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Free Online Taxes

Free online taxes Index A Adoption Taxpayer identification number, Adoption taxpayer identification number (ATIN). Free online taxes Aliens, Individual taxpayer identification number (ITIN) for aliens. Free online taxes Alternative minimum tax (AMT), Limit on credit. Free online taxes Amount of credit, Amount of Credit, Payments for prior year's expenses. Free online taxes Limit on, Limit on credit. Free online taxes Assistance (see Tax help) C Calculation of credit, How To Figure the Credit, Payments for prior year's expenses. Free online taxes Camp, overnight, Camp. Free online taxes Care Dependent care benefits, Dependent care benefits. Free online taxes , Dependent care benefits. Free online taxes Employer-provided benefits, Dependent Care Benefits Outside home, Care outside your home. Free online taxes Provider identification, Provider Identification Test Qualifying person, Care of a Qualifying Person Children Divorced or separated parents, Child of divorced or separated parents or parents living apart. Free online taxes Physically or mentally disabled, Qualifying Person Test Under age 13, Qualifying Person Test Work-related expense payments to relatives, Payments to Relatives or Dependents Church employee, Clergy or church employee. Free online taxes Claiming of credit, How To Claim the Credit Tests to claim credit, Tests To Claim the Credit Clergy, Clergy or church employee. Free online taxes Community property, Community property laws. Free online taxes D Death of spouse, Death of spouse. Free online taxes Dependent care benefits, Dependent care benefits. Free online taxes , Dependent Care Benefits Dependent care centers, Dependent care center. Free online taxes Dependent defined, Dependent defined. Free online taxes Dependents (see Qualifying person test) Deposits, Fees and deposits. Free online taxes Disabilities, persons with Dependents, Qualifying Person Test Physically or mentally not able to care for self, Physically or mentally not able to care for oneself. Free online taxes Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Free online taxes , Working or Looking for Work, You or your spouse is a student or not able to care for self. Free online taxes Divorced parents, Child of divorced or separated parents or parents living apart. Free online taxes Dollar limit, Dollar Limit, Yearly limit. Free online taxes Reduced dollar limit, Tests To Claim the Credit, Reduced Dollar Limit Domestic help, Housekeeper. Free online taxes Due diligence, Due diligence. Free online taxes E Earned income Dependent care benefits, Exclusion or deduction. Free online taxes For figuring credit, Earned Income Test Limit on, Earned Income Limit Net loss, Net loss. Free online taxes Nonworking spouse, Rule for student-spouse or spouse not able to care for self. Free online taxes Self-employment earnings, Self-employment earnings. Free online taxes Statutory employees, Statutory employee. Free online taxes What is not, What is not earned income? Earned income test, Earned Income Test, Full-time student. Free online taxes Determination, Tests To Claim the Credit Education expenses, Education. Free online taxes Employer-provided dependent care benefits, Dependent care benefits. Free online taxes , Dependent Care Benefits Employment taxes, Reminders, Taxes paid on wages. Free online taxes , How To Claim the Credit Exclusion from income Employer-provided dependent care benefits, Dependent care benefits. Free online taxes , Exclusion or deduction. Free online taxes Expenses, How To Figure the Credit (see also Work-related expenses) 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Free online taxes Worksheet for 2012 Expenses Paid in 2013 Education, Education. Free online taxes Medical, Medical expenses. Free online taxes Not for care, Expenses not for care. Free online taxes Prepaid, Expenses prepaid in an earlier year. Free online taxes Reimbursed, Expenses reimbursed. Free online taxes F Fees, Fees and deposits. Free online taxes Figures, Tests To Claim the Credit Figuring credit, How To Figure the Credit, Payments for prior year's expenses. Free online taxes Earned income, Earned income. Free online taxes Filing status Joint return test, Joint Return Test Tests to claim credit, Tests To Claim the Credit Form 1040 Claiming the credit, Tests To Claim the Credit, Form 1040, Form 1040A, or Form 1040NR. Free online taxes Form 1040A Claiming the credit, Tests To Claim the Credit Form 2441, Form 1040, Form 1040A, or Form 1040NR. Free online taxes Form 4029, Members of certain religious faiths opposed to social security. Free online taxes , Form 4029. Free online taxes Form 4361, Members of certain religious faiths opposed to social security. Free online taxes , Form 4361. Free online taxes Form W-10, Getting the information. Free online taxes Form W-2 Dependent care benefits, Statement for employee. Free online taxes Form W-7, Individual taxpayer identification number (ITIN) for aliens. Free online taxes Free tax services, Free help with your tax return. Free online taxes H Help (see Tax help) Household services, Care of a Qualifying Person, Household Services, Meals and lodging provided for housekeeper. Free online taxes Employment taxes, How To Claim the Credit Housekeepers, Housekeeper. Free online taxes I Identification of provider, Provider Identification Test, Provider refusal. Free online taxes Individual taxpayer identification numbers (ITINs) For aliens, Individual taxpayer identification number (ITIN) for aliens. Free online taxes Inmate, What is not earned income? J Joint return test, Joint Return Test, Costs of keeping up a home. Free online taxes Tests to claim credit, Tests To Claim the Credit L Limits Amount of credit, Limit on credit. Free online taxes Dollar, Dollar Limit Earned income, Earned Income Limit Reduced dollar, Tests To Claim the Credit, Reduced