filing your return: a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned income, and pay the tax due. Federal amended tax return instructions After you have qualified for the exclusion, you can file an amended return, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a refund of any excess tax paid. Federal amended tax return instructions b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, then file your return reflecting the exclusion of foreign earned income. Federal amended tax return instructions This allows you to file only once and saves you from paying the tax and waiting for a refund. Federal amended tax return instructions However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. Federal amended tax return instructions If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year. Federal amended tax return instructions File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 13) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen. Federal amended tax return instructions I have lived abroad for a number of years and recently realized that I should have been filing U. Federal amended tax return instructions S. Federal amended tax return instructions income tax returns. Federal amended tax return instructions How do I correct this oversight in not having filed returns for these years? File the late returns as soon as possible, stating your reason for filing late. Federal amended tax return instructions For advice on filing the returns, you should contact an  Internal Revenue Service representative in one of the four overseas offices listed in chapter 7. Federal amended tax return instructions It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions . Federal amended tax return instructions 14) In 2008, I qualified to exclude my foreign earned income, but I did not claim this exclusion on the return I filed in 2009. Federal amended tax return instructions I paid all outstanding taxes with the return. Federal amended tax return instructions Can I file a claim for refund now? It is too late to claim this refund since a claim for refund must be filed within 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever is later. Federal amended tax return instructions A return filed before the due date is considered filed on the due date. Federal amended tax return instructions 2. Federal amended tax return instructions Meeting the Requirements of Either the Bona Fide Residence Test or the Physical Presence Test . Federal amended tax return instructions 1) I recently came to Country X to work for the Orange Tractor Co. Federal amended tax return instructions and I expect to be here for 5 or 6 years. Federal amended tax return instructions I understand that upon the completion of 1 full year I will qualify for an exclusion or deduction under the bona fide residence test. Federal amended tax return instructions Is this correct? . Federal amended tax return instructions 2) I understand the physical presence test to be simply a matter of being physically present in a foreign country for at least 330 days within 12 consecutive months; but what are the criteria of the bona fide residence test? . Federal amended tax return instructions 3) To meet the qualification of an uninterrupted period which includes an entire taxable year, do I have to be physically present in a foreign country for the entire year? . Federal amended tax return instructions 4) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen and during 2012 was a bona fide resident of Country X. Federal amended tax return instructions On January 15, 2013, I was notified that I was to be assigned to Country Y. Federal amended tax return instructions I was recalled to New York for 90 days orientation and then went to Country Y, where I have been since. Federal amended tax return instructions Although I was not in Country Y on January 1, I was a bona fide resident of Country X and was in Country Y on December 31, 2013. Federal amended tax return instructions My family remained in Country X until completion of the orientation period, and my household goods were shipped directly to my new post. Federal amended tax return instructions Am I a bona fide resident of a foreign country for 2013, or must I wait for the entire year of 2014 to become one? . Federal amended tax return instructions 5) Due to illness, I returned to the United States before I completed my qualifying period to claim the foreign earned income exclusion. Federal amended tax return instructions Can I figure the exclusion for the period I resided abroad? . Federal amended tax return instructions 6) Can a resident alien of the United States qualify for an exclusion or deduction under the bona fide residence test or the physical presence test? . Federal amended tax return instructions 7) On August 13 of last year I left the United States and arrived in Country Z to work for the Gordon Manufacturing Company. Federal amended tax return instructions I expected to be able to exclude my foreign earned income under the physical presence test because I planned to be in Country Z for at least 1 year. Federal amended tax return instructions However, I was reassigned back to the United States and left Country Z on July 1 of this year. Federal amended tax return instructions Can I exclude any of my foreign earned income? . Federal amended tax return instructions 1) I recently came to Country X to work for the Orange Tractor Co. Federal amended tax return instructions and I expect to be here for 5 or 6 years. Federal amended tax return instructions I understand that upon the completion of 1 full year I will qualify for an exclusion or deduction under the bona fide residence test. Federal amended tax return instructions Is this correct? Not necessarily. Federal amended tax return instructions The law provides that to qualify under this test for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, a person must be a “bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year. Federal amended tax return instructions ” If, like most U. Federal amended tax return instructions S. Federal amended tax return instructions citizens, you file your return on a calendar year basis, the taxable year referred to in the law would be from