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Hr Block Free Online Filing

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Hr Block Free Online Filing

Hr block free online filing 3. Hr block free online filing   Exclusions From Gross Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident AliensForeign Earned Income and Housing Amount Nonresident AliensInterest Income Dividend Income Services Performed for Foreign Employer Gambling Winnings From Dog or Horse Racing Gain From the Sale of Your Main Home Scholarships and Fellowship GrantsExpenses that do not qualify. Hr block free online filing Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. Hr block free online filing An exclusion from gross income is generally income you receive that is not included in your U. Hr block free online filing S. Hr block free online filing income and is not subject to U. Hr block free online filing S. Hr block free online filing tax. Hr block free online filing This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. Hr block free online filing Topics - This chapter discusses: Nontaxable interest, Nontaxable dividends, Certain compensation paid by a foreign employer, Gain from sale of home, and Scholarships and fellowship grants. Hr block free online filing Useful Items - You may want to see: Publication 54 Tax Guide for U. Hr block free online filing S. Hr block free online filing Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. Hr block free online filing Resident Aliens Resident aliens may be able to exclude the following items from their gross income. Hr block free online filing Foreign Earned Income and Housing Amount If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. Hr block free online filing The exclusion is $97,600 in 2013. Hr block free online filing In addition, you may be able to exclude or deduct certain foreign housing amounts. Hr block free online filing You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. Hr block free online filing For more information, see Publication 54. Hr block free online filing Foreign country. Hr block free online filing    A foreign country is any territory under the sovereignty of a government other than that of the United States. Hr block free online filing   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. Hr block free online filing It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Hr block free online filing   The term “foreign country” does not include U. Hr block free online filing S. Hr block free online filing possessions or territories. Hr block free online filing It does not include the Antarctic region. Hr block free online filing Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. Hr block free online filing Interest Income Interest income that is not connected with a U. Hr block free online filing S. Hr block free online filing trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, 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), and Amounts held by an insurance company under an agreement to pay interest on them. Hr block free online filing State and local government obligations. Hr block free online filing   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. Hr block free online filing S. Hr block free online filing possession, generally is not included in income. Hr block free online filing However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. Hr block free online filing Portfolio interest. Hr block free online filing   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. Hr block free online filing To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. Hr block free online filing Note. Hr block free online filing For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. Hr block free online filing Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. Hr block free online filing Obligations in registered form. Hr block free online filing   Portfolio interest includes interest paid on an obligation that is in registered form, and for which you have received documentation that the beneficial owner of the obligation is not a United States person. Hr block free online filing   Generally, an obligation is in registered form if: (i) the obligation is registered as to both principal and any stated interest with the issuer (or its agent) and any transfer of the obligation may be effected only by surrender of the old obligation and reissuance to the new holder; (ii) the right to principal and stated interest with respect to the obligation may be transferred only through a book entry system maintained by the issuer or its agent; or (iii) the obligation is registered as to both principal and stated interest with the issuer or its agent and can be transferred both by surrender and reissuance and through a book entry system. Hr block free online filing   An obligation that would otherwise be considered to be in registered form is not considered to be in registered form as of a particular time if it can be converted at any time in the future into an obligation that is not in registered form. Hr block free online filing For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. Hr block free online filing Obligations not in registered form. Hr block free online filing    For obligations issued before March 19, 2012, interest on an obligation that is not in registered form (bearer obligation) is portfolio interest if the obligation is foreign-targeted. Hr block free online filing A bearer obligation is foreign-targeted if: There are arrangements to ensure that the obligation will be sold, or resold in connection with the original issue, only to a person who is not a United States person, Interest on the obligation is payable only outside the United States and its possessions, and The face of the obligation contains a statement that any United States person who holds the obligation will be subject to limits under the United States income tax laws. Hr block free online filing   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. Hr block free online filing In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. Hr block free