Dollar Limit Looking for work, Working or Looking for Work Losses, Net loss. Free online taxes M Married and living apart, Married and living apart. Free online taxes Meals and lodging for housekeeper, Meals and lodging provided for housekeeper. Free online taxes Medical expenses, Medical expenses. Free online taxes Minister, Clergy or church employee. Free online taxes Missing children, photographs of, Reminders N Nonrefundability of credit, Tax credit not refundable. Free online taxes Not able to care for self Qualifying person test, Physically or mentally not able to care for oneself. Free online taxes Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Free online taxes , Working or Looking for Work, You or your spouse is a student or not able to care for self. Free online taxes O Outside of home care, Care outside your home. Free online taxes P Part of year Persons qualifying for, Person qualifying for part of year. Free online taxes Work or looking for work, Work for part of year. Free online taxes Part-time work, Part-time work. Free online taxes Prepaid expenses, Expenses prepaid in an earlier year. Free online taxes Prisoner, What is not earned income? Provider identification test, Tests To Claim the Credit, Provider Identification Test, Provider refusal. Free online taxes Publications (see Tax help) Q Qualifying child, Qualifying child. Free online taxes Qualifying person Care for, Care of a Qualifying Person Expenses not for care, Expenses not for care. Free online taxes Qualifying person test, Qualifying Person Test, Child of divorced or separated parents or parents living apart. Free online taxes Tests to claim credit, Tests To Claim the Credit R Recordkeeping requirements, How To Claim the Credit Reduced dollar limit, Reduced Dollar Limit Tests to claim credit, Tests To Claim the Credit Refusal by provider to give information, Provider refusal. Free online taxes Reimbursed expenses, Expenses reimbursed. Free online taxes Relatives, payments to, Tests To Claim the Credit, Payments to Relatives or Dependents Religious faiths opposed to social security programs, Members of certain religious faiths opposed to social security. Free online taxes S School expenses, Education. Free online taxes Self-employed persons, Self-employment earnings. Free online taxes Separated parents, Child of divorced or separated parents or parents living apart. Free online taxes , Legally separated. Free online taxes Separated spouse, Separated spouse. Free online taxes Sick days, Temporary absence from work. Free online taxes Social Security, Employment Taxes for Household Employers (see also Employment taxes) Religious faiths opposed to, Members of certain religious faiths opposed to social security. Free online taxes Social security numbers, Information needed. Free online taxes Spouse Both spouses qualifying, Both spouses qualify. Free online taxes Death of, Death of spouse. Free online taxes Nonworking, earned income, Rule for student-spouse or spouse not able to care for self. Free online taxes Not able to care for self, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Free online taxes , Working or Looking for Work, You or your spouse is a student or not able to care for self. Free online taxes Qualifying person, Qualifying Person Test Separated, Separated spouse. Free online taxes Student, Rule for student-spouse or spouse not able to care for self. Free online taxes , You or your spouse is a student or not able to care for self. Free online taxes Surviving, Surviving spouse. Free online taxes Working, Spouse works. Free online taxes Students Full-time, Full-time student. Free online taxes Spouse, Rule for student-spouse or spouse not able to care for self. Free online taxes , You or your spouse is a student or not able to care for self. Free online taxes T Tax help, How To Get Tax Help Taxes on wages (see Employment taxes) Taxpayer identification number (TINs), Reminders, Taxpayer identification number. Free online taxes Adoption, Adoption taxpayer identification number (ATIN). Free online taxes Aliens, Individual taxpayer identification number (ITIN) for aliens. Free online taxes Providers, Information needed. Free online taxes Temporary absence, Temporary absence from work. Free online taxes Tests to claim credit, Tests To Claim the Credit, Exclusion or deduction. Free online taxes Determination, Tests To Claim the Credit Earned income, Earned Income Test Qualifying persons, Qualifying Person Test Work-related expenses, Work-Related Expense Test Transportation, Transportation. Free online taxes TTY/TDD information, How To Get Tax Help U Unearned income, What is not earned income? V Vacation, Temporary absence from work. Free online taxes Volunteer work, Volunteer work. Free online taxes W Wages, taxes on (see Employment taxes) Withholding Federal income tax, Employment Taxes for Household Employers Work-related expense test, Work-Related Expense Test, Payments to Relatives or Dependents Partly work-related expenses, Expenses partly work-related. Free online taxes Tests to claim credit, Tests To Claim the Credit Work-related expenses Earned income limit, Earned Income Limit Figuring of credit, Figuring Total Work-Related Expenses Medical, Medical expenses. Free online taxes Paid following year, Expenses not paid until the following year. Free online taxes , Payments for prior year's expenses. Free online taxes , Worksheet A. Free online taxes Worksheet for 2012 Expenses Paid in 2013 Partly work-related expenses, Expenses partly work-related. Free online taxes Prepaid, Expenses prepaid in an earlier year. Free online taxes Recordkeeping, How To Claim the Credit Reimbursed, Expenses reimbursed. Free online taxes Worksheets 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Free online taxes Worksheet for 2012 Expenses Paid in 2013 Prev  Up     Home   More Online Publications
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The Free Online Taxes