January 1 to December 31 of any particular year. Federal amended tax return instructions Unless you established residence in Country X on January 1, it would be more than 1 year before you would be a bona fide resident of a foreign country. Federal amended tax return instructions Once you have completed your qualifying period, however, you are entitled to exclude the income or to claim the housing exclusion or deduction from the date you established bona fide residence. Federal amended tax return instructions To be a bona fide resident of a foreign country, you must show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to that end, you are making your home in that country. Federal amended tax return instructions Consideration is given to the type of quarters occupied, whether your family went with you, the type of visa, the employment agreement, and any other factor pertinent to show whether your stay in the foreign country is indefinite or prolonged. Federal amended tax return instructions To claim the foreign earned income exclusion or foreign housing exclusion or deduction under this test, the period of foreign residence must include 1 full tax year (usually January 1 – December 31), but once you meet this time requirement, you figure the exclusions and the deduction from the date the residence actually began. Federal amended tax return instructions No. Federal amended tax return instructions Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Federal amended tax return instructions During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Federal amended tax return instructions To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Federal amended tax return instructions Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Federal amended tax return instructions No. Federal amended tax return instructions You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Federal amended tax return instructions If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions tax. Federal amended tax return instructions Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 2) I understand the physical presence test to be simply a matter of being physically present in a foreign country for at least 330 days within 12 consecutive months; but what are the criteria of the bona fide residence test? To be a bona fide resident of a foreign country, you must show that you entered a foreign country intending to remain there for an indefinite or prolonged period and, to that end, you are making your home in that country. Federal amended tax return instructions Consideration is given to the type of quarters occupied, whether your family went with you, the type of visa, the employment agreement, and any other factor pertinent to show whether your stay in the foreign country is indefinite or prolonged. Federal amended tax return instructions To claim the foreign earned income exclusion or foreign housing exclusion or deduction under this test, the period of foreign residence must include 1 full tax year (usually January 1 – December 31), but once you meet this time requirement, you figure the exclusions and the deduction from the date the residence actually began. Federal amended tax return instructions No. Federal amended tax return instructions Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Federal amended tax return instructions During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Federal amended tax return instructions To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Federal amended tax return instructions Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Federal amended tax return instructions No. Federal amended tax return instructions You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Federal amended tax return instructions If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions tax. Federal amended tax return instructions Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 3) To meet the qualification of “an uninterrupted period which includes an entire taxable year,” do I have to be physically present in a foreign country for the entire year? No. Federal amended tax return instructions Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. Federal amended tax return instructions During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. Federal amended tax return instructions To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence. Federal amended tax return instructions Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Federal amended tax return instructions No. Federal amended tax return instructions You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Federal amended tax return instructions If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions tax. Federal amended tax return instructions Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 4) I am a U. Federal amended tax return instructions S. Federal amended tax return instructions citizen and during 2012 was a bona fide resident of Country X. Federal amended tax return instructions On January 15, 2013, I was notified that I was to be assigned to Country Y. Federal amended tax return instructions I was recalled to New York for 90 days orientation and then went to Country Y, where I have been since. Federal amended tax return instructions Although I was not in Country Y on January 1, I was a bona fide resident of Country X and was in Country Y on December 31, 2013. Federal amended tax return instructions My family remained in Country X until completion of the orientation period, and my household goods were shipped directly to my new post. Federal amended tax return instructions Am I a bona fide resident of a foreign country for 2013, or must I wait for the entire year of 2014 to become one? Since you did not break your period of foreign residence, you would continue to be a bona fide resident of a foreign country for 2013. Federal amended tax return instructions No. Federal amended tax return instructions You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Federal amended tax return instructions If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions tax. Federal amended tax return instructions Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 5) Due to illness, I returned to the United States before I completed my qualifying period to claim the foreign earned income exclusion. Federal amended tax return instructions Can I figure the exclusion for the period I resided abroad? No. Federal amended tax return instructions You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. Federal amended tax return instructions If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U. Federal amended tax return instructions S. Federal amended tax return instructions tax. Federal amended tax return instructions Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 6) Can a resident alien of the United States qualify for an exclusion or deduction under the bona fide residence test or the physical presence test? Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Federal amended tax return instructions Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect also can qualify under the bona fide residence test. Federal amended tax return instructions No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions . Federal amended tax return instructions 7) On August 13 of last year I left the United States and arrived in Country Z to work for the Gordon Manufacturing Company. Federal amended tax return instructions I expected to be able to exclude my foreign earned income under the physical presence test because I planned to be in Country Z for at least 1 year. Federal amended tax return instructions However, I was reassigned back to the United States and left Country Z on July 1 of this year. Federal amended tax return instructions Can I exclude any of my foreign earned income? No. Federal amended tax return instructions You cannot exclude any of the income you earned in Country Z because you were not in a foreign country for at least 330 full days as required under the physical presence test. Federal amended tax return instructions 3. Federal amended tax return instructions Foreign Earned Income . Federal amended tax return instructions 1) I am an employee of the U. Federal amended tax return instructions S. Federal amended tax return instructions Government working abroad. Federal amended tax return instructions Can all or part of my government income earned abroad qualify for the foreign earned income exclusion? . Federal amended tax return instructions 2) I qualify for the foreign earned income exclusion under the bona fide residence test. Federal amended tax return instructions Does my foreign earned income include my U. Federal amended tax return instructions S. Federal amended tax return instructions dividends and the interest I receive on a foreign bank account? . Federal amended tax return instructions 3) My company pays my foreign income tax on my foreign earnings. Federal amended tax return instructions Is this taxable compensation? . Federal amended tax return instructions 4) I live in an apartment in a foreign city for which my employer pays the rent. Federal amended tax return instructions Should I include in my income the cost to my employer ($1,200 a month) or the fair market value of equivalent housing in the United States ($800 a month)? . Federal amended tax return instructions 5) My U. Federal amended tax return instructions S. Federal amended tax return instructions employer pays my salary into my U. Federal amended tax return instructions S. Federal amended tax return instructions bank account. Federal amended tax return instructions Is this income considered earned in the United States or is it considered foreign earned income? . Federal amended tax return instructions 6) What is considered a foreign country? . Federal amended tax return instructions 7) What is the source of earned income? . Federal amended tax return instructions 1) I am an employee of the U. Federal amended tax return instructions S. Federal amended tax return instructions Government working abroad. Federal amended tax return instructions Can all or part of my government income earned abroad qualify for the foreign earned income exclusion? No. Federal amended tax return instructions The foreign earned income exclusion applies to your foreign earned income. Federal amended tax return instructions Amounts paid by the United States or its agencies to their employees are not treated, for this purpose, as foreign earned income. Federal amended tax return instructions No. Federal amended tax return instructions The only income that is foreign earned income is income from the performance of personal services abroad. Federal amended tax return instructions Investment income is not earned income. Federal amended tax return instructions However, you must include it in gross income reported on your Form 1040. Federal amended tax return instructions Yes. Federal amended tax return instructions The amount is compensation for services performed. Federal amended tax return instructions The tax paid by your company should be reported on Form 1040, line 7, and on Form 2555, Part IV, line 22(f) (or on Form 2555-EZ, Part IV, line 17). Federal amended tax return instructions You must include in income the fair market value (FMV) of the facility provided, where it is provided. Federal amended tax return instructions This will usually be the rent your employer pays. Federal amended tax return instructions Situations when the FMV is not included in income are discussed in chapter 4 under Exclusion of Meals and Lodging. Federal amended tax return instructions If you performed the services to earn this salary outside the United States, your salary is considered earned abroad. Federal amended tax return instructions It does not matter that you are paid by a U. Federal amended tax return instructions S. Federal amended tax return instructions employer or that your salary is deposited in a U. Federal amended tax return instructions S. Federal amended tax return instructions bank account in the United States. Federal amended tax return instructions The source of salary, wages, commissions, and other personal service income is the place where you perform the services. Federal amended tax return instructions For the purposes of the foreign earned income exclusion and the foreign housing exclusion or deduction, any territory under the sovereignty of a countr