online filing Interest that does not qualify as portfolio interest. Hr block free online filing   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. Hr block free online filing You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. Hr block free online filing Contingent interest. Hr block free online filing   Portfolio interest does not include contingent interest. Hr block free online filing Contingent interest is either of the following: Interest that is determined by reference to: Any receipts, sales, or other cash flow of the debtor or related person, Income or profits of the debtor or related person, Any change in value of any property of the debtor or a related person, or Any dividend, partnership distributions, or similar payments made by the debtor or a related person. Hr block free online filing For exceptions, see Internal Revenue Code section 871(h)(4)(C). Hr block free online filing Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. Hr block free online filing Related persons. Hr block free online filing   Related persons include the following. Hr block free online filing Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Hr block free online filing ), and lineal descendants (children, grandchildren, etc. Hr block free online filing ). Hr block free online filing Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. Hr block free online filing Certain corporations, partnerships, and other entities. Hr block free online filing For details, see Nondeductible Loss in chapter 2 of Publication 544. Hr block free online filing Exception for existing debt. Hr block free online filing   Contingent interest does not include interest paid or accrued on any debt with a fixed term that was issued: On or before April 7, 1993, or After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter before that debt was issued. Hr block free online filing Dividend Income The following dividend income is exempt from the 30% tax. Hr block free online filing Certain dividends paid by foreign corporations. Hr block free online filing   There is no 30% tax on U. Hr block free online filing S. Hr block free online filing source dividends you receive from a foreign corporation. Hr block free online filing See Second exception under Dividends in chapter 2 for how to figure the amount of U. Hr block free online filing S. Hr block free online filing source dividends. Hr block free online filing Certain interest-related dividends. Hr block free online filing   There is no 30% tax on interest-related dividends from sources within the United States that you receive from a mutual fund or other regulated investment company in 2013. Hr block free online filing The mutual fund will designate in writing which dividends are interest-related dividends. Hr block free online filing Certain short-term capital gain dividends. Hr block free online filing   There may not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you receive from a mutual fund or other regulated investment company. Hr block free online filing The mutual fund will designate in writing which dividends are short-term capital gain dividends. Hr block free online filing This tax relief will not apply to you if you are present in the United States for 183 days or more during your tax year. Hr block free online filing Services Performed for Foreign Employer If you were paid by a foreign employer, your U. Hr block free online filing S. Hr block free online filing source income may be exempt from U. Hr block free online filing S. Hr block free online filing tax, but only if you meet one of the situations discussed next. Hr block free online filing Employees of foreign persons, organizations, or offices. Hr block free online filing   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. Hr block free online filing S. Hr block free online filing sources and is tax exempt if you meet all three of the following conditions. Hr block free online filing You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U. Hr block free online filing S. Hr block free online filing corporation, a U. Hr block free online filing S. Hr block free online filing partnership, or a U. Hr block free online filing S. Hr block free online filing citizen or resident. Hr block free online filing You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. Hr block free online filing Your pay for these services is not more than $3,000. Hr block free online filing If you do not meet all three conditions, your income from personal services performed in the United States is U. Hr block free online filing S. Hr block free online filing source income and is taxed according to the rules in chapter 4. Hr block free online filing   If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States. Hr block free online filing To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. Hr block free online filing If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. Hr block free online filing   A day means a calendar day during any part of which you are physically present in the United States. Hr block free online filing Example 1. Hr block free online filing During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. Hr block free online filing S. Hr block free online filing partnership. Hr block free online filing Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2013 performing personal services for the overseas office of the partnership. Hr block free online filing That office paid him a total gross salary of $2,800 for those services. Hr block free online filing During 2013, he was not engaged in a trade or business in the United States. Hr block free online filing The salary is not considered U. Hr block free online filing S. Hr block free online filing source income and is exempt from U. Hr block free online filing S. Hr block free online filing tax. Hr block free online filing Example 2. Hr block free online filing The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2013 was $4,500. Hr block free online filing He received $2,875 in 2013, and $1,625 in 2014. Hr block free online filing During 