Free online taxes 2. Free online taxes   Source of Income Table of Contents Introduction Topics - This chapter discusses: Resident Aliens Nonresident AliensInterest Income Dividends Guarantee of Indebtedness Personal Services Transportation Income Scholarships, Grants, Prizes, and Awards Pensions and Annuities Rents or Royalties Real Property Personal Property Community Income Introduction After you have determined your alien status, you must determine the source of your income. Free online taxes This chapter will help you determine the source of different types of income you may receive during the tax year. Free online taxes This chapter also discusses special rules for married individuals who are domiciled in a country with community property laws. Free online taxes Topics - This chapter discusses: Income source rules, and Community income. Free online taxes Resident Aliens A resident alien's income is generally subject to tax in the same manner as a U. Free online taxes S. Free online taxes citizen. Free online taxes If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U. Free online taxes S. Free online taxes tax return. Free online taxes You must report these amounts from sources within and outside the United States. Free online taxes Nonresident Aliens A nonresident alien usually is subject to U. Free online taxes S. Free online taxes income tax only on U. Free online taxes S. Free online taxes source income. Free online taxes Under limited circumstances, certain foreign source income is subject to U. Free online taxes S. Free online taxes tax. Free online taxes See Foreign Income in chapter 4. Free online taxes The general rules for determining U. Free online taxes S. Free online taxes source income that apply to most nonresident aliens are shown in Table 2-1. Free online taxes The following discussions cover the general rules as well as the exceptions to these rules. Free online taxes Not all items of U. Free online taxes S. Free online taxes source income are taxable. Free online taxes See chapter 3. Free online taxes Interest Income Generally, U. Free online taxes S. Free online taxes source interest income includes the following items. Free online taxes Interest on bonds, notes, or other interest-bearing obligations of U. Free online taxes S. Free online taxes residents or domestic corporations. Free online taxes Interest paid by a domestic or foreign partnership or foreign corporation engaged in a U. Free online taxes S. Free online taxes trade or business at any time during the tax year. Free online taxes Original issue discount. Free online taxes Interest from a state, the District of Columbia, or the U. Free online taxes S. Free online taxes Government. Free online taxes The place or manner of payment is immaterial in determining the source of the income. Free online taxes A substitute interest payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as the interest on the transferred security. Free online taxes Exceptions. Free online taxes   U. Free online taxes S. Free online taxes source interest income does not include the following items. Free online taxes Interest paid by a resident alien or a domestic corporation on obligations issued before August 10, 2010, if for the 3-year period ending with the close of the payer's tax year preceding the interest payment, at least 80% of the payer's total gross income: Is from sources outside the United States, and Is attributable to the active conduct of a trade or business by the individual or corporation in a foreign country or a U. Free online taxes S. Free online taxes possession. Free online taxes However, the interest will be considered U. Free online taxes S. Free online taxes source interest income if either of the following apply. Free online taxes The recipient of the interest is related to the resident alien or domestic corporation. Free online taxes See section 954(d)(3) for the definition of related person. Free online taxes The terms of the obligation are significantly modified after August 9, 2010. Free online taxes Any extension of the term of the obligation is considered a significant modification. Free online taxes Interest paid by a foreign branch of a domestic corporation or a domestic partnership on deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law if the interest paid or credited can be deducted by the association. Free online taxes Interest on deposits with a foreign branch of a domestic corporation or domestic partnership, but only if the branch is in the commercial banking business. Free online taxes Dividends In most cases, dividend income received from domestic corporations is U. Free online taxes S. Free online taxes source income. Free online taxes Dividend income from foreign corporations is usually foreign source income. Free online taxes Exceptions to both of these rules are discussed below. Free online taxes A substitute dividend payment made to the transferor of a security in a securities lending transaction or a sale-repurchase transaction is sourced in the same manner as a distribution on the transferred security. Free online taxes Dividend equivalent payments. Free online taxes   U. Free online taxes S. Free online taxes source dividends also include all dividend equivalent payments. Free online taxes Dividend equivalent payments include substitute dividends, payments made pursuant to a specified notional principal contract, and all similar payments that, directly or indirectly, are contingent on or determined by reference to, the payment of a dividend from U. Free online taxes S. Free online taxes sources. Free online taxes    The Internal Revenue Service has issued final regulations that would affect the treatment of dividend equivalent payments and specified notional principal contracts. Free online taxes You can view this regulation at www. Free online taxes irs. Free online taxes gov/irb/2013-52_IRB/ar08. Free