2013, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. Hr block free online filing Henry's salary is U. Hr block free online filing S. Hr block free online filing source income and is taxed under the rules in chapter 4. Hr block free online filing Crew members. Hr block free online filing   Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U. Hr block free online filing S. Hr block free online filing possession is not U. Hr block free online filing S. Hr block free online filing source income and is exempt from U. Hr block free online filing S. Hr block free online filing tax. Hr block free online filing This exemption does not apply to compensation for services performed on foreign aircraft. Hr block free online filing Students and exchange visitors. Hr block free online filing   Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. Hr block free online filing   This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. Hr block free online filing It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. Hr block free online filing   A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. Hr block free online filing Foreign employer. Hr block free online filing   A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation, or An office or place of business maintained in a foreign country or in a U. Hr block free online filing S. Hr block free online filing possession by a U. Hr block free online filing S. Hr block free online filing corporation, a U. Hr block free online filing S. Hr block free online filing partnership, or an individual who is a U. Hr block free online filing S. Hr block free online filing citizen or resident. Hr block free online filing   The term “foreign employer” does not include a foreign government. Hr block free online filing Pay from a foreign government that is exempt from U. Hr block free online filing S. Hr block free online filing income tax is discussed in chapter 10. Hr block free online filing Income from certain annuities. Hr block free online filing   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. Hr block free online filing S. Hr block free online filing income tax if you meet both of the following conditions. Hr block free online filing You receive the annuity only because: You performed personal services outside the United States while you were a nonresident alien, or You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices . Hr block free online filing At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U. Hr block free online filing S. Hr block free online filing citizens or residents. Hr block free online filing   If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if: You are a resident of a country that gives a substantially equal exclusion to U. Hr block free online filing S. Hr block free online filing citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. Hr block free online filing   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. Hr block free online filing Income affected by treaties. Hr block free online filing   Income of any kind that is exempt from U. Hr block free online filing S. Hr block free online filing tax under a treaty to which the United States is a party is excluded from your gross income. Hr block free online filing Income on which the tax is only limited by treaty, however, is included in gross income. Hr block free online filing See chapter 9. Hr block free online filing Gambling Winnings From Dog or Horse Racing You can exclude from your gross income winnings from legal wagers initiated outside the United States in a parimutuel pool with respect to a live horse or dog race in the United States. Hr block free online filing Gain From the Sale of Your Main Home If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. Hr block free online filing If you are married and file a joint return, you may be able to exclude up to $500,000. Hr block free online filing For information on the requirements for this exclusion, see Publication 523. Hr block free online filing This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. Hr block free online filing Scholarships and Fellowship Grants If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. Hr block free online filing The rules discussed here apply to both resident and nonresident aliens. Hr block free online filing If a nonresident alien receives a grant that is not from U. Hr block free online filing S. Hr block free online filing sources, it is not subject to U. Hr block free online filing S. Hr block free online filing tax. Hr block free online filing See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. Hr block free online filing S. Hr block free online filing sources. Hr block free online filing A scholarship or fellowship is excludable from income only if: You are a candidate for a degree at an eligible educational institution, and You use the scholarship or fellowship to pay qualified education expenses. Hr block free online filing Candidate for a degree. Hr block free online filing   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Hr block free online filing Eligible educational institution. Hr block free online filing   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Hr block free online filing Qualified education expenses. Hr block free online filing   These are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Hr block free online filing These items must be required of all students in your course of instruction. Hr block free online filing However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. Hr block free online filing Expenses that do not qualify. Hr block free online filing   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Hr block free online filing This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Hr block free online filing Scholarship or fellowship amounts used to pay these costs are taxable. Hr block free online filing Amounts used to pay expenses that do not qualify. Hr block free online filing   A scholarship amount used to pay any expense that does not qualify is taxable, even if the expense is a fee that must be paid to the institution as a condition of enrollment or attendance. Hr block free online filing Payment for services. Hr block free online filing   You cannot exclude from income the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. Hr block free online filing This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. Hr block free online filing Example. Hr block free online filing On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. Hr block free online filing As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. Hr block free online filing Of the $2,500 scholarship, $1,000 represents payment for her services. Hr block free online filing Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. Hr block free online filing Prev  Up  Next   Home   More Online Publications
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The Hr Block Free Online Filing

Hr block free online filing 9. Hr block free online filing   Tax Treaty Benefits Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Treaty Income Some Typical Tax Treaty BenefitsPersonal Services Teachers, Professors, and Researchers Employees of Foreign Governments Students, Apprentices, and Trainees Capital Gains Resident Aliens Reporting Treaty Benefits Claimed Introduction A nonresident alien (and certain resident aliens) from a country with which the United States has an income tax treaty may qualify for certain benefits. Hr block free online filing Most treaties require that the nonresident alien be a resident of the treaty country to qualify. Hr block free online filing However, some treaties require that the nonresident alien be a national or a citizen of the treaty country. Hr block free online filing See Table 9-1 for a list of tax treaty countries. Hr block free online filing You can generally arrange to have withholding tax reduced or eliminated on wages and other income that are eligible for tax treaty benefits. Hr block free online filing See Income Entitled to Tax Treaty Benefits in chapter 8. Hr block free online filing Topics - This chapter discusses: Typical tax treaty benefits, How to obtain copies of tax treaties, and How to claim tax treaty benefits on your tax return. Hr block free online filing Useful Items - You may want to see: Publication 901 U. Hr block free online filing S. Hr block free online filing Tax Treaties Form (and Instructions) 1040NR U. Hr block free online filing S. Hr block free online filing Nonresident Alien Income Tax Return 1040NR-EZ U. Hr block free online filing S. Hr block free online filing Income Tax Return for Certain Nonresident Aliens With No Dependents 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) See chapter 12 for information about getting these publications and forms. Hr block free online filing Treaty Income A nonresident alien's treaty income is the gross income on which the tax is limited by a tax treaty. Hr block free online filing Treaty income includes, for example, dividends from sources in the United States that are subject to tax at a tax treaty rate not to exceed 15%. Hr block free online filing Nontreaty income is the gross income of a nonresident alien on which the tax is not limited by a tax treaty. Hr block free online filing Figure the tax on treaty income on each separate item of income at the reduced rate that applies to that item under the treaty. Hr block free online filing To determine tax on nontreaty income, figure the tax at either the flat 30% rate or the graduated rate, depending upon whether or not the income is effectively connected with your trade or business in the United States. Hr block free online filing Your tax liability is the sum of the tax on treaty income plus the tax on nontreaty income, but cannot be more than the tax liability figured as if the tax treaty had not come into effect. Hr block free online filing Example. Hr block free online filing Arthur Banks is a nonresident alien who is single and a resident of a foreign country that has a tax treaty with the United States. Hr block free online filing He received gross income of $25,850 during the tax year from sources within the United States, consisting of the following items: Dividends on which the tax is limited to a 15% rate by the tax treaty $1,400 Compensation for personal services on which the tax is not limited by the tax treaty 24,450 Total gross income $25,850 Arthur was engaged in business in the United States during the tax year. Hr block free online filing His dividends are not effectively connected with that business. Hr block free online filing He has no deductions other than his own personal exemption. Hr block free online filing His tax liability, figured as though the tax treaty had not come into effect, is $3,060 determined as follows: Total compensation $24,450 Less: Personal exemption 3,900 Taxable income $20,550 Tax determined by graduated rate (Tax Table column for single taxpayers) $2,640 Plus: Tax on gross dividends ($1,400 × 30%) 420 Tax determined as though treaty had not come into effect $3,060 Arthur's tax liability, figured by taking into account the reduced rate on dividend income as provided by the tax treaty, is $2,850 determined as follows: Tax determined by graduated rate (same as figured above) $2,640 Plus: Tax on gross dividends ($1,400 × 15%) 210 Tax on compensation and dividends $2,850 His tax liability, therefore, is limited to $2,850, the tax liability figured using the tax treaty rate on the dividends. Hr block free online filing Some Typical Tax Treaty Benefits The following paragraphs briefly explain the exemptions that are available under tax treaties for personal services income, remittances, scholarships, fellowships, and capital gain income. Hr block free online filing The conditions for claiming the exemptions vary under each tax treaty. Hr block free online filing For more information about the conditions under a particular tax treaty, see Publication 901. Hr block free online filing Or, you may download the complete text of most U. Hr block free online filing S. Hr block free online filing tax treaties at IRS. Hr block free online filing gov. Hr block free online filing Technical