online taxes html. Free online taxes First exception. Free online taxes   Dividends received from a domestic corporation are not U. Free online taxes S. Free online taxes source income if the corporation elects to take the American Samoa economic development credit. Free online taxes Second exception. Free online taxes   Part of the dividends received from a foreign corporation is U. Free online taxes S. Free online taxes source income if 25% or more of its total gross income for the 3-year period ending with the close of its tax year preceding the declaration of dividends was effectively connected with a trade or business in the United States. Free online taxes If the corporation was formed less than 3 years before the declaration, use its total gross income from the time it was formed. Free online taxes Determine the part that is U. Free online taxes S. Free online taxes source income by multiplying the dividend by the following fraction. Free online taxes   Foreign corporation's gross income connected with a U. Free online taxes S. Free online taxes trade or business for the 3-year period     Foreign corporation's gross income from all sources for that period   Guarantee of Indebtedness Certain amounts received directly or indirectly, for the provision of a guarantee of indebtedness issued after September 27, 2010, are U. Free online taxes S. Free online taxes source income. Free online taxes They must be paid by a noncorporate resident or U. Free online taxes S. Free online taxes corporation or by any foreign person if the amounts are effectively connected with the conduct of a U. Free online taxes S. Free online taxes trade or business. Free online taxes For more information, see Internal Revenue Code sections 861(a)(9) and 862(a)(9). Free online taxes Personal Services All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. Free online taxes The only exceptions to this rule are discussed in chapter 3 under Employees of foreign persons, organizations, or offices, and under Crew members. Free online taxes If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. Free online taxes Compensation (other than certain fringe benefits) is sourced on a time basis. Free online taxes Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Free online taxes Or, you may be permitted to use an alternative basis to determine the source of compensation. Free online taxes See Alternative Basis , later. Free online taxes Multi-level marketing. Free online taxes   Certain companies sell products through a multi-level marketing arrangement, such that an upper-tier distributor, who has sponsored a lower-tier distributor, is entitled to a payment from the company based on certain activities of that lower-tier distributor. Free online taxes Generally, depending on the facts, payments from such multi-level marketing companies to independent (non-employee) distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have sponsored (lower-tier distributors) constitute income for the performance of personal services in recruiting, training, and supporting the lower-tier distributors. Free online taxes The source of such income is generally based on where the services of the upper-tier distributor are performed, and may, depending on the facts, be considered multi-year compensation, with the source of income determined over the period to which such compensation is attributable. Free online taxes Self-employed individuals. Free online taxes   If you are self-employed, you determine the source of compensation for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Free online taxes In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Free online taxes Time Basis Use a time basis to figure your U. Free online taxes S. Free online taxes source compensation (other than the fringe benefits discussed later). Free online taxes Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed services in the United States during the year     Total number of days you performed services during the year   You can use a unit of time less than a day in the above fraction, if appropriate. Free online taxes The time period for which the compensation is made does not have to be a year. Free online taxes Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Free online taxes Example 1. Free online taxes Christina Brooks, a resident of the Netherlands, worked 240 days for a U. Free online taxes S. Free online taxes company during the tax year. Free online taxes She received $80,000 in compensation. Free online taxes None of it was for fringe benefits. Free online taxes Christina performed services in the United States for 60 days and performed services in the Netherlands for 180 days. Free online taxes Using the time basis for determining the source of compensation, $20,000 ($80,000 × 60/240) is her U. Free online taxes S. Free online taxes source income. Free online taxes Example 2. Free online taxes Rob Waters, a resident of South Africa, is employed by a corporation. Free online taxes His annual salary is $100,000. Free online taxes None of it is for fringe benefits. Free online taxes During the first quarter of the year he worked entirely within the United States. Free online taxes On April 1, Rob was transferred to Singapore for the remainder of the year. Free online taxes Rob is able to establish that the first quarter of the year and the last 3 quarters of the year are two separate, distinct, and continuous periods of time. Free online taxes Accordingly, $25,000 of Rob's annual salary is attributable to the first quarter of the year (. Free online taxes 25 × $100,000). Free online taxes All of it is U. Free online taxes S. Free online taxes source income because he worked entirely within the United States during that quarter. Free online taxes The remaining $75,000 is attributable to the last three quarters of the year. Free online taxes During those quarters, he worked 150 days in Singapore and 30 days in the United States. Free online taxes His periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. Free online taxes Of this $75,000, $12,500 ($75,000 × 30/180) is U. Free online taxes S. Free online taxes source income. Free online taxes Multi-year compensation. Free online taxes   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Free online taxes Multi-year compensation is compensation that is included in your income in one tax year but that is attributable to a period that includes two or more tax years. Free online taxes   You determine the period to which the compensation is attributable based on the facts and circumstances of your case. Free online taxes For example, an amount of compensation that specifically relates to a period of time that includes several calendar years is attributable to the entire multi-year period. Free online taxes   The amount of compensation treated as from U. Free online taxes S. Free online taxes sources is figured by multiplying the total multi-year compensation by a fraction. Free online taxes The numerator of the fraction is the number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in the United States in connection with the project. Free online taxes The denominator of the fraction is the total number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in connection with the project. Free online taxes Geographical Basis Compensation you receive as an employee in the form of the following fringe benefits is sourced on a geographical basis. Free online taxes Housing. Free online taxes Education. Free online taxes Local transportation. Free online taxes Tax reimbursement. Free online taxes Hazardous or hardship duty pay as defined in Regulations section 1. Free online taxes 861-4(b)(2)(ii)(D)(5). Free online taxes Moving expense reimbursement. Free online taxes The amount of fringe benefits must be reasonable and you must substantiate them by adequate records or by sufficient evidence. Free online taxes Principal place of work. Free online taxes   The above fringe benefits, except for tax reimbursement and hazardous or hardship duty pay, are sourced based on your principal place of work. Free online taxes Your principal place of work is usually the place where you spend most of your working time. Free online taxes This could be your office, plant, store, shop, or other location. Free online taxes If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Free online taxes   If you have more than one job at any time, your main job location depends on the facts in each case. Free online taxes The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Free online taxes Housing. Free online taxes   The source of a housing fringe benefit is determined based on the location of your principal place of work. Free online taxes A housing fringe benefit includes payments to you or on your behalf (and your family's if your family resides with you) only for the following. Free online taxes Rent. Free online taxes Utilities (except telephone charges). Free online taxes Real and personal property insurance. Free online taxes Occupancy taxes not deductible under section 164 or 216(a). Free online taxes Nonrefundable fees for securing a leasehold. Free online taxes Rental of furniture and accessories. Free online taxes Household repairs. Free online taxes Residential parking. Free online taxes Fair rental value of housing provided in kind by your employer. Free online taxes   A housing fringe benefit does not include: Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation), The cost of buying property, including principal payments on a mortgage, The cost of domestic labor (maids, gardeners, etc. Free online taxes ), Pay television subscriptions, Improvements and other expenses that increase the value or appreciably prolong the life of property, Purchased furniture or accessories, Depreciation or amortization of property or improvements, The value of meals or lodging that you exclude from gross income, or The value of meals or lodging that you deduct as moving expenses. Free online taxes Education. Free online taxes   The source of an education fringe benefit for the education expenses of your dependents is determined based on the location of your principal place of work. Free online taxes An education fringe benefit includes payments only for the following expenses for education at an elementary or secondary school. Free online taxes Tuition, fees, academic tutoring, special needs services for a special needs student, books, supplies, and other equipment. Free online taxes Room and board and uniforms that are required or provided by the school in connection with enrollment or attendance. Free online taxes Local transportation. Free online taxes   The source of a local transportation fringe benefit is determined based on the location of your principal place of work. Free online taxes Your local transportation fringe benefit is the amount that you receive as compensation for local transportation for you or your spouse or dependents at the location of your principal place of work. Free online taxes The amount treated as a local transportation fringe benefit is limited to actual expenses incurred for local transportation and the fair rental value of any employer-provided vehicle used predominantly by you, your spouse, or your dependents for local transportation. Free online taxes Actual expenses do not include the cost (including interest) of any vehicle purchased by you or on your behalf. Free online taxes Tax reimbursement. Free online taxes   The source of a tax reimbursement fringe benefit is determined based on the location of the jurisdiction that imposed the tax for which you are reimbursed. Free online taxes Moving expense reimbursement. Free online taxes   The source of a moving expense reimbursement is generally based on the location of your new principal