explanations for many of those treaties are also available at that site. Hr block free online filing Tax treaty benefits also cover income such as dividends, interest, rentals, royalties, pensions, and annuities. Hr block free online filing These types of income may be exempt from U. Hr block free online filing S. Hr block free online filing tax or may be subject to a reduced rate of tax. Hr block free online filing For more information, see Publication 901 or the applicable tax treaty. Hr block free online filing Personal Services Nonresident aliens from treaty countries who are in the United States for a short stay and also meet certain other requirements may be exempt from tax on their compensation received for personal services performed in the United States. Hr block free online filing Many tax treaties require that the nonresident alien claiming this exemption be present in the United States for a total of not more than 183 days during the tax year. Hr block free online filing Other tax treaties specify different periods of maximum presence in the United States, such as 180 days or 90 days. Hr block free online filing Spending part of a day in the United States counts as a day of presence. Hr block free online filing Tax treaties may also require that: The compensation cannot be more than a specific amount (frequently $3,000), and The individual have a foreign employer; that is, an individual, corporation, or entity of a foreign country. Hr block free online filing Note. Hr block free online filing Under most treaties, income received as an employee (generally designated as dependent personal services) and income received as a self-employed person (generally designated as independent personal services or business income) are treated differently. Hr block free online filing Teachers, Professors, and Researchers Under many income tax treaties, nonresident alien teachers or professors who temporarily visit the United States for the primary purpose of teaching at a university or other accredited educational institution are not subject to U. Hr block free online filing S. Hr block free online filing income tax on compensation received for teaching for the first 2 or 3 years after their arrival in the United States. Hr block free online filing Many treaties also provide an exemption for engaging in research. Hr block free online filing Generally, the teacher or professor must be in the United States primarily to teach, lecture, instruct, or engage in research. Hr block free online filing A substantial part of that person's time must be devoted to those duties. Hr block free online filing The normal duties of a teacher or professor include not only formal classroom work involving regularly scheduled lectures, demonstrations, or other student-participation activities, but also the less formal method of presenting ideas in seminars or other informal groups and in joint efforts in the laboratory. Hr block free online filing If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Hr block free online filing See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens later under Resident Aliens. Hr block free online filing Employees of Foreign Governments All treaties have provisions for the exemption of income earned by certain employees of foreign governments. Hr block free online filing However, a difference exists among treaties as to who qualifies for this benefit. Hr block free online filing Under many treaties, aliens admitted to the United States for permanent residence do not qualify. Hr block free online filing Under most treaties, aliens who are not nationals or subjects of the foreign country do not qualify. Hr block free online filing Employees of foreign governments should read the pertinent treaty carefully to determine whether they qualify for benefits. Hr block free online filing Chapter 10 of this publication also has information for employees of foreign governments. Hr block free online filing Students, Apprentices, and Trainees Under some income tax treaties, students, apprentices, and trainees are exempt from tax on remittances received from abroad for study and maintenance. Hr block free online filing Also, under some treaties, scholarship and fellowship grants, and a limited amount of compensation received by students, apprentices, and trainees may be exempt from tax. Hr block free online filing If you entered the United States as a nonresident alien, but are now a resident alien, the treaty exemption may still apply. Hr block free online filing See Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens , later, under Resident Aliens. Hr block free online filing Capital Gains Most treaties provide for the exemption of gains from the sale or exchange of personal property. Hr block free online filing Generally, gains from the sale or exchange of real property located in the United States are taxable. Hr block free online filing Resident Aliens Resident aliens may qualify for tax treaty benefits in the situations discussed below. Hr block free online filing U. Hr block free online filing S. Hr block free online filing Residency Under Tax Treaty “Tie-Breaker” Rule In certain circumstances, individuals who are treated as residents of the United States under an income tax treaty (after application of the so-called “tie-breaker” rule) will be entitled to treaty benefits. Hr block free online filing (The “tie-breaker” rule is explained in chapter 1 under Effect of Tax Treaties. Hr block free online filing ) If this applies to you, you generally will not need to file a Form 8833 for the income for which treaty benefits are claimed. Hr block free online filing This is because the income will typically be of a category for which disclosure on a Form 8833 is waived. Hr block free online filing See Reporting Treaty Benefits Claimed . Hr block free online filing In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Hr block free online filing S. Hr block free online filing tax under the treaty. Hr block free online filing However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Hr block free online