place of work. Free online taxes However, the source is determined based on the location of your former principal place of work if you provide sufficient evidence that such determination of source is more appropriate under the facts and circumstances of your case. Free online taxes Sufficient evidence generally requires an agreement between you and your employer, or a written statement of company policy, which is reduced to writing before the move and which is entered into or established to induce you or other employees to move to another country. Free online taxes The written statement or agreement must state that your employer will reimburse you for moving expenses that you incur to return to your former principal place of work regardless of whether you continue to work for your employer after returning to that location. Free online taxes It may contain certain conditions upon which the right to reimbursement is determined as long as those conditions set forth standards that are definitely ascertainable and can only be fulfilled prior to, or through completion of, your return move to your former principal place of work. Free online taxes Alternative Basis If you are an employee, you can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your compensation than the time or geographical basis. Free online taxes If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your compensation. Free online taxes Also, if your total compensation from all sources is $250,000 or more, check “Yes” to both questions on line K on page 5 of Form 1040NR, and attach a written statement to your tax return that sets forth all of the following. Free online taxes Your name and social security number (written across the top of the statement). Free online taxes The specific compensation income, or the specific fringe benefit, for which you are using the alternative basis. Free online taxes For each item in (2), the alternative basis of allocation of source used. Free online taxes For each item in (2), a computation showing how the alternative allocation was computed. Free online taxes A comparison of the dollar amount of the U. Free online taxes S. Free online taxes compensation and foreign compensation sourced under both the alternative basis and the time or geographical basis discussed earlier. Free online taxes Transportation Income Transportation income is income from the use of a vessel or aircraft or for the performance of services directly related to the use of any vessel or aircraft. Free online taxes This is true whether the vessel or aircraft is owned, hired, or leased. Free online taxes The term “vessel or aircraft” includes any container used in connection with a vessel or aircraft. Free online taxes All income from transportation that begins and ends in the United States is treated as derived from sources in the United States. Free online taxes If the transportation begins or ends in the United States, 50% of the transportation income is treated as derived from sources in the United States. Free online taxes For transportation income from personal services, 50% of the income is U. Free online taxes S. Free online taxes source income if the transportation is between the United States and a U. Free online taxes S. Free online taxes possession. Free online taxes For nonresident aliens, this only applies to income derived from, or in connection with, an aircraft. Free online taxes For information on how U. Free online taxes S. Free online taxes source transportation income is taxed, see chapter 4. Free online taxes Scholarships, Grants, Prizes, and Awards Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. Free online taxes However, see Activities to be performed outside the United States , later. Free online taxes For example, payments for research or study in the United States made by the United States, a noncorporate U. Free online taxes S. Free online taxes resident, or a domestic corporation, are from U. Free online taxes S. Free online taxes sources. Free online taxes Similar payments from a foreign government or foreign corporation are foreign source payments even though the funds may be disbursed through a U. Free online taxes S. Free online taxes agent. Free online taxes Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources. Free online taxes Activities to be performed outside the United States. Free online taxes   Scholarships, fellowship grants, targeted grants, and achievement awards received by nonresident aliens for activities performed, or to be performed, outside the United States are not U. Free online taxes S. Free online taxes source income. Free online taxes    These rules do not apply to amounts paid as salary or other compensation for services. Free online taxes See Personal Services, earlier, for the source rules that apply. Free online taxes Pensions and Annuities If you receive a pension from a domestic trust for services performed both in and outside the United States, part of the pension payment is from U. Free online taxes S. Free online taxes sources. Free online taxes That part is the amount attributable to earnings of the pension plan and the employer contributions made for services performed in the United States. Free online taxes This applies whether the distribution is made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded). Free online taxes If you performed services as an employee of the United States, you may receive a distribution from the U. Free online taxes S. Free online taxes Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan. Free online taxes Your U. Free online taxes S. Free online taxes source income is the otherwise taxable amount of the distribution that is attributable to your total U. Free online taxes S. Free online taxes Government basic pay other than tax-exempt pay for services performed outside the United States. Free online taxes Rents or Royalties Your U. Free online taxes S. Free online taxes source income includes rent and royalty income received during the tax year from property located in the United States or from any interest in that property. Free online taxes U. Free online taxes S. Free online taxes source income also includes rents or royalties for the use of, or for the privilege of using, in the United States, intangible property such as patents, copyrights, secret processes and formulas, goodwill, trademarks, franchises, and similar property. Free online taxes Real Property Real property is land and buildings and generally anything built on, growing on, or attached to land. Free online taxes Gross income from sources in the United States includes gains, profits, and income from the sale or other disposition of real property located in the United States. Free online taxes Natural resources. Free online taxes   The income from the sale of products of any farm, mine, oil or gas well, other natural deposit, or timber located in the United States and sold in a foreign country, or located in a foreign country and sold in the United States, is partly from sources in the United States. Free online taxes For information on determining that part, see section 1. Free online taxes 863-1(b) of the regulations. Free online taxes Table 2-1. Free online taxes Summary of Source Rules for Income of Nonresident Aliens Item of income Factor determining source Salaries, wages, other compensation Where services performed Business income:   Personal services Where services performed Sale of inventory—purchased Where sold Sale of inventory—produced Allocation Interest Residence of payer Dividends Whether a U. Free online taxes S. Free online taxes or foreign corporation* Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Free online taxes Where property is used Sale of real property Location of property Sale of personal property Seller's tax home (but see Personal Property , later, for exceptions) Pension distributions attributable to contributions Where services were performed that earned the pension Investment earnings on pension contributions Location of pension trust Sale of natural resources Allocation based on fair market value of product at export terminal. Free online taxes For more information, see section 1. Free online taxes 863-1(b) of the regulations. Free online taxes *Exceptions include: a) Dividends paid by a U. Free online taxes S. Free online taxes corporation are foreign source if the corporation elects the  American Samoa economic development credit. Free online taxes  b) Part of a dividend paid by a foreign corporation is U. Free online taxes S. Free online taxes source if at least 25% of the  corporation's gross income is effectively connected with a U. Free online taxes S. Free online taxes trade or business for the  3 tax years before the year in which the dividends are declared. Free online taxes Personal Property Personal property is property, such as machinery, equipment, or furniture, that is not real property. Free online taxes Gain or loss from the sale or exchange of personal property generally has its source in the United States if you have a tax home in the United States. Free online taxes If you do not have a tax home in the United States, the gain or loss generally is considered to be from sources outside the United States. Free online taxes Tax home. Free online taxes   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Free online taxes Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. Free online taxes If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. Free online taxes If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Free online taxes Inventory property. Free online taxes   Inventory property is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Free online taxes Income from the sale of inventory that you purchased is sourced where the property is sold. Free online taxes Generally, this is where title to the property passes to the buyer. Free online taxes For example, income from the sale of inventory in the United States is U. Free online taxes S. Free online taxes source income, whether you purchased it in the United States or in a foreign country. Free online taxes   Income from the sale of inventory property that you produced in the United States and sold outside the United States (or vice versa) is partly from sources in the United States and partly from sources outside the United States. Free online taxes For information on making this allocation, see section 1. Free online taxes 863-3 of the regulations. Free online taxes   These rules apply even if your tax home is not in the United States. Free online taxes Depreciable property. Free online taxes   To determine the source of any gain from the sale of depreciable personal property, you must first figure the part of the gain that is not more than the total depreciation adjustments on the property. Free online taxes You allocate this part of the gain to sources in the United States based on the ratio of U. Free online taxes S. Free online taxes depreciation adjustments to total depreciation adjustments. Free online taxes The rest of this part of the gain is considered to be from sources outside the United States. Free online taxes   For this purpose, “U. Free online taxes S. Free online taxes depreciation adjustments” are the depreciation adjustments to the basis of the property that are allowable in figuring taxable income from U. Free online taxes S. Free online taxes sources. Free online taxes However, if the property is used predominantly in the United States during a tax year, all depreciation deductions allowable for that year are treated as U. Free online taxes S. Free online taxes depreciation adjustments. Free online taxes But there are some exceptions for certain transportation, communications, and other property used internationally. Free online taxes   Gain from the sale of depreciable