filing Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Hr block free online filing Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Hr block free online filing On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Hr block free online filing Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Hr block free online filing Attach a statement to Form 1040 showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Hr block free online filing Include this tax on Form 1040, line 61. Hr block free online filing On the dotted line next to line 61, write “Tax from attached statement” and the amount of the tax. Hr block free online filing Example. Hr block free online filing Jacques Dubois, who is a resident of the United States under Article 4 of the U. Hr block free online filing S. Hr block free online filing -France income tax treaty, receives French social security benefits. Hr block free online filing Under Article 18(1) of the treaty, French social security benefits are not taxable by the United States. Hr block free online filing Mr. Hr block free online filing Dubois is not required to file a Form 8833 for his French social security benefits or report the benefits on Form 1040. Hr block free online filing Special Rule for Canadian and German Social Security Benefits Under income tax treaties with Canada and Germany, if a U. Hr block free online filing S. Hr block free online filing resident receives social security benefits from Canada or Germany, those benefits are treated for U. Hr block free online filing S. Hr block free online filing income tax purposes as if they were received under the social security legislation of the United States. Hr block free online filing If you receive social security benefits from Canada or Germany, include them on line 1 of your Social Security Benefits Worksheet for purposes of determining the taxable amount to be reported on Form 1040, line 20b or Form 1040A, line 14b. Hr block free online filing You are not required to file a Form 8833 for those benefits. Hr block free online filing Students, Apprentices, Trainees, Teachers, Professors, and Researchers Who Became Resident Aliens Generally, you must be a nonresident alien student, apprentice, trainee, teacher, professor, or researcher in order to claim a tax treaty exemption for remittances from abroad for study and maintenance in the United States, for scholarship, fellowship, and research grants, and for wages or other personal service compensation. Hr block free online filing Once you become a resident alien, you generally can no longer claim a tax treaty exemption for this income. Hr block free online filing However, if you entered the United States as a nonresident alien, but you are now a resident alien for U. Hr block free online filing S. Hr block free online filing tax purposes, the treaty exemption will continue to apply if the tax treaty's saving clause (explained later) provides an exception for it and you otherwise meet the requirements for the treaty exemption (including any time limit, explained later). Hr block free online filing This is true even if you are a nonresident alien electing to file a joint return as explained in chapter 1. Hr block free online filing Some exceptions to the saving clause apply to all resident aliens (for example, under the U. Hr block free online filing S. Hr block free online filing -People's Republic of China treaty); others apply only to resident aliens who are not lawful permanent residents of the United States (green card holders). Hr block free online filing If you qualify under an exception to the treaty's saving clause, you can avoid income tax withholding by giving the payor a Form W-9 with the statement required by the Form W-9 instructions. Hr block free online filing Saving clause. Hr block free online filing   Most tax treaties have a saving clause. Hr block free online filing A saving clause preserves or “saves” the right of each country to tax its own residents as if no tax treaty were in effect. Hr block free online filing Thus, once you become a resident alien of the United States, you generally lose any tax treaty benefits that relate to your income. Hr block free online filing However, many tax treaties have exceptions to the saving clause, which may allow you to continue to claim certain treaty benefits when you become a resident alien. Hr block free online filing Read the treaty to find out if it has a saving clause and an exception to it. Hr block free online filing Time limit for claiming treaty exemptions. Hr block free online filing   Many treaties limit the number of years you can claim a treaty exemption. Hr block free online filing For students, apprentices, and trainees, the limit is usually 4–5 years; for teachers, professors, and researchers, the limit is usually 2–3 years. Hr block free online filing Once you reach this limit, you can no longer claim the treaty exemption. Hr block free online filing See the treaty or Publication 901 for the time limits that apply. Hr block free online filing How to report income on your tax return. Hr block free online filing   In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U. Hr block free online filing S. Hr block free online filing tax under the treaty. Hr block free online filing However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages, salaries, scholarships, or fellowships). Hr block free online filing Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Hr block free online filing Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. Hr block free online filing On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22. Hr block free online filing Example. Hr block free online filing Mr. Hr block free online filing Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2009. Hr block free online filing He remained a nonresident alien through 2013 and was able to exclude his scholarship from U. Hr block free online filing S. Hr block free online filing tax in those years under Article 20 of the U. Hr block free online filing S. Hr block free online filing -People's Republic of China income tax treaty. Hr block free online filing On January 1, 2014, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Hr block free online filing Even though Mr. Hr block free online filing Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U. Hr block free online filing S. Hr block free online filing -People's Republic of China treaty dated April 30, 1984. Hr block free online filing Mr. Hr block free online filing Yu should submit Form W-9 and the required statement to the payor. Hr block free online filing Reporting Treaty Benefits Claimed If you claim treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits your tax is, or might be, reduced, you must attach a fully completed Form 8833 to your tax return. Hr block free online filing See below, for the situations where you are not required to file Form 8833. Hr block free online filing You must file a U. Hr block free online filing S. Hr block free online filing tax return and Form 8833 if you claim the following treaty benefits. Hr block free online filing You claim a reduction or modification in the taxation of gain or loss from the disposition of a U. Hr block free online filing S. Hr block free online filing real property interest based on a treaty. Hr block free online filing You claim a credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code. Hr block free online filing You receive payments or income items totaling more than $100,000 and you determine your country of residence under a treaty and not under the rules for residency discussed in chapter 1. Hr block free online filing These are the more common situations for which Form 8833 is required. Hr block free online filing Exceptions. Hr block free online filing   You do not have to file Form 8833 for any of the following situations. Hr block free online filing You claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate. Hr block free online filing You claim a treaty reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. Hr block free online filing This includes taxable scholarship and fellowship grants. Hr block free online filing You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement. Hr block free online filing You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return. Hr block free online filing The payments or items of income that are otherwise required to be disclosed total no more than $10,000. Hr block free online filing You are claiming treaty benefits for amounts that are: Reported to you on Form 1042-S and Received by you: As a related party from a reporting corporation within the meaning of Internal Revenue Code section 6038A (relating to information returns on Form 5472 filed by U. Hr block free online filing S. Hr block free online filing corporations that are 25-percent owned by a foreign person), or As a beneficial owner that is a direct account holder of a U. Hr block free online filing S. Hr block free online filing financial institution or qualified intermediary, or a direct partner, beneficiary, or owner of a withholding foreign partnership or trust, from that U. Hr block free online filing S. Hr block free online filing financial institution, qualified intermediary, or withholding foreign partnership or trust. Hr block free online filing The exception described in (6) above does not apply to any amounts for which a treaty-based return disclosure is specifically required by the Form 8833 instructions. Hr block free online filing Penalty for failure to provide required information on Form 8833. Hr block free online filing   If you are required to report the treaty benefits but do not, you may be subject to a penalty of $1,000 for each failure. Hr block free online filing Additional information. Hr block free online filing   For additional information, see section 301. Hr block free online filing 6114-1(c) of the Income Tax Regulations. Hr block free online filing Table 9-1. Hr block free online filing Table of Tax Treaties (Updated through December 31, 2013) Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. Hr block free online filing D. Hr block free online filing ) Australia TIAS 10773 Dec. Hr block free online filing 1, 1983 1986-2 C. Hr block free online filing B. Hr block free online filing 220 1986-2 C. Hr block free online filing B. Hr block free online filing 246 Protocol TIAS Jan. Hr block free online filing 1, 2004     Austria TIAS Jan. Hr block free online filing 1, 1999     Bangladesh TIAS Jan. Hr block free online filing 1, 2007     Barbados TIAS 11090 Jan. Hr block free online filing 1, 1984 1991-2 C. Hr block free online filing B. Hr block free online filing 436 1991-2 C. Hr block free online filing B. Hr block free online filing 466 Protocol TIAS Jan. Hr block free online filing 1, 1994     Protocol TIAS Jan. Hr block free online filing 1, 2005     Belgium TIAS Jan. Hr block free online filing 1, 2008     Bulgaria TIAS Jan. Hr block free online filing 1, 2009     Canada2 TIAS 11087 Jan. Hr block free online filing 1, 1985 1986-2 C. Hr block free online filing B. Hr block free online filing 258 1987-2 C. Hr block free online filing B. Hr block free online filing 298 Protocol TIAS Jan. Hr block free online filing 1, 1996     Protocol TIAS Dec. Hr block free online filing 16, 1997     Protocol TIAS Jan. Hr block free online filing 1, 2009     China, People's Republic of TIAS 12065 Jan. Hr block free online filing 1, 1987 1988-1 C. Hr block free online filing B. Hr block free online filing 414 1988-1 C. Hr block free online filing B. Hr block free online filing 447 Commonwealth of Independent States3 TIAS 8225 Jan. Hr block free online filing 1, 1976 1976-2 C. Hr block free online filing B. Hr block free online filing 463 1976-2 C. Hr block free online filing B. Hr block free online filing 475 Cyprus TIAS 10965 Jan. Hr block free online filing 1, 1986 1989-2 C. Hr block free online filing B. Hr block free online filing 280 1989-2 C. Hr block free online filing B. Hr block free online filing 314 Czech Republic TIAS Jan. Hr block free online filing 1, 1993     Denmark TIAS Jan. Hr block free online filing 1, 2001     Protocol TIAS Jan. Hr block free online filing 1, 2008     Egypt TIAS 10149 