property that is more than the total depreciation adjustments on the property is sourced as if the property were inventory property, as discussed above. Free online taxes   A loss is sourced in the same way as the depreciation deductions were sourced. Free online taxes However, if the property was used predominantly in the United States, the entire loss reduces U. Free online taxes S. Free online taxes source income. Free online taxes   The basis of property usually means the cost (money plus the fair market value of other property or services) of property you acquire. Free online taxes Depreciation is an amount deducted to recover the cost or other basis of a trade or business asset. Free online taxes The amount you can deduct depends on the property's cost, when you began using the property, how long it will take to recover your cost, and which depreciation method you use. Free online taxes A depreciation deduction is any deduction for depreciation or amortization or any other allowable deduction that treats a capital expenditure as a deductible expense. Free online taxes Intangible property. Free online taxes   Intangible property includes patents, copyrights, secret processes or formulas, goodwill, trademarks, trade names, or other like property. Free online taxes The gain from the sale of amortizable or depreciable intangible property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the original deductions were sourced. Free online taxes This is the same as the source rule for gain from the sale of depreciable property. Free online taxes See Depreciable property , earlier, for details on how to apply this rule. Free online taxes   Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is used if the income from the sale is contingent on the productivity, use, or disposition of that property. Free online taxes If the income is not contingent on the productivity, use, or disposition of the property, the income is sourced according to your tax home as discussed earlier. Free online taxes If payments for goodwill do not depend on its productivity, use, or disposition, their source is the country in which the goodwill was generated. Free online taxes Sales through offices or fixed places of business. Free online taxes   Despite any of the earlier rules, if you do not have a tax home in the United States, but you maintain an office or other fixed place of business in the United States, treat the income from any sale of personal property (including inventory property) that is attributable to that office or place of business as U. Free online taxes S. Free online taxes source income. Free online taxes However, this rule does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your office or other fixed place of business outside the United States materially participated in the sale. Free online taxes   If you have a tax home in the United States but maintain an office or other fixed place of business outside the United States, income from sales of personal property, other than inventory, depreciable property, or intangibles, that is attributable to that foreign office or place of business may be treated as U. Free online taxes S. Free online taxes source income. Free online taxes The income is treated as U. Free online taxes S. Free online taxes source income if an income tax of less than 10% of the income from the sale is paid to a foreign country. Free online taxes This rule also applies to losses if the foreign country would have imposed an income tax of less than 10% had the sale resulted in a gain. Free online taxes Community Income If you are married and you or your spouse is subject to the community property laws of a foreign country, a U. Free online taxes S. Free online taxes state, or a U. Free online taxes S. Free online taxes possession, you generally must follow those laws to determine the income of yourself and your spouse for U. Free online taxes S. Free online taxes tax purposes. Free online taxes But you must disregard certain community property laws if: Both you and your spouse are nonresident aliens, or One of you is a nonresident alien and the other is a U. Free online taxes S. Free online taxes citizen or resident and you do not both choose to be treated as U. Free online taxes S. Free online taxes residents as explained in chapter 1. Free online taxes In these cases, you and your spouse must report community income as explained later. Free online taxes Earned income. Free online taxes   Earned income of a spouse, other than trade or business income and a partner's distributive share of partnership income, is treated as the income of the spouse whose services produced the income. Free online taxes That spouse must report all of it on his or her separate return. Free online taxes Trade or business income. Free online taxes   Trade or business income, other than a partner's distributive share of partnership income, is treated as the income of the spouse carrying on the trade or business. Free online taxes That spouse must report all of it on his or her separate return. Free online taxes Partnership income (or loss). Free online taxes   A partner's distributive share of partnership income (or loss) is treated as the income (or loss) of the partner. Free online taxes The partner must report all of it on his or her separate return. Free online taxes Separate property income. Free online taxes   Income derived from the separate property of one spouse (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that spouse. Free online taxes That spouse must report all of it on his or her separate return. Free online taxes Use the appropriate community property law to determine what is separate property. Free online taxes Other community income. Free online taxes   All other community income is treated as provided by the applicable community property laws. Free online taxes Prev  Up  Next   Home   More Online Publications