Jan. Hr block free online filing 1, 1982 1982-1 C. Hr block free online filing B. Hr block free online filing 219 1982-1 C. Hr block free online filing B. Hr block free online filing 243 Estonia TIAS Jan. Hr block free online filing 1, 2000     Finland TIAS 12101 Jan. Hr block free online filing 1, 1991     Protocol TIAS Jan. Hr block free online filing 1, 2008     France TIAS Jan. Hr block free online filing 1, 1996     Protocol TIAS Jan. Hr block free online filing 1, 2007     Protocol TIAS Jan. Hr block free online filing 1, 2010     Germany TIAS Jan. Hr block free online filing 1, 1990     Protocol TIAS Jan. Hr block free online filing 1, 2008     Greece TIAS 2902 Jan. Hr block free online filing 1, 1953 1958-2 C. Hr block free online filing B. Hr block free online filing 1054 T. Hr block free online filing D. Hr block free online filing 6109, 1954-2 C. Hr block free online filing B. Hr block free online filing 638 Hungary TIAS 9560 Jan. Hr block free online filing 1, 1980 1980-1 C. Hr block free online filing B. Hr block free online filing 333 1980-1 C. Hr block free online filing B. Hr block free online filing 354 Iceland TIAS Jan. Hr block free online filing 1, 2009     India TIAS Jan. Hr block free online filing 1, 1991     Indonesia TIAS 11593 Jan. Hr block free online filing 1, 1990     Ireland TIAS Jan. Hr block free online filing 1, 1998     Israel TIAS Jan. Hr block free online filing 1, 1995     Italy TIAS Jan. Hr block free online filing 1, 2010     Jamaica TIAS 10207 Jan. Hr block free online filing 1, 1982 1982-1 C. Hr block free online filing B. Hr block free online filing 257 1982-1 C. Hr block free online filing B. Hr block free online filing 291 Japan TIAS Jan. Hr block free online filing 1, 2005     Kazakhstan TIAS Jan. Hr block free online filing 1, 1996     Korea, South TIAS 9506 Jan. Hr block free online filing 1, 1980 1979-2 C. Hr block free online filing B. Hr block free online filing 435 1979-2 C. Hr block free online filing B. Hr block free online filing 458 Latvia TIAS Jan. Hr block free online filing 1, 2000     Lithuania TIAS Jan. Hr block free online filing 1, 2000     Luxembourg TIAS Jan. Hr block free online filing 1, 2001     Malta TIAS Jan. Hr block free online filing 1, 2011     Mexico TIAS Jan. Hr block free online filing 1, 1994 1994-2 C. Hr block free online filing B. Hr block free online filing 424 1994-2 C. Hr block free online filing B. Hr block free online filing 489 Protocol TIAS Oct. Hr block free online filing 26, 1995     Protocol TIAS Jan. Hr block free online filing 1, 2004     Morocco TIAS 10195 Jan. Hr block free online filing 1, 1981 1982-2 C. Hr block free online filing B. Hr block free online filing 405 1982-2 C. Hr block free online filing B. Hr block free online filing 427 Netherlands TIAS Jan. Hr block free online filing 1, 1994     Protocol TIAS Jan. Hr block free online filing 1, 2005     New Zealand TIAS 10772 Nov. Hr block free online filing 2, 1983 1990-2 C. Hr block free online filing B. Hr block free online filing 274 1990-2 C. Hr block free online filing B. Hr block free online filing 303 Protocol TIAS Jan. Hr block free online filing 1, 2011     Norway TIAS 7474 Jan. Hr block free online filing 1, 1971 1973-1 C. Hr block free online filing B. Hr block free online filing 669 1973-1 C. Hr block free online filing B. Hr block free online filing 693 Protocol TIAS 10205 Jan. Hr block free online filing 1, 1982 1982-2 C. Hr block free online filing B. Hr block free online filing 440 1982-2 C. Hr block free online filing B. Hr block free online filing 454 Pakistan TIAS 4232 Jan. Hr block free online filing 1, 1959 1960-2 C. Hr block free online filing B. Hr block free online filing 646 T. Hr block free online filing D. Hr block free online filing 6431, 1960-1 C. Hr block free online filing B. Hr block free online filing 755 Philippines TIAS 10417 Jan. Hr block free online filing 1, 1983 1984-2 C. Hr block free online filing B. Hr block free online filing 384 1984-2 C. Hr block free online filing B. Hr block free online filing 412 Poland TIAS 8486 Jan. Hr block free online filing 1, 1974 1977-1 C. Hr block free online filing B. Hr block free online filing 416 1977-1 C. Hr block free online filing B. Hr block free online filing 427 Portugal TIAS Jan. Hr block free online filing 1, 1996     Romania TIAS 8228 Jan. Hr block free online filing 1, 1974 1976-2 C. Hr block free online filing B. Hr block free online filing 492 1976-2 C. Hr block free online filing B. Hr block free online filing 504 Russia TIAS Jan. Hr block free online filing 1, 1994     Slovak Republic TIAS Jan. Hr block free online filing 1, 1993     Slovenia TIAS Jan. Hr block free online filing 1, 2002     South Africa TIAS Jan. Hr block free online filing 1, 1998     Spain TIAS Jan. Hr block free online filing 1, 1991     Sri Lanka TIAS Jan. Hr block free online filing 1, 2004     Sweden TIAS Jan. Hr block free online filing 1, 1996     Protocol TIAS Jan. Hr block free online filing 1, 2007     Switzerland TIAS Jan. Hr block free online filing 1, 1998     Thailand TIAS Jan. Hr block free online filing 1, 1998     Trinidad and Tobago TIAS 7047 Jan. Hr block free online filing 1, 1970 1971-2 C. Hr block free online filing B. Hr block free online filing 479   Tunisia TIAS Jan. Hr block free online filing 1, 1990     Turkey TIAS Jan. Hr block free online filing 1, 1998     Ukraine TIAS Jan. Hr block free online filing 1, 2001     United Kingdom TIAS Jan. Hr block free online filing 1, 2004     Venezuela TIAS Jan. Hr block free online filing 1, 2000     1(TIAS) Treaties and Other International Act Series 2Information on the treaty can be found in Publication 597, Information on the United States-Canada Income Tax Treaty. Hr block free online filing 3The U. Hr block free online filing S. Hr block free online filing -U. Hr block free online filing S. Hr block free online filing S. Hr block free online filing R. Hr block free online filing income tax treaty applies to the countries of Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Hr block free online filing Prev  Up  Next